For three years, the Kremlin told the world the dollar was a weapon it would never touch again. State media treated the greenback’s decline as destiny. Vladimir Putin personally championed a new financial architecture at every BRICS summit, casting Russia as the architect of a post-American monetary order. Then, in early February 2026, Bloomberg reported that an internal Kremlin memo proposes doing the opposite: returning to the dollar settlement system as part of a wide-ranging economic partnership with the Trump administration—a move which would mean “a stunning reversal of Kremlin policy”.
The U.S. has already proposed gradually lifting sanctions on Russia as part of any peace agreement, a necessary first step for the country to start transacting in dollars again. Bloomberg reports the document lists seven areas of potential cooperation, including joint oil and LNG projects, nuclear energy collaboration, aviation modernization, critical mineral development, preferential access for U.S. companies to the Russian market, and coordination in promoting fossil fuels over green energy policies. The memo argues that returning to the dollar system would stabilize Russia’s balance of payments and foreign exchange market, while for Washington, it would strengthen the greenback’s position as reserve currency and reduce global trade imbalances.
Why Now?
The timing makes sense when you look at the numbers. The year 2025 marked the end of Russia’s wartime growth spurt — after two years of expansion above 4%, GDP growth slowed to around 1%. Oil and gas revenues have faced significant downward pressure, with early 2026 reports showing a budget deficit jump in January to nearly half of the full-year target due to falling revenues. If oil prices do not rise, Russia’s fiscal reserves could be severely strained by the end of this year.
Consumer price inflation remained a persistent hurdle, standing at 6.3% as of February 9, 2026. This follows a period where the central bank raised its key rate to a two-decade high of 21% in late 2024 to curb spending. Though the Bank of Russia cut rates several times in 2025, on February 13, 2026, the bank cut again to 15.5% — still punishing for any business outside the defense sector. The rate primarily affects the civilian economy, which lacks government funding, while the military sector remains largely immune to these pressures.
The China Trap
Russia’s eastward pivot was supposed to deliver financial autonomy. It delivered dependence instead. By late 2025, more than 95% of bilateral trade settlements were conducted in rubles and yuan. That sounds like a triumph for de-dollarization — until you look closer.
Russian companies frequently face difficulties repatriating yuan revenues or deploying them efficiently within domestic financial markets, while Chinese banks apply heightened compliance scrutiny due to secondary sanctions risks. In 2025, Russia-China trade declined for the first time since the pandemic, falling 6.9% year-on-year to approximately $228.1 billion.
The relationship is increasingly transactional on Beijing’s terms. China halted electricity imports from Russia in early 2026 after Russian export prices exceeded domestic Chinese power tariffs. Western officials familiar with the memo consider it extremely unlikely that Putin would pursue a deal running counter to Beijing’s interests, since China has become a crucial supplier of components for Russia’s war machine.
What It Means for BRICS
If Russia — the bloc’s loudest voice against dollar hegemony — is privately negotiating its way back into the dollar system, the entire de-dollarization project looks less like a blueprint and more like a bargaining chip. Full de-dollarization faces structural obstacles: BRICS lacks the coherence to function as a unified economic bloc, and individual nations continue to manage their own reserve currency shifts at a gradual pace of 1–2 percentage points annually.
What is unfolding is better described as diversification rather than a wholesale exodus from the world’s dominant currency since 1945. The dollar remains the world’s most liquid and trusted currency — even amid crises and geopolitical instability, it has maintained unrivaled liquidity and dominant market share.
The Kremlin memo is a confession dressed as a proposal. After years of bombast about monetary sovereignty, Moscow is signaling that the pain of exclusion from the dollar system outweighs the pride of resisting it. For the dozens of countries watching BRICS as a model for financial independence, that signal may prove more consequential than any summit declaration.
Original analysis inspired by Jason Corcoran from The Moscow Times. Additional research and verification conducted through multiple sources.
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Categories: Russia | Economics & Energy | Diplomacy
