adminVladimir Odintsov Correspondent
In its quest for world domination, the United States has relied on two primary tools: US dollars and military power.
In order to prevent the complete hegemony of Washington, certain countries have recently been revising their positions towards these two elements by developing, on the one hand, military co-operation with the states that are non-dependent on the US, and by getting rid of their US dollars on the other.
Until the mid-twentieth century, the gold standard was the dominant monetary system that was based on a fixed quantity of gold reserves stocked in the national banks, which was putting a limit on lending.
At that time, the US managed to become the owner of 70 percent of world’s gold reserves (excluding the USSR from the count), therefore it pushed its weakened competitor the UK aside, which led to the creation of the Bretton Woods financial system in 1944. That’s how the dollar became the predominant currency for international payments.
But a quarter century later this system was proved ineffective due to its inability to contain the economic growth of Germany and Japan, along with the reluctance of the US to adjust its economic policies to maintain the dollar-gold balance.
At that time, the dollar experienced a dramatic decline but it was saved by the support of rich oil exporters, especially once Saudi Arabia consented to exchange its black gold for the US weapons and support in talks with Richard Nixon.
As a result, President Richard Nixon in 1971 unilaterally ordered the cancellation of the direct convertibility of the United States dollar to gold, instead he established the Jamaican currency system in which oil has become the foundation of the US dollar system. Therefore, it’s no coincidence that from that moment on control over oil trades has become the number one priority of Washington’s foreign policy.
In the aftermath of the so-called Nixon Shock the number of US military engagements in the Middle East and other oil producing regions saw a sharp increase.
Once this system was supported by the OPEC members, the global demand for the US petrodollars hit an all time high. Petrodollars became the basis for the America domination over the global financial system which resulted in countries being forced to buy dollars in order to get oil on the international market.
Analysts believe that the share of the United States in today’s world gross domestic product shouldn’t exceed 22 percent. However, 80 percent of international payments are made in US dollars.
As a result, the value of the US dollar is exceedingly high in comparison with other currencies, that’s why consumers in the US receive imported goods at extremely low prices.
It provides the US with the significant financial profit, while high demand for dollars in the world allows the US government to refinance its debt at very low interest rates.
In these circumstances, once someone is trying to get rid of the US dollars, it’s considered as a direct threat to US economic hegemony and the high living standards of its citizens, and therefore the political and business circles in Washington try as hard as they can to resist this process.
This resistance manifested itself in the overthrow and the brutal murder of the Libyan leader Muammar Gaddafi, who decided to switch to euros in oil payments, before introducing a gold dinar to replace the European currency.
However, in recent years, despite Washington’s desire to use whatever means to sustain its positions in the international arena, its policies are increasingly facing rejections.
As a result, a growing number of countries are trying to get rid of the US dollar along with the dependence on the United States, by pursuing a policy of de-dollarisation.
The three states that are particularly active in this domain are China, Russia and Iran, who are trying to achieve de-dollarisation at a record pace, along with some European banks and energy companies that are operating within their borders.
The Russian government held a meeting on de-dollarisation in the spring of 2014, where the Ministry of Finance announced a plan to increase the share of rouble-denominated contracts and the consequent abandonment of dollar exchange.
Last May at the Shanghai summit the Russian delegation managed to sign the so-called “deal of the century” which implies that over the next 30 years China will buy $400 billion worth of Russia’s natural gas, while paying in roubles and yuans.
Last August while visiting the Crimea, Russia’s President Vladimir Putin announced that “the petrodollar system should become history” while “Russia is discussing the use of national currencies in mutual settlements with a number of countries.”
These steps that has been recently taken by Russia are the real reason behind the Western sanctions policy.
In recent months, China has also become an active member of this “anti-dollar” campaign, since it has signed agreements with Canada and Qatar on national currencies exchange, which resulted in Canada becoming the first offshore hub for the yuan in North America.
This fact alone can potentially double or even triple the volume of trade between the two countries since the volume of the swap agreement signed between China and Canada is estimated to total a whopping 200 billion yuans.
China’s agreement with Qatar on direct currency swaps between the two countries to the equivalent of $5.7 billion has dealt a heavy blow to the petrodollars as well and become the basis for the usage of the yuan on the Middle East markets.
It is no secret that the oil-producing countries of the Middle Eastern region have little trust in the US dollar due to export of inflation, so you should expect other OPEC countries to sign agreements with China.
The Islamic Republic of Iran has recently announced its reluctance to use US dollars in its foreign trade. Additionally, the President of Kazakhstan Nursultan Nazarbayev has recently tasked he National Bank with the de-dollarisation of the national economy.
All across the world, calls for the creation of a new international monetary system are getting louder with each passing day.
In this context it should be noted that the UK government plans to release debts denominated in yuans while the European Central Bank is discussing the possibility of including the yuan in its official reserves.
Those trends are to be seen everywhere, but in the midst of anti-Russian propaganda hype, Western newsmakers prefer to keep quiet about these facts.
The above stated facts indicate that the world does not want to rely on US dollars anymore. In these circumstances, Washington relies on the policy of the deepening regional destabilisation, which, according to White House strategy, must lead to a considerable weakening of potential US rivals. But there’s little to none hope for the US to survive the wave of chaos it has unleashed across the world. — New Eastern Outlook.
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