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This page is the English version of Almasirah Media Network website and it focuses on delivering all leading News and developments in Yemen, the Middle East and the world. In the eara of misinformation imposed by the main stream media in the Middle East and abroad, Almasirah Media Network strives towards promoting knowledge, principle values and justice, among all societies and cultures in the world

King Dollar Is Dead, Long Live King Yuan

World: Why are so many countries seeking alternatives to or ditching the greenback? Is the US dollar hegemony over or should we be asking when, not if, de-dollarization will happen on a mass scale?

News of de-dollarization keeps coming in from far and wide and in a recent statement the Russian foreign minister says the transition to non dollar currencies is unstoppable.

In another development Iran and Russia are taking the last steps towards integrating their electronic banking systems.

Let us look at how the dollar has been deformed, how the Yuan has been internationalized, and, how trade in local currencies is becoming the norm.

The Russian Foreign Minister, Sergei Lavrov, has said that the transition to non dollar currencies is unstoppable. He says that this is happening while countries are seeking alternatives to the US dollar as a reserve currency.

Do you think that he has any grounds to be making that kind of a statement?

It is unstoppable. It's rather like the movement of tectonic plates. The movement is imperceptible at first, then there's creaking, then there's rumbles, and then, suddenly, there's a violent movement with huge consequences.

It's a bit like bankruptcy. It goes on very slowly, then all at once. And that is going to happen because you have a situation in which any sane politician, in any country, knows that his country can be sanctioned and can have its assets expropriated by the Americans.

The situation is an outrage; America has simply abused its position on a humongous scale. Thus the process by which, if they can, almost probably every country is now going to start shifting away from the economic and financial power of America; if they can.

That's an IFF, but believe you me, where there's a will, there's a way and the determination to do it, is there and it is unstoppable.

One quick word, look Lavrov at United Nations meeting or any other meeting. They're all slinking up to him. Wanting to shake his hand and they probably want his autograph as though he's a pop star or something.

That is the shift that is going on. And America has only got itself to blame.

Professor Rodney Shakespeare, London

This shift is repeated in the scenarios that are related to de-dollarization. Previously, one would hear about de-dollarization here and there, but in the past month or so, it's just keeps popping up everywhere.

For example, South American countries like Brazil, have announced their plan, ASEAN countries have announced their plans to wean their economies off their reliance, not only on the dollar, but also on the Euro, and the group of BRICS countries are considering the possibility of creating a common currency.

It's not a possibility. They're actually going to go through with it. And they're going to make that announcement when they convene in South Africa.

Why has there been such a wealth of de-dollarization news recently?

Well, because the de-dollarization is facing exponential growth, that is, it keeps intensifying. Initially, you saw it was mainly being spearheaded by adversaries of the United States who were facing the brunt of its sanctions, but you are correct now that is the gaining pace you see even the friends or allies of the United States are jumping in, so yeah, Argentina, Brazil, obviously but also Turkey is joining in; India, you have Malaysia; there's a lot of countries who doesn't have bad relations with the US.

And but the reason is when an economic hegemon is dominant, then it can be more responsible in terms of administrating the international economic system. However, when the hegemon is in decline, it's much more likely to use its privileged position in the international economy to punish or it punishes adversaries and use this privileged position to hold on to hegemony so the more it uses, the more it sinks, the more it uses the dollar or its currency as a weapon.

And the more the rest of the world is incentivized to today to decouple from it, but it goes on to two different dimensions.

One is the pure economic one, because, it's not just sanctions, because the United States, having the dollar, allows it to run huge budget deficits.

 It can use all the printing press to fund the welfare state, they can fund the warfare state, simply because when you print new money, it becomes a form of taxation because you can tax people's income or you can print the money thus reducing the value of the currency. Now if you're controlling the world currency, you effectively can tax the entire world.

Anyone who holds dollars in the world will then see the dollar reduced in value in order to allow the Central Bank of the United States [to] print new dollars to fund whatever it wants.

Obviously, if you're Iran, China, Russia, any other state targeted by the US, holding the dollar then effectively means that you're funding your own containment.

So, obviously, from this perspective, it has economic disadvantage, not just adversaries but also to allies.

But then, of course, you have the other threat, which is when the United States converts these economic instruments into a political instrument, because if you control the reserve currency, you can also put sanctions on countries, they can be cut off Swift, the payment system and use of the dollar.

And this allows for extra territorial jurisdiction, which means the US has unilateral sanctions and it tells all the countries of the world you have to follow this. To quote Steve Mnuchin, former US Treasury Secretary, at the G7 meeting in 2019 said if you want to participate in the US dollar system, you have to abide by US sanction, you know international law, all of this aside, the US determines who should be sanctioned and who has to follow.

Even US allies who do not follow secondary sanction with France, India, they all will all get the whip, and they will all be punished, if they don't follow the Diktats of the US.

So both economic and political, the whole world has an incentive to decouple and that's what we're seeing now.

Professor Glenn Diesen, International Relations, Oslo

We spoke about the printing of the dollar and how Washington is, in essence, using the dollar as a means of taxation.

There's also the burden of dollar denominated debt for other nations that rises and falls with the exchange rate.

Could you talk a little bit about the technical aspects of this, which many people may not be aware of, where this obviously can hurt one's economy, when exchange rate fluctuations happen, it could destabilize the economies of the countries.

Yes, and what happens to countries which had their debt denominated in dollars as soon as there's any sort of trembling or problem? The rates immediately rise, there is compound interest, and in no time at all they’ve got a financial crisis, and they are ending up having to sell their assets to the predators.

I would like to say in respect of Glenn Diesen just now, he's quite right that the more the USA does it, the more that people are turning away from the USA. Another aspect which if I could just touch on, which is the dollar's present position is the means by which America finances over 800 military bases around the world. And I mean, there's about 40 around Iran ... It finances all the wars that are going on basically.

And that's another aspect, the position of the dollar has been completely and utterly abused in respect of individual countries, and respect of the peoples of the countries who are indebted and screwed down into the ground.

And respect of a military situation, where the USA, I think, doesn’t want to dominate, it wants to smash up Russia, and why smash up Russia? Because that's sort of the way to smashing up China and a quick word there, there's going to be a humongous debacle in Ukraine.

And already you can see that in the USA, they're saying, Oh, well, let's forget about Ukraine, but government will have war with China.

This is a nation (which has) abused its power (and) is out of control. And as for its internal politics, they're completely and utterly insane.

Professor Rodney Shakespeare, London

The Brazilian President Inacio Lula da Silva made some statements while he was in China which went viral.

"Every night I ask myself why do all countries have to base their trade on the dollar. Why can't we do trade based on our own currencies? Who was it that decided that the dollar was a (reserve) currency after the disappearance of the gold standard?"

Obviously, these kinds of questions have been asked before but why is the issue being highlighted now?

Well, I think because the world has shifted. In the unipolar order when the central power in the United States, it was accepted because, although there was no alternatives, but also you had to accept it.

But in a multipolar system, you see a lot of this large and medium sized countries, they would like to be able to have more independent policy. So in the past, United States can say “you with or against us”, and you're not with them, you could be crushed. But in the multipolar system, you know, countries don't want to have to choose between various states or block.

So when, so we refer to the Brazilian President visiting China, it was interesting to look at American media's response, and essentially it can be summarized as saying, ‘Well, you know, we hope that Brazil will be our friend, however, they're still talking to China and doing business with others’.

This is also the US mentality towards Europe, that is, if you're a friend of (the) US you have to choose "us" or "them" but the thing is, if in a multipolar system, if you want to be autonomous country you want to have an independent foreign policy.

You have to be allowed to diversify. You have to be able to say I want to do business with the Americans, the Chinese, the Russians, the Iranians, the Indians, whoever I want, and this is the problem. So I think that as long as the Americans have the dollar hanging over the Brazilians, they can coerce, force them to not take an independent position.

That being said, I also agree with President Lula on the issue of the petrodollar because when the United States took over the world currency after World War Two, by the way, the British was not happy about it.

They wanted a basket of currency in which the pound was included. But anyways, the Americans got what they wanted, but it was backed by gold, which meant that the dollar was as good as gold.

Well, what we saw in 1971 was effectively the US, to some extent, defaulting on its debt because it had a fixed currency exchange between gold and the dollar.

So again, the dollar was as good as gold.

Professor Glenn Diesen, International Relations, Oslo

What is the dollar backed by at the moment?

Nothing! It's backed by weapons, by guns. This is effectively if you threatened to abandon the dollar, you might meet the fury of the United States and this was the problem.

In 1971 they abandoned gold, and they replaced it with oil to the benefit of the oil exporting countries, so Saudi Arabia, obviously became a key in the petrodollar, but now we see the Saudis, a key US ally in the region, now is trading with the Chinese ditching the dollar, you see Russia also one of the biggest energy exporters, they no longer want to take either dollars or euros.

And you see this now catching on among all countries. So if you're not exporting oil and petrol dollars, petro dollar is gone. What's it going to be replaced with? I would say nothing, because if they lost trust in it and people are looking for alternatives.

The main problem is there are no good alternatives, but they're trying to find some.

Professor Glenn Diesen, International Relations, Oslo

BRICS is the five countries that have moved towards creating a common currency, a common currency that would not be reliant on the US dollar, the euro, or, the pound.

It will most probably be computed as a combination of the Rand, Rial, Rupee, Renminbi, and ruble.

Is this common currency going to actually be operational?

Well, it sounds very much like what Glenn referred to just now, a sort of basket of currencies with some sort of gold backing in there. But that, I think, is what is coming.

The essential point is that that system will not be controlled by the USA, whereas at the moment the existing system is controlled by the USA, and it's totally abused.

If I may just slightly shift, so many aspects of this; look what the Americans have done, even to their own allies. Look what they've done to Germany, and they blew up the pipeline, their own ally is treated with contempt and that sums it all up. ... now, there is a new currency coming into being, it may suddenly come into being because there's another aspect to this, which is that the world finance and economics, the economy, is trembling with debt levels, much higher personal, corporation, government, levels higher than they were in 2008.

And you could be moving into a crisis on a huge scale, in which change, which is already there, will be sadly precipitated of necessity. So we're looking at the tectonic plates, all sorts of things going on.

There is certainly a new global currency, I think gold will be the backing, I think the Chinese have been storing up gold for a long time.

Professor Rodney Shakespeare, London

In just 24 hours twenty countries have applied for BRICS membership, The countries include Iran, Saudi Arabia, Argentina, and Algeria, according to Russian Foreign Minister, Sergey Lavrov.

If you spread that on a map and you combine that with the trade blocs, the major trade blocs in the world, BRICS being one of them, there is also RCEP, SCO and another in the EU, the Eurasian Economic Union. These don't have the US in them.

So, shouldn't that ring alarm bells for the US when it comes to the dollar?

Oh, well, this is why it's quite important that, first of all let me say that BRICS is one of these institutions launching it but you are correct, the Shanghai Cooperation Organization, they are also dealing with  economic competencies, developing their own development bank's, energy cooperation, but also having initiatives for de-dollarization.

But BRICS, Brazil, Russia, India, China and South Africa, you know, this is a huge part of the world's population, industries and GDP. So the fact that they are now looking to collectively find some solutions to decouple from the dollar, it's quite powerful, and as mentioned with all of this new countries seeking to join BRICS, which they will probably be allowed to join by converting it into a BRICS plus.

It will bring much of the entire world into this BRICS system and this enables them to begin to reorganize a lot of international economic architecture that is the dollar obviously will be at the core but also a new payment system. So, getting away from Swift; having new development banks, all of this to also to finance these different infrastructure projects around the world. You know, this allows them to escape the sanctions.

It has immensely implications, but it's simply too, too much. It's not that the United States can do now unless, you know, they're gonna go to war against Russia or China, which again is a possibility. But this is gaining too much speed there is not so much you can do anymore, even as is correctly pointed out even the French are now doing trades with the Chinese in the Yuan so even the Americans own allies, closest allies, are joining.

Now, obviously, we shouldn't be surprised that the French joined in on this first among the Europeans, because the French has, you know, even though their key ally has still, you know, felt the cost of using the dollar.

For example, in 2014 the United States, you know, they fined the banking group, the French banking group, BNP Paribas, about almost $9 billion, because they didn't follow US sanctions against Iran, Cuba and Sudan.

And similarly, the United States they accused Alstom, which is this French energy and transportation conglomerate, of bribery in Indonesia.

Again, this is France in Indonesia, nothing to do about the United States, but the US can function as this world policeman. So they essentially can put them in your lap.

They say their sanction applies so for France has to abide by them, but because they didn't Alston was threatened by the US Department of Justice, and that ended up to sell to General Electric, their main rival, effectively taking over this huge French giant so it's, it's quite, you know, this is not just something other things, it is allies as well being concerned.

So I think BRICS can reach out to American allies not necessarily membership, but partnership.

Professor Glenn Diesen, International Relations, Oslo

It seems unlikely that America is just going to sit back and watch this unfold.

What kind of reactions may we see from the US with regard to this whole de-dollarization notion?

Well, I actually think that the USA is now not only deluded, but it has lost rationality. When all else fails, they go to war. They are moving in a direction where they're going to find themselves inevitably precipitating war. And I regret to say that, but that is what it seems to be happening.

That is the true significance of their outrageous policy, which is the movement of NATO to the eastern Ukraine, and that is going to fail.

And now, on top of that, they're now moving very rapidly to war in the Taiwan Strait, none of that is necessary.

But behind this, there is American exceptionalism, American arrogance, and they have abused their power for years.

I mean, how dare they smash up the Nord Stream pipeline and do that to their own allies. They're out of control. They're deluded, they are very dangerous.

It is not a happy situation and it looks to me that we could get something really nasty coming down. Because behind this, the Americans are aware now that they've lost control of the situation, and that the dollar is going down.

Professor Rodney Shakespeare, London

 

Source: Press TV

#US #China #EU #Dollar About 1 year
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This page is the English version of Almasirah Media Network website and it focuses on delivering all leading News and developments in Yemen, the Middle East and the world. In the eara of misinformation imposed by the main stream media in the Middle East and abroad, Almasirah Media Network strives towards promoting knowledge, principle values and justice, among all societies and cultures in the world

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