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5/3/2023

De-Dollarization Kicks Into High Gear By: Pepe Escobar

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Picture
The US dollar is essential to US global power projection. But in 2022, the dollar share of reserve currencies slid 10 times faster than the average in the past two decades.
It is now established that the US dollar’s status as a global reserve currency is eroding. When corporate western media begins to attack the multipolar world’s de-dollarization narrative in earnest, you know the panic in Washington has fully set in.

The numbers: the dollar share of global reserves was 73 percent in 2001, 55 percent in 2021, and 47 percent in 2022. The key takeaway is that last year, the dollar share slid 10 times faster than the average in the past two decades.

Now it is no longer far-fetched to project a global dollar share of only 30 percent by the end of 2024, coinciding with the next US presidential election.

The defining moment – the actual trigger leading to the Fall of the Hegemon – was in February 2022, when over $300 billion in Russian foreign reserves were “frozen” by the collective west, and every other country on the planet began fearing for their own dollar stores abroad. There was some comic relief in this absurd move, though: the EU “can’t find” most of it.

Now cue to some current essential developments on the trading front.

Over 70 percent of trade deals between Russia and China now use either the ruble or the yuan, according to Russian Finance Minister Anton Siluanov.

Russia and India are trading oil in rupees. Less than four weeks ago, Banco Bocom BBM became the first Latin American bank to sign up as a direct participant of the Cross-Border Interbank Payment System (CIPS), which is the Chinese alternative to the western-led financial messaging system, SWIFT.

China’s CNOOC and France’s Total signed their first LNG trade in yuan via the Shanghai Petroleum and Natural Gas Exchange.

The deal between Russia and Bangladesh for the construction of the Rooppur nuclear plant will also bypass the US dollar. The first $300 million payment will be in yuan, but Russia will try to switch the next ones to rubles.

​Russia and Bolivia’s bilateral trade now accepts settlements in Boliviano. That’s extremely pertinent, considering Rosatom’s drive to be a crucial part of the development of lithium deposits in Bolivia.

Notably, many of those trades involve BRICS countries – and beyond. At least 19 nations have already requested to join BRICS+, the extended version of the 21st century’s major multipolar institution, whose founding members are Brazil, Russia, India, and China, then South Africa. The foreign ministers of the original five will start discussing the modalities of accession for new members in an upcoming June summit in Capetown.

BRICS, as it stands, is already more relevant to the global economy than the G7. The latest IMF figures reveal that the existing five BRICS nations will contribute 32.1 percent to global growth, compared to the G7’s 29.9 percent.

With Iran, Saudi Arabia, UAE, Turkey, Indonesia, and Mexico as possible new members, it is clear that key Global South players are starting to focus on the quintessential multilateral institution capable of smashing Western hegemony.

Russian President Vladimir Putin and Saudi Crown Prince Mohammad bin Salman (MbS) are working in total sync as Moscow’s partnership with Riyadh in OPEC+ metastasizes into BRICS+, in parallel to the deepening Russia-Iran strategic partnership.

MbS has willfully steered Saudi Arabia toward Eurasia’s new power trio Russia-Iran-China (RIC), away from the US. The new game in West Asia is the incoming BRIICSS – featuring, remarkably, both Iran and Saudi Arabia, whose historic reconciliation was brokered by yet another BRICS heavyweight, China.

Importantly, the evolving Iran-Saudi rapprochement also implies a much closer relationship between the Gulf Cooperation Council (GCC) as a whole and the Russia-China strategic partnership.

This will translate into complementary roles – in terms of trade connectivity and payment systems – for the International North-South Transportation Corridor (INSTC), linking Russia-Iran-India, and the China-Central-Asia-West Asia Economic Corridor, a key plank of Beijing’s ambitious, multi-trillion-dollar Belt and Road Initiative (BRI).

Today, only Brazil, with its President Luiz Inácio Lula Da Silva caged by the Americans and an erratic foreign policy, runs the risk of being relegated by the BRICS to the status of a secondary player.

Beyond BRIICSS

The de-dollarization train has been propelled to high-speed status by the accumulated effects of Covid-linked supply chain chaos and collective western sanctions on Russia.

The essential point is this: The BRICS have the commodities, and the G7 controls finance. The latter can’t grow commodities, but the former can create currencies – especially when their value is linked to tangibles like gold, oil, minerals, and other natural resources.'

Arguably the key swing factor is that pricing for oil and gold is already shifting to Russia, China, and West Asia.

In consequence, demand for dollar-denominated bonds is slowly but surely collapsing. Trillions of US dollars will inevitably start to go back home – shattering the dollar’s purchasing power and its exchange rate.

The fall of a weaponized currency will end up smashing the whole logic behind the US’ global network of 800+ military bases and their operating budgets.

Since mid-March, in Moscow, during the Economic Forum of the Commonwealth of Independent States (CSI) – one of the key inter-government organizations in Eurasia formed after the fall of the USSR – further integration is being actively discussed between the CSI, the Eurasia Economic Union (EAEU), the Shanghai Cooperation Organization (SCO) and the BRICS.

Eurasian organizations coordinating the counterpunch to the current western-led system, which tramples on international law, was not by accident one of the key themes of Russian Foreign Minister Sergey Lavrov’s speech at the UN earlier this week. It is also no accident that four member-states of the CIS – Russia and three Central Asian “stans” – founded the SCO along with China in June 2001.

The Davos/Great Reset globalist combo, for all practical purposes, declared war on oil immediately after the start of Russia’s Special Military Operation (SMO) in Ukraine. They threatened OPEC+ to isolate Russia – or else, but failed humiliatingly. OPEC+, effectively run by Moscow-Riyadh, now rules the global oil market.

Western elites are in a panic. Especially after Lula’s bombshell on Chinese soil during his visit with Xi Jinping, when he called on the whole Global South to replace the US dollar with their own currencies in international trade.

Christine Lagarde, president of the European Central Bank (ECB), recently told the New York-based Council of Foreign Relations – the heart of the US establishment matrix – that “geopolitical tensions between the US and China could raise inflation by 5 percent and threaten the dominance of the dollar and euro.”

The monolithic spin across western mainstream media is that BRICS economies trading normally with Russia “creates new problems for the rest of the world.” That’s utter nonsense: it only creates problems for the dollar and the euro.

The collective west is reaching Desperation Row – now timed with the astonishing announcement of a Biden-Harris US presidential ticket running again in 2024. This means that the US administration’s neo-con handlers will double down on their plan to unleash an industrial war against both Russia and China by 2025.

The petroyuan cometh

And that brings us back to de-dollarization and what will replace the hegemonic reserve currency of the world. Today, the GCC represents more than 25 percent of global oil exports (Saudi Arabia stands at 17 percent). More than 25 percent of China’s oil imports come from Riyadh. And China, predictably, is the GCC’s top trading partner.

The Shanghai Petroleum and Natural Gas Exchange went into business in March 2018. Any oil producer, from anywhere, can sell in Shanghai in yuan today. This means that the balance of power in the oil markets is already shifting from the US dollar to the yuan.

The catch is that most oil producers prefer not to keep large stashes of yuan; after all, everyone is still used to the petrodollar. Cue to Beijing linking crude futures in Shanghai to converting yuan into gold. And all that without touching China’s massive gold reserves.

This simple process happens via gold exchanges set up in Shanghai and Hong Kong. And not by accident, it lies at the heart of a new currency to bypass the dollar being discussed by the EAEU.

Dumping the dollar already has a mechanism: making full use of the Shanghai Energy Exchange’s future oil contracts in yuan. That’s the preferred path for the end of the petrodollar.

US global power projection is fundamentally based on controlling the global currency. Economic control underlies the Pentagon’s ‘Full Spectrum Dominance’ doctrine. Yet now, even military projection is in shambles, with Russia maintaining an unreachable advance on hypersonic missiles and Russia-China-Iran able to deploy an array of carrier-killers.
​
The Hegemon – clinging to a toxic cocktail of neoliberalism, sanction dementia, and widespread threats – is bleeding from within. De-dollarization is an inevitable response to system collapse. In a Sun Tzu 2.0 environment, it is no wonder the Russia-China strategic partnership exhibits no intention of interrupting the enemy when he is so busy defeating himself.

Author

​Pepe Escobar is a Brazilian journalist. He writes a column – The Roving Eye – for Asia Times Online, and works as an analyst for RT, Sputnik News, and Press TV. In addition, he previously worked for Al Jazeera.


This article was republished from Orinoco Tribune. 

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1 Comment
Charles Brown
5/7/2023 07:00:37 am

Mr Lavrov's New York Shuffle

Foreign Minister Sergey Lavrov's New York moment performed the diplomatic equivalent of bringing the house down.

by Pepe Escobar

https://strategic-culture.org (April 27 2023)

https://strategic-culture.org/wp-content/uploads/2023/04/photo1682600812-930x520.jpeg

(c) Photo: Public domain

Now picture a true gentleman, the foremost diplomat of these troubled times, in total command of the facts and endowed with a delightful sense of humor, taking a perilous walk on the wild side, to quote iconic Lou Reed, and emerging unscathed.

In fact, Foreign Minister Sergey Lavrov's New York moment - as in his two interventions before the UN Security Council on April 24 and 25 - performed the diplomatic equivalent of bringing the house down. At least the sections of the house inhabited by the Global South - or Global Majority.

April 24, during the 9308th meeting of the UNSC under the agenda "Maintenance of international peace and security, effective multilateralism through the protection of the principles of the UN Charter", was particularly relevant.

Lavrov stressed the symbolism of the meeting happening on the International Day of Multilateralism and Diplomacy for Peace, deemed quite significant by a 2018 UN General Assembly resolution.

In his preamble, Lavrov noted how




in two weeks, we will celebrate the 78th anniversary of Victory in World War Two. The defeat of Nazi Germany, to which my country made a decisive contribution with the support of the Allies, laid the foundation for the post-war international order. The UN Charter has become its legal basis, and our organization itself, embodying true multilateralism, has acquired a central, coordinating role in world politics.

Well, not really. And that brings us to Lavrov's true walk on the wild side, pinpointing how multilateralism has been trampled. Way beyond torrents of denigration by the usual suspects, and their attempt to submit him to an ice-cold shower in New York, or even confine him to the - geopolitical - freezer, he prevailed. Let's take a walk with him across the current wasteland. Mr Lavrov, you're the star of the show.

Our way or the highway

That "rules-based order":




The UN-centric system is going through a deep crisis. The root cause was the desire of some members of our organization to replace international law and the UN Charter with a kind of "rules-based order". No one saw these "rules", they were not the subject of transparent international negotiations. They are invented and used to counteract the natural processes of the formation of new independent centers of development, which are an objective manifestation of multilateralism. They are trying to contain them with illegitimate unilateral measures, including cutting off access to modern technologies and financial services, ousting them from supply chains, confiscating property, destroying competitors' critical infrastructure, and manipulating universally agreed norms and procedures. As a result, the fragmentation of world trade, the collapse of market mechanisms, the paralysis of the WTO [World Trade Organization] and the final, already without disguise, transformation of the IMF [International Monetary Fund] into a tool for achieving the goals of the United States and its allies, including military goals.


Destroying globalization:

In a desperate attempt to assert its dominance by punishing the disobedient, the United States went on to destroy globalization, which for many years was extolled as the highest good of all mankind, serving the multilateral system of the world economy. Washington and the rest of the West, which has submitted to it, use their "rules" whenever it is necessary to justify illegitimate steps against those who build their policies in accordance with international law and refuse to follow the selfish interests of the "golden billion". Dissenters are blacklisted according to the principle: "Whoever is not with us is against us". It has long been "inconvenient" for our Western colleagues to negotiate in universal formats, such as the UN. For the ideological justification of the policy of undermining multilateralism, the theme of the unity of "democracies" as opposed to "autocracies" has been introduced. In addition to the "summits for democracy", whose composition is determined by the self-proclaimed Hegemon, other "clubs of the elite" are being created, bypassing the UN.

"Garden" vs "Jungle":

Let's call a spade a spade: no one allowed the Western minority to speak on behalf of all mankind. It is necessary to behave decently and respect all members of the international community. By imposing a "rules-based order", its authors arrogantly reject a key principle of the UN Charter - the sovereign equality of states. The quintessence of the "exclusivity complex" was the "proud" statement by the head of EU diplomacy, Josep Borrell, that "Europe is the Garden of Eden, and the rest of the world is a jungle". I will also quote the Nato

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