Tag Archives: NEO

The Global De-dollarization and the US Policies

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By Vladimir Odintsov

Source: New Eastern Outlook

In its quest for world domination, which the White House has been pursuing for more than a century, it relied on two primary tools: the US dollar and military might. In order to prevent Washington from establishing complete global hegemony, certain countries have recently been revising their positions towards these two elements by developing alternative military alliances and by breaking with their dependence on the US dollar.

Until the mid-twentieth century, the gold standard was the dominant monetary system, based on a fixed quantity of gold reserves stocked in national banks, which limited lending. At that time, the United States managed to become the owner of 70% of world’s gold reserves (excluding the USSR), therefore it pushed its weakened competitor, the UK, aside resulting to the creation of the Bretton Woods financial system in 1944. That’s how the US dollar became the predominant currency for international payments.

But a quarter century later this system had proven 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 began to exchange its black gold for 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, and 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 the control over oil trade 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 OPEC members, the global demand for US petrodollars hit an all time high. Petrodollars became the basis for 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%. However, 80% of international payments are made with 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 United States receive imported goods at extremely low prices. It provides the United States with significant financial profit, while high demand for dollars in the world allows the US government to refinance its debt at very low interest rates.

Under these circumstances, those hedging against the dollar are considered a direct threat to US economic hegemony and the high living standards of its citizens, and therefore political and business circles in Washington attempt by all means to resist this process. This resistance manifested itself in the overthrow and the brutal murder of Libyan leader Muammar Gaddafi, who decided to switch to Euros for 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 position within the international arena, US policies are increasingly faced with opposition. As a result, a growing number of countries are trying to move from the US dollar along with its dependence on the United States, by pursuing a policy of de-dollarization. Three states that are particularly active in this domain are China, Russia and Iran. These countries are trying to achieve de-dollarization 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-dollarization in spring of 2014, where the Ministry of Finance announced the plan to increase the share of ruble-denominated contracts and the consequent abandonment of dollar exchange. Last May at the Shanghai summit, the Russian delegation manged 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 rubles and yuans. In addition, in August 2014 a subsidiary company of Gazprom announced its readiness to accept payment for 80,000 tons of oil from Arctic deposits in rubles that were to be shipped to Europe, while the payment for the supply of oil through the “Eastern Siberia – Pacific Ocean” pipeline can be transferred in 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 recently taken by Russia are the real reasons behind the West’s sanction 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 be a total of 200 billion yuans.

China’s agreement with Qatar on direct currency swaps between the two countries are the equivalent of $ 5.7 billion and has cast a heavy blow to the petrodollar becoming the basis for the usage of the yuan in 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 the export of inflation, so one should expect other OPEC countries to sign agreements with China.

As for the Southeast Asia region, the establishment of a clearing center in Kuala Lumpur, which will promote greater use of the yuan locally, has become yet another major step that was made by China in the region. This event occurred in less than a month after the leading financial center of Asia – Singapore – became a center of the yuan exchange in Southeast Asia after establishing direct dialogue regarding the Singapore dollar and the yuan.

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 the National Bank with the de-dollarization of the national economy.

All across the world, the 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, Western newsmakers prefer to keep quiet about these facts, in particular, when inflation is skyrocketing in the United States. In recent months, the proportion of US Treasury bonds in the Russian foreign exchange reserves has been shrinking rapidly, being sold at a record pace, while this same tactic has been used by a number of different states.

To make matters worse for the US, many countries seek to export their gold reserves from the United States, which are deposited in vaults at the Federal Reserve Bank. After a scandal of 2013, when the US Federal Reserve refused to return German gold reserves to its respective owner, the Netherlands have joined the list of countries that are trying to retrieve their gold from the US. Should it be successful the list of countries seeking the return of gold reserves will double which may result in a major crisis for Washington.

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 deepening regional destabilization, which, according to the White House strategy, must lead to a considerable weakening of any potential US rivals. But there’s little to no hope for the United States to survive its own wave of chaos it has unleashed across the world.

Vladimir Odintsov, political commentator, exclusively for the online magazine “New Eastern Outlook”

A Gloomy Summary of the Outgoing Year

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By Vladimir Mashin

Source: New Eastern Outlook

The outgoing 2014 is destined, apparently, to go down in the annals of history as a special year given its share of iconic dates (note, for example, 100 years since WWI and 75 years since WWII, 25 years since the fall of the Berlin Wall), and due to abundance of events having worldwide significance.

Today the mankind is on the verge of epochal changes in its history, which will determine the course of the world development for decades to come. 2014 was a turning point in international relations, sharply denoting the main trend of our time – the reconfiguration of the entire world system, reformatting of global structures, the shift from a unipolar to a polycentric world in which decisions on key issues should be based on cooperation and agreements between states and their associations, relying on equal participation and consideration of the interests of the whole mankind. And the contours of this world are now visible.

On the surface, these processes take the form of a deep civilizational and geopolitical fault.

There is a weakening of the position of the United States and the West in general as the center of gravity of the world. Many European political scientists and world known academics speak explicitly about the decline of the Western civilization. European nations are homogeneous, and the continual rise of immigration in recent decades has in fact already changed the ethnic composition of the Old World. Europe found itself unable to integrate the Muslim minority, which is already more than 30 million people, but it is also unable, due to the declining population and its aging, to maintain the current standard of living and the rate of production growth without an influx of the young foreign workforce.

The European sub-ethnic group has entered the phase of obscuration and is on the verge of (according to the criteria of historical time) being absorbed by new, emerging and already prominently visible types (of sub-ethnic groups). This is the Asian sub-ethnic group – a synthesis of several types of cultures and religions. By 2020, experts anticipate a rise of the African sub-ethnic group. In the Western Hemisphere the Hispanic sub-ethnic group is being created on the basis of a huge diversity of ethnic groups and beliefs.

These processes are to a large extent objective: for example, the outgoing year marked the emergence of China as an economic leader (China surpassed the United States in its purchasing power parity in 2014).

If the current trend continues, the “third world”, which today by population surpasses the West five times, by 2050 will surpass it ten-fold.

The reformatting of international relations will further continue. China proposed the following definition for this process: construction of a new non-American world.

In 2014 the US administration, giving itself the status of a self-proclaimed “exceptional nation” entitled to lead world processes, in fact launched a war for the world domination using the NATO military force in conjunction with new methods of disinformation and media control. (This has already occurred in history three-quarters of a century ago, when Germany tried to become a superpower promoting the “Aryan supremacy” with a reliance on military force and Goebbels propaganda). This manifested itself in successive waves of the NATO expansion, contrary to assurances given at the highest level, and in violation of a solemn declaration on the establishment of an equal and indivisible security system in the Euro-Atlantic area. By this logic, the Anschluss of 2014 is a large-scale operation by the US State Department to subjugate the European Union, and then, with combined forces, to launch an attack on the East – stubborn, but temptingly rich with its natural resources and human potential.

The Ukrainian crisis was the result of the policy pursued by the United States and Western countries during the last quarter-century of controlled expansion of their geopolitical space, strengthening their own security at the expense of others. Washington took a line on the separation of Ukraine from Russia and dragging it into the NATO. With the support of the United States and some European countries an armed anti-constitutional coup was carried out in Ukraine. Radical nationalists put the country on the brink of a schism and pushed it into a civil war that has taken thousands of lives and led to the horrible devastation turning into a tragedy for hundreds of thousands of civilians.

In a way, the EU is solving its own problems by capturing Ukrainian markets in order to prevent the collapse of its own integration scheme which had failed the test posed by the protracted economic crisis, since Ukraine, with its 46 million people, black earth, metallurgy and engineering, can reanimate Europe going through a systemic crisis.

The Ukrainian crisis is not a simple episode – it reflects a deep civilizational fault, which has ripped across all continents. The already complex and tense situation is further aggravated, poisoned by provocative, negatively charged statements of certain Western officials.

The Western attempt to tear Ukraine away from Russia and drag it to its side has only further exacerbated the general systemic crisis of international relations.

There is a growing discrepancy between the global ambitions of the US administration and their actual capabilities. America remains the leading economic and military power; however, Washington has no real power, and especially no moral right to lecture everyone else on democracy and proper behavior. Normal people’s hair stands on end from what they see on TV and read in the detailed reports and presentations about the tortures by CIA “experts” of so-called terrorists whose guilt has not been proven. And that’s not to mention the evidence submitted by Snowden about the United States espionage around the world.

In 2014, the Western media coined the “hybrid war” term. It applies to, first of all, the United States and the American war strategy – it is truly hybrid and focused on the military defeat of the enemy, and simultaneously regime change in states pursuing policies objectionable to Washington. Financial and economic pressure is used as well as information attacks, increasing pressure by proxy along the borders of the respective state, and, of course, informational and ideological influence by relying on externally funded non-governmental organizations. Is this not what is called a war?

In 2014, the flares of the “Arab Spring”, seemingly so encouraging at the initial stages, proceeded to incinerate the Middle East which by its degree of ‘flashpoint’ tension – right now twelve different scale armed conflicts are blazing there – has moved to the forefront of world events. The main reason is the US military invasion of Iraq in 2003. The transition of control in Baghdad from the Sunnis who had been in power traditionally to the Shiite majority, with the direct complicity of the United States, has led to a breach in the balance of power in the Persian Gulf, which had existed for decades and was the basis for maintaining stability. This resultant bias towards the growing influence of Shiites and indirectly Iran immediately caused an explosion of discontent and fear within the Sunni minority in Iraq and Sunni communities as a whole in the region.

Open intervention by Western powers in the Iraqi drama, into the affairs of Libya and Syria, seriously complicates the situation and leads to the increased activity of Islamist extremists. At the core of the “Arab Spring” events was the struggle for social justice, for a way out of the vicious circle of underdevelopment and injustice – it was an arising national identity, the movement against Westernization, the desire for self-assertion and defining a decent place for Arabs in the international community. The US and some European countries have tried to turn to their advantage the rise of revolutionary action and in its wake the ascent of Islamic parties to the levers of power in a number of Arab countries. To do this, proven methods were used, such as incitement to religious and ethnic strife, the tacit support of extremist organizations. The activation of al-Qaeda, Boko Haram, the Taliban and the establishment of the Islamic Caliphate in Syria and Iraq is a direct result of the policy of the United States and other Western powers.

There is a real disintegration of state, social and civilizational structures going on in the Middle East region. ISIS terrorists have laid claim to their statehood status, and are beginning to develop the territories, setting up governmental authorities there, that are quasi-state, but, nonetheless, perform administrative functions. We cannot exclude the possibility that the actions of Islamist terrorists can also spread beyond the region.

Throughout 2014, new centers of the extremist activity in Africa (Libya, Mali, Sinai, Nigeria, Somalia, etc.) have appeared and the centers of radicalism in Afghanistan and Pakistan are expanding on the map.

Some Western leaders are still thinking in terms of the Cold War, not fully grasping the possible catastrophic consequences of current trends. But the development of some of them raises the question of the preservation of life on our planet: for example, the fact that nine states have 16,300 nuclear warheads at their disposal, which is enough to kill all life on the Earth many times over.

In the 20th century, the world repeatedly faced with the risk of weapons of mass destruction being used (UN official sources indicated thirteen such situations after 1962). In 2002, the world was in danger of the Indo-Pakistani War (note that Pakistan has the fastest growing nuclear program in the world). According to Al-Arabiya website of December 10, 2014, Israel offered to sell a nuclear bomb to the apartheid regime in South Africa. And the 2003 UN Security Council resolution number 687 declared as its goal “making the Middle East a zone free of weapons of mass destruction and missiles capable of delivering these weapons” (The Conference for the implementation of this task was scheduled for 2012, but is still delayed to this day).

The civilizational fault in today’s globalized, but very fragile world is becoming one of the forms of many contradictions. And, at their base is the question of values. Western powers are moving away from their once traditional postulates and are trying to return their former hegemony by force. This is a very painful process, because the West does not want to accept the fact of its diminishing influence and loss of ability to manage global processes. Now there is an increasingly growing tendency towards asserting the unconditional right of every civilization to choose, without pressure and pointers from the outside, a system of government, relevant government institutions, ethnic, ethical and cultural paradigms.

There is a genuine war going on between sound conservatism – for the preservation of ethical moral principles developed by the mankind over centuries of Homo sapiens’ evolvement, and rampant liberalism, the accession to power of instincts, which means degradation, offensive barbarism, leading eventually to the extinction of the human race. Our outstanding scientists – Vernadsky, Moiseev, Rauschenbach – warned us about this.

Russia consistently and firmly acts from its belief in the cultural and civilizational diversity of the modern world, where each state has the right to its own path of development and should be able to freely and independently determine its foreign policy in the framework of the goals and principles of the UN Charter. Attempts to impose a different value system, interference in the internal affairs of other countries are fraught with the danger of sliding towards chaos and unmanageability of international affairs.

Brzezinski’s famous political thriller – “The Grand Chessboard: American Primacy and Its Geostrategic Imperatives” – clearly defines the objectives of the chess game: to provide the US world domination euphemistically called “leadership”. Besides, it directly and bluntly asserts that in the twenty-first century “the chief geopolitical prize for America is Eurasia.”

And now, when the center of global processes has suddenly moved to Ukraine, where a real opposition front opened up, the United States and Western Europe have lined up openly against Russia.

Linking together the events in Ukraine, the Middle East, Southwest Asia and the Caucasus, it is possible to see strategic plans of globalists. The situation is extremely fluctuant, the balance vacillates, and there is a reason to believe that the historical time for containing Russia by the combined West has been lost.

Russia, with its unique natural resources, economic and, most importantly, human potential, a fusion of many peoples and cultures, is geographically and historically a unique independent world civilization, able to withstand the challenges of the coming epoch.

Russian President Vladimir Putin in his recent speech said that no one in history has ever been able to subjugate Russia to his will. It’s not even an assessment, but a statement of fact. Although such attempts have been made by the West for the sake of quenching its thirst for expanding the geopolitical space under its control.

The obvious fact now is that the vast majority of the states with which Russia continues its dialogue appreciate the independent role of the Russian Federation in the international arena.

American professor Samuel Huntington, a historian so often quoted recently while praising the power of the United States, nonetheless admitted that “the West conquered the world not by the superiority of its ideas, moral values or religion (few other civilizations were converted to it) but rather as a result of superiority in the use of organized violence.” In the West, this fact has been forgotten, but in the East – it will never be. The US invasion to Iraq, which in fact laid the groundwork for a chain of collisions – tragic for the peoples and endless to this day – national, ethnic, religious, economic, and social, at the same time has sucked the US deeply into the quagmire of a perpetual conflict with the Islamic world. Since the Roman Empire there has never been a situation where the tentacles of one nation’s claims stretched so far from its borders.

Ultimately, humanity can survive if it realizes that there is no real alternative to cooperation. We have so many global and regional issues, and the world is becoming so fragile that there is simply no other way out. (For example, Secretary of State Kerry, for nine long months made unilateral shuttle trips in an attempt to reach a peaceful political settlement between Israel and the Palestinians. But unilateral American efforts proved ineffective. Moreover, there has been a new outbreak of bloody clashes in Jerusalem, and tension in Israeli-Palestinian affairs is growing. Meanwhile, in another situation on the Syrian track, when Russia and the United States worked together with China, we were able to prevent a major war in the region, eliminate chemical weapons in Syria and convene the Geneva Conference).

Unfortunately, in today’s world the number of terrorist attacks and conflict situations is on the rise again. New dividing lines or the construction of new walls will not lead to the resolution of these problems.

To cope with these and other pending challenges, we can only work together on the basis of equal and mutually respectful cooperation.

Vladimir Mashin, Ph.D. in History, a political commentator, exclusively for the online magazine “New Eastern Outlook”.