De-dollarization kicks into high gear
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.
By Pepe Escobar
April 27, 2023:
Information Clearing House --
Cradle" -- It is now
established that the US dollar’s status as a global reserve currency is eroding.
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
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
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
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
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
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.
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
The fall of a weaponized currency will end up smashing the whole
logic behind the US’ global network of 800+ military bases and their
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
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.
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