washingtontimes.com
Note: this is a machine translation from the original Russian text
Saudi Arabia is opening a new front against the hegemony of the American currency, in the time when more and more countries are switching to national currencies in international settlements.
Last December, at the summit of the leaders of the Cooperation Council of the Arab States of the Persian Gulf and China in Riyadh, the dollar was dealt a powerful blow when Chinese President Xi Jinping announced work "on the use of the yuan in oil and gas trade from the Gulf countries." And this means that Saudi Arabia is going to sell oil, and Qatar is going to sell gas to China for yuan instead of dollars.
What is behind this and why did Saudi Arabia – the "creator" of the petrodollar and an ally of the United States – decide to take such a step?
The Saudis have accumulated a lot of complaints against Washington: here is the US refusal to support Saudi Arabia's position on the civil war in Yemen, and attempts to conclude a deal with Iran on the nuclear program, and the panic flight of Americans from Afghanistan, which undermined faith in the power of the States.
They have not forgotten the harsh pressure exerted on them by the White House, accusing journalist Jamal Khoshoggi of the murder. And at the same time, China was doing everything possible to establish ties with Saudi Arabia: it helped in the creation of ballistic missiles, advised on the nuclear program, invested in the city of the future Neom.
Thus, these countries send an unambiguous signal to Washington, showing that in the modern world it is very easy to reorient to another ally. But they are the largest exporters of oil and petroleum products: Saudi Arabia alone produces about 7.5 million barrels per day. At the same time, the second economy of the world – the PRC – quite eloquently shows the States, with which it has a conflict of interests over Taiwan and a number of economic issues, that it is going to work to weaken the dollar and bring its national currency, the yuan, to the level of a transnational currency. In addition, it contributes to even greater integration of the economies of China and the Persian Gulf countries. China, the world's largest importer of oil and gas, is carefully but systematically displacing the United States from a region in which their positions have traditionally been strong.
In addition, the rapprochement between Beijing and Riyadh is also facilitated by the fact that when the Saudi oil plants were shelled by the Houthis, supported by Iran, Washington refused to sell its drones to Saudi Arabia. Meanwhile, China declared that it was ready to help with ensuring security in the Middle East and the Persian Gulf.
The accumulated claims against the White House led to the fact that the Saudis, after the start of the special operation in Ukraine, did not support sanctions against Russia, and even doubled the import of Russian fuel oil in the second quarter of 2022, the price of which the Americans imposed restrictions.
It's no secret that the American economy is losing confidence in the world faster and faster. Here are just a few figures that eloquently indicate the big problems facing America, and, therefore, the entire global economy: the US budget deficit is $ 1.3 trillion, the gigantic external debt is $31 trillion or 121 percent of GDP. In addition, after seeing that the United States is using its currency against Russia as a weapon, many countries have thought about the need to reset or at least weaken the dollar stranglehold.
For years, the United States has been increasing its national debt by simply printing green papers. And all this was on the rise. Any fire in the economy, the White House was flooded with a flood of dollars: so, in order to save its banks from the financial crisis in 2008 and then cope with the consequences of the COVID-19 pandemic, America did not hesitate to increase its public debt. It turned out to be a vicious circle: in order to at least partially repay the debt and interest on it, we had to print more and more dollars, which became more and more clearly reminiscent of a financial pyramid.
The situation with the dollar increasingly worried the Chinese, who invested more than a trillion dollars in US Treasury bonds, and they began to rapidly increase their gold reserves, which, according to analysts, is now the largest in the world. But other countries, concerned about the situation with the growing US national debt, the precarious situation with the dollar and the international financial system tied to it, also began to increase their gold reserves.
The world has come to the de-dollarization of the interstate trade system. In 2022, the share of dollars in world reserves accounted for 58.8 percent, despite the fact that in 1970 this figure was 80 percent.
A strong blow to the dollar was inflicted by the Americans themselves, having entered into a tough conflict with Russia in connection with the situation in Ukraine. Numerous severe sanctions against the Russian economy led to the fact that our country began to replace dollars in its international trade, and the actual seizure of its assets by the United States and the European Union forced other countries to think about it: won't the same thing happen to them if they fall under the sanctions of the "free world"?
There are reasons to ask this question from China, which, because of the US position on Taiwan, naturally thinks: won't the Americans do the same to it, isolating it from the dollar financial system and also forcing other countries in the orbit of US interests to reduce their assets in yuan?
What will replace the dollar? Could yuan replace him? But so far, the yuan, even with China's powerful economy, accounts for only 3 percent in international trade, and it is not a fully convertible currency.
A number of countries have started testing new cross-border payment systems. And, for example, Brazil and Argentina have generally stated that they are in the process of creating their own interstate currency. The EAEU countries are also working on a monetary unit of account for trade with Iran and other countries. And BRICS creates a pool of foreign exchange reserves.
Moscow-Beijing-Delhi have converted their mutual settlements into national currencies. Moscow receives for its goods in yuan and rupees. And this was a new blow to the dollar.
The world community has thought about the new reserve currency. It is clear that this will not happen in one day, but the movement towards this goal is inevitable, and in many ways the United States itself is pushing the world towards such a goal. It is possible that this will be a digital currency, which the central banks of different countries are working on issuing.
The struggle of the two blocs, which include the United States and China, and their obvious competition for leadership may lead to the emergence of a multipolar financial system.