The worldwide economic, cultural and geopolitical supremacy of the US-based global elite has been based not on military might, but rather on the special position of the Dollar which financed it and made it possible.
In very simplistic terms, the role of the Federal Reserve as creator of the biggest slice of global credit, coupled with practice of paying for oil in US dollars, has been central to US dominance for decades.
So any real change in these things will in turn automatically bring about change in the reality and distribution of global power.
Which is what makes two recent developments extremely important.
The first, is the fact that Vladimir Putin has given the green light for Russia to have its own cryptcurrency – the ‘CryptoRuble.
The move will propel Russia into the digital currency market and pit it against rival Bitcoin. Officials said that once it is launched in a few weeks time, all other cryptocurrencies will be banned in the country.
“If the owner cannot explain the reason for the appearance of his CryptoRubles, when converting them into Russian rubles, the tax for him will be 13 percent of the total.”
Russian officials said the Cryptoruble will be taxed and the tax will be applied to any appreciation in value that occurs.
The new currency will use Russian designed encryption in a bid for it to remain traceable.
And Mr Putin already has plans to make the currency international.
He said: “This mustn’t be a private currency, but the one, which is issued by the state, controlled by the state and enable to provide circulation of digital money in light of the digital economy.”
While most attention has focused on the impact of the new currency on Bitcoin, the real significance is in this point: It will be issued not by private banks but by the State. This is a truly radical departure (remember that the Federal Reserve and Bank of England are both in fact private banks) which is indicative of just how far Russia has come in breaking free of the Wall Street-dominated world financial system.
Parallel to this, de-dollarisation has become an urgent priority for Beijing, Moscow and Tehran. Eliminating the unlimited spending capacity of the Fed and the American economy means limiting US imperialist expansion and diminishing global destabilisation. Without the usual US military power to strengthen and impose the use of US dollars, China, Russia and Iran have paved the way for important shifts in the global order.
The US shot itself in the foot by accelerating this process through their removal of Iran from the SWIFT system (paving the way for the Chinese alternative, known as CIPS) and imposing sanctions on countries like Russia, Iran and Venezuela. This also accelerated China and Russia’s mining and acquisition of physical gold, which is in direct contrast to the situation in the US, with rumours of the FED no longer possessing any more gold. It is no secret that Beijing and Moscow are aiming for a gold-backed currency if and when the dollar should collapse. This has pushed unyielding countries to start operating in a non-dollar environment and through alternative financial systems.
A perfect example of how this is being achieved can be seen with Saudi Arabia, which has represented the crux of the petrodollar.
De-dollarise
Beijing has started putting strong pressure on Riyadh to start accepting yuan payments for oil instead of dollars, as are other countries such as the Russian Federation. For Riyadh, this is an almost existential issue. Riyadh is in a delicate situation, dedicated as it is to keeping the US dollar tied to oil, even though its main ally, the US, has pursued in the Middle East a contradictory strategy, as seen with the JCPOA agreement. Iran, the main regional enemy of Saudi Arabia, was able to have sanctions lifted (especially from Europeans countries) thanks to the JCPOA.
In addition, Iran was able to pursue a historic victory with its allies in Syria, gaining a preeminent role in the region and aspiring to become a regional powerhouse. Riyadh is obliged to obey the US, an ally that does not care about its fate in the region (Iran is increasingly influential in Iraq, Syria and Lebanon) and is even competing in the oil market. To make matters worse for Washington, China is Riyadh’s largest customer; and considering the agreements with Nigeria and Russia, Beijing can safely stop buying oil from Saudi Arabia should Riyadh continue to insist on receiving payment only in dollars. This would badly hurt the petrodollar, a perverse system that damages China and Russia most of all.
For China, Iran and Russia, as well as other countries, de-dollarisation has become a pressing issue. The number of countries that are beginning to see the benefits of a decentralised system, as opposed to the US dollar system, is increasing. Iran and India, but also Iran and Russia, have often traded hydrocarbons in exchange for primary goods, thereby bypassing American sanctions. Likewise, China’s economic power has allowed it to open a 10-billion-euro line of credit to Iran to circumvent recent sanctions.
Even the DPRK seems to use cryptocurrencies like bitcoin to buy oil from China and bypass US sanctions. Venezuela (with the largest oil reserves in the world) has just started a historic move to completely renounce selling oil in dollars, and has announced that it will start receiving money in a basket of currencies without US dollars. (This is not to mention the biggest change to have occurred in the last 40 years).
Beijing will buy gas and oil from Russia by paying in yuan, with Moscow being able to convert yuan into gold immediately thanks to the Shanghai International Energy Exchange. This gas-yuan-gold mechanism signals a revolutionary economic change through the progressive abandonment of the dollar in trade.
It is all part of the process of Russia, Iran and China forging a multipolar world order with the goal of peacefully containing the fallout from the collapsing American empire. This alternative world order is opening up a new geopolitical landscape for America’s allies and other countries, and making the position of Washington’s overseas puppet regimes – particularly liberal Europe – increasingly outdated and untenable.
