Iran Weaponises The Strait of Hormuz Against The Petrodollar

 
The Petrodollar system has propped up the US economy for 50 years - picture: sbcgold.com

In spite of the very fragile ceasefire in the conflict between the USA / Israel alliance and Iran, the theocratic regime of the Muslim nation has opened a new front in the war by weaponising the Strait of Hormuz against The Petrodollar. 

Having made this strait a de facto toll gate at the entrance to the Persian Gulf, the Iranians are demanding that commercial vessels pay hefty transit fees in yuan or Bitcoin, according to multiple reports form news organisations in the middle east. As well as signalling a further deepening of Chinese-Iranian economic cooperation it brings a new dimension to Ian's asymmetric warfare. A huge proportion of the world's hydrocarbons supply passes through the Strait of Hormuz and significant reductions in shipping movements will trigger a global crisis.

China, Russia and Iran along with their BRICS partners have been threatening currency wars with the aim of replacing or at least offering a serious rival to the US Dollar as the primary global reserve curency. 

For years, Russia and the two Asian allies have accused Washington of using the dollar's dominance in global trade as a weapon, imposing sanctions and inflicting economic pain on rivals through the dollar-dominated financial system.

Now the ongoing war aound The Gulf - and lets not fool ouselves that the current ceasefire will turn into lasting peace - is forcing a fundamental reassessment of the petrodollar system that has underpinned US financial hegemony for decades. This informal arrangement, in which Gulf oil producers price crude in dollars and reinvest revenues in US assets, emerged as a cornerstone of American economic power in the 1970s and has held since then. But with the US-Israeli campaign against Iran now in its second month, the strait’s uncertain fate is raising urgent questions about whether that order can survive. 

Iran has so far managed to withstand the US-Israeli attack and inflict some damage on Israel and US allies around The Gulf, even after significant casualties aming its leadership, and has been able to assert strategic control over the Strait of Hormuz. Thus they have added a currency war to the shooting war.

This means Iran has been able to insist it will only accept  payment for passage through the Strait of Hormuz in Chinese Yuan or crypto currencies, . At least two vessels have so far settled the transit fees in Yuan via a Chinese maritime services company which is acting as an intermediary and handling payment to the Iranian authorities.

This is a significant even though analysts debate if it can ultimately become decisive in the longer run. The de-dollarisation rhetoric has emanated from China, Russia, Iran and their BRICS partners for years, without materialising into meaningful change. Now, if one of the vital choke points through which one-fifth of the world's petroleum passes becomes conditional on currency denomination that is meaningful. 

The practical consequence, even if it was partially adopted, would be a bifurcated global oil market. One where yuan-denominated barrels flowing through Hormuz for payment in China's currency in the Chinese payment system CIPS ( Cross-Border Interbank Payment System) and dollar-denominated barrels are rerouted at a high additional cost and time for those who are not using Chinese currency. 

Further, Iran is employing a broader mechanism employing informal transactions in cryptocurrency to effectively circumvent the US financial system. Wang Yiwei, director of the Institute of International Affairs at Renmin University, said that the yuan-for-passage is more likely to gain international acceptance than a complete blockade. 

Of far more concern to banks and businesses in the west if oil shipments through the strait are to be transacted in currencies other than the dollar, particularly the Chinese yuan and the Iranian rial the  Gulf states, driven by security concerns, begin to distance themselves from the dollar-based energy trade, the ripple effects could be profound: reduced demand for the greenback, waning appetite for US Treasury debt, and a gradual erosion of the dollar’s reserve currency status. 

FROM THE ARCHIVE: 

 

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The Shooting Wars and the Currency Wars

 

As the shooting wars grind on in Ukrsine, Gaza, Syria, The Red Sea, Sudan and e;sewhere, the main theatre of war is now shifting from the battlefields to the financial centres of the world.

Many of you will have been reading in mainstream media about de-dollarization recently, and may have been surprised to learn of the various attempts and strategies being deploted to facilitate trade among the various countries' currencies without using the US dollar, which has been the main reserve currency for intrnational trade since World War Two. You may be even more surprised to learn that Boggart Blog and its various offshoots have been writing about de-dollarisation and currency wars for over ten years. Most international trade is still conducted in dollars, which means the buyer has to purchase dollars in order to make the settle the transaction, and that often means the sale is settled at a U.S.-controlled bank ... a situation which many nations feel Washington has exploited unfairly to preserve its global economic hegemony.

The established world order has come to the dangerous state it is curreently in, because the U.S. exerts uses its position of economic dominance via he dollar to exert political influence. To put it bluntly the U.S.A. has "weaponised" finance. Avoiding the U.S.ninvolvement in cross border transactions is complex and there's a lot of resistance to change particularly from US banks.

There are a number of new, rapidly developing tools and organizations to do this job, and more importantly there are new players with major resources and even bigger motivations that have committed themselves to make non-dollar-denominated trade easy, reliable and fast. And soon. For example, next time Israel attacks Hezbollah Lebanon, Iran could weaoponise the Strait of Hormuz to trigger a global economic and energy crisis.

Russia and China, two of the nations, along with Iran, that started the move to de dollarise world trade over a decade ago are leading, their BRICs trading bloc is likely to be the first major beneficiary of the new trading tools, and now Saudi Arabia has weighed in: SA has let the "price all oil sales in dollars" deal with the U.S. lapse.

This has now been reported in the U.S. and European mainstream media press , with all the appropriate consternation over likely impacts.

M.K Bhadrakumar (IndiaPunchline.com) has a new article out that covers the waterfront - the technologies, the big players, the Saudis, and the impact on the U.S. of de-dollarization. If you're new to the subject, this is a decent place to start.

As many critics have pointed out, everyone knows _why_ other countries are motivated to de-dollarize. The question is "what's the alternative?".

Alternatives get built when the motivation, resources, and capability thresholds are met. They've been met.

If the Saudis actually do start pricing in currencies other than dollars (remember, letting the deal lapse, and actually pricing their oil in different currencies are two separate events), and if China and Russia really do build the multi-currency trading system for BRICS, and remember they have already started the process by creating the 'petroyuan' to rival the global standard 'ptrodollar vehicle for ttrading oil futuresd, this is certin to bring to an end the "exorbitant privilege" of the U.S. as issuer or the global reserve currency.

And that will be a major, major change in the U.S.' situation.

For further reading, search "mBridge" and "BRICs". That'll provide much food for thought.

 

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BRICS Centralized Clearing To End Dollar Dominance

The status of vthe USDollar as global reserve currency has beeen under threat for some years now, initially because of the way the US government abused its position as issuer of the reserve currency to force unequal terms and conditions on its trading partners, and latterly also because of US militarism, meddling in the political affairs of sovereign nations.

Recently, as we have been  reporting regularly in our Cunnency Wars feature page, China has set up the Petroyuan, an alternative to the Petrodollar which since an agreement between the USA and Saudi Arabia has been the only vehicle for settling international oil trades, and Russia has set up a rival to US owned SWIFT, the electronic, inter - currency system for settling cross - border transactions.

 China and Russia have also been increasing their geopolitical influence in South East Asia, Africa and South America and having established the BRICS trading bloc in partnership with Brazil, India and South Africa. Since the election victory of the imperialistic Democrat Party in the US 2020 electionmany other nations have submitted applications to join BRICS.

With the massive populations of China, India and Brazil , and the vast reserves of natural resources in Russia, Brazil and South Africa BRICS is already a formidable bloc economically and should the bloc launch a coordinated bid to oust the US dollar as reserve currency it will be difficult for an already weakened US / NATO blog to hold the line.

If BRICS were to agreed on how to centralize financial clearing, then they’ve already agreed on their universal settlement medium. That is Gold

Last Friday (2 June) ZeroHedge, responding to latest moves in the far east in a story titled Massive: Gold Closer to Centralized Clearing in BRICS Solution to SWIFT commented

This is huge on many levels. We will gleefully break it down best we can in our Weekly post Sunday. It lies directly on the path of “things to do” when building an alternative to SWIFT.

As promised. This podcast unpacks why the BRICS nations are agreeing on Centralized Clearing as a solution to counterparty risk necessitates Gold as the medium of exchange in *all* future international trade.

With the USA always teetering on the brink of insolvency while American society disintegrates around the bewildered geriatric in The White House while Biden's loonytoons administration continues to focus on transgender and gay pride issues, and the EU suffocating under a blanket of bureucracy, the timing for setting up a rival reserve currency could not be better. 

MORE posts on Currency Wars

 

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The Petrodollar is Dead to China

We Boggart Bloggers have written extensively about the efforts of China and Russia to either float a new global reserve currency, backed by gold, to replace the US$ or at least serve as a rival and an alternative to the dollar. Now, post pandemic, post Great reset, and with war in Ukraine still threatening to plunge the world into its biggest economic crisis ever. The signs were there ten years ago, but now we see it happening. Saudi Arabia has effectively killed the petrodollar by agreeing with China, the world's biggest importer of oil and petroleum products, to accept payment for Saudi oil in Chinese yuan. 

For more history on the dedollarization of world trad go to out Currency Wars page.

For a summary of how things stand now read the embedded article below.

 

Authored by Goldfix;

In 2017 while researching option marketmaking business ideas in Energy overseas, much was learned about the growing rift between the BRICS and the G7 as it manifested even back then.

Making Markets in NYMEX Oil and Natural Gas Options...

Where’s Waldo (VBL)?

One byproduct of this explorative experience was seeing1 how global commodity supply/demand pricing dynamics could handicap global trade trends.Regarding Gold, this is what we learned back then:

Since 2013 global players in Gold (and Oil) had been slowly opening up shop in the East and closing it in the West. Demand had been moving eastward, and related businesses followed that demand.

Over some years, a slow but unmistakable drift from the US to China was observed in Gold businesses. Between 2013 and 2017, gold demand in Asia caused a great migration eastward of vaults, physical and financial trading operations, and finally exchanges themselves to open shop there. Why? Because that is where the demand was.

What was also learned and observed was a growing but inextricable tie forming between Oil, Gold, and the Chinese Yuan. That learning gelled during a conversation between a physical oil trader and this author.

The physical oil trader (paraphrased) said this in 2017:

A few months ago, Russia did some Oil deals with China amounting to about $3BB testing Blockchain connectivity. The deals somehow were done through Seychelles and called for settlement in Yuan with a kind-of embedded call [EDIT- his words not mine-VBL] to convert to Gold on demand. So basically Russia and China did a Gold-for-Oil trade and used Blockchain to verify the Gold in Shanghai for custodial chain purposes.

We had been discussing blockchain potential in Oil and Gold clearing trades. But, long story short, the whole mechanism for Gold remonetization worldwide was witnessed in a single mind-blowing moment. Since then this author has written and spoken (NY Mines and Money) on the obsession many times to anyone in earshot.

Golden Yuan 2017 Articles…

One article remains as a coming-out moment for this development from September 2017:

What I saw as a test of Blockchain between Russia and China was much further along than originally seen.Deals are being done… And the info  I got was that the gold paid to Russia never left the Chinese vault. 

Source: Golden Yuan: Crude Backed By Gold is Here

  

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US-Saudi Petrodollar Deal Breaking Down as Russia Grabs Upper Hand

13 April 2023

The recently minted Saudi-Russia-China oil alliance, which paves the way for international oil trades to be settled in a currency of the vendors choice effectively spells the end of the 'Petrodollar' system, an agreement concluded in the early 1970s between Saudi Arabia, as the world's largest oil exporter, and the USA, issuer since the Bretton Woods agreement of 1945, of the main global reserve currency for international trade.

This development has the potential to cause all kinds of trouble for the US economy, which has been propped up for decades by the US$ status as reserve currency, because it enabled the USA to dictate to nations and organisations needing to buy dollars to settle their trades, what price the USA would pay for its imports and how much its trading partners would pay for US exports.. At the OPEC+ (Organisation of Petroleum Exporting Cpuntries,) meeting earlier this month the decision by member states to cut crude output, for the second time since President Joe (Where am I, what's going on,) Biden flew to Saudi Arabia last summer to plead with Crown Prince Mohammed bin Salman to increase oil output may be just the start of the oil producers revenge, after they have watched advanced nations try and fail to find alternative ways to power their economies which would have destroyed the oil producers revenue streams.

The April 2 announcement caused oil prices to spike by about $5 a barrel. OPEC’s projections on future demand show that the cuts will widen the supply shortfall later this year as futures contracts made before sanctions were applied to Russian oil exports expire. That means oil prices will go up further, with the usual knock on effects on food and manufactured goods, inflation will rise even faster, and recession risks become greater because consumers spending more on energy  and food will have less to spend on consumer goods. Worse, in spite of sanctions Russia is still managing to sell its oil via middle men in China, Iran, India, Pakistan and the Gulf States so Russian President Vladimir Putin, meanwhile, gets a bigger war-chest to fund his attack on Ukraine.

But what does the OPEC+ move tell us about the likely future for oil prices.

In a world of shifting geopolitical alliances, Saudi Arabia is breaking away from Washington’s orbit and cosying up to China and Russia which in addition to its detente with the traditional enemy and rival regional power Iran, is very bad news for businesses and citizens in the developed nations. The Saudis set oil production levels in coordination with Russia. When they wanted to ease tensions with regional rival Iran, they turned to China to broker a deal with the US left out of the loop. Western influence over the oil cartel, in other words, is no longer absolute and appears to be waning fast.

But while The White House  expects OPEC+ members  to dance to Washington's tune, all have their own priorities, from Saudi Crown Prince Mohammed Bin Salman’s ambitious plans to reinvent his economy, to Putin’s war. Any extra revenue they get from charging more for oil will help and also serve China's long term aim of replacing the US$ as reserve currency with a trading system of its own creation.

Asked about concerns that OPEC+ has twice cut production since Biden's visit to Saudi Arabia, a State Department spokesperson said the administration is focused on controlling domestic energy prices and ensuring US energy security, adding that the US views production cuts as inadvisable given ongoing market volatility.

Meanwhile, the threat of competition from US shale fields, a deterrent to price hikes in the past, has receded. And while there’s a global effort to reduce fossil-fuel use — and higher prices will accelerate that effort — the dash to drill in the last year shows that the zero-carbon economy remains in the realm of wishful thinking than an achievable target in the short term.

However for the global economy, lower oil supply and higher prices are doubly bad news. The major exporters are the big winners, of course. For importers, like most European countries, more expensive energy is a double blow — dragging on growth even as inflation rises. Bloomberg Economics’ SHOK model predicts that for every $5 increase in oil prices, US inflation will rise by 0.2 percentage point, which  at a time when the Federal Reserve is struggling to bring prices under control is not welcome.

There are three key reasons why more such shocks may be in store: The geopolitical shift, the maturing of shale, and the Saudi spending splurge.

For decades, the US-Saudi “oil for security” pact has been the foundation of of the energy market.  Symbolized by the 1945 meeting between President Franklin D. Roosevelt and King Abdul Aziz Ibn Saud, aboard a US cruiser in the Suez Canal, the deal to make US$ the reserve currency later gave the US access to Saudi oil in exchange for guaranteeing the kingdom’s security.

But the pact is no longer what it once was: 

In 2018, Washington Post columnist and Saudi dissident Jamal Khashoggi was assassinated at the Saudi consulate in Istanbul.

In 2019, Joe Biden — then a presidential candidate — threatened to turn Saudi Arabia into a pariah state and halt arms sales.

In 2021, early in the Biden presidency, the US government published an intelligence report assessing that Crown Prince Mohammed, the kingdom’s de facto ruler, was responsible for the Khashoggi assassination.

In October 2022, OPEC+ lowered oil production by 2 million barrels a day — less than three months after Biden flew to Riyadh seeking an increase. The White House blasted the move as “short-sighted.”

Last month, Saudi Arabia and Iran agreed to restore diplomatic ties in a deal brokered by China and signed in Beijing. The Saudi government has also agreed to join the Shanghai Cooperation Organization – a group with China and Russia at the helm, and seen as a rival to Western institutions,  as a “dialogue member”.

"The Saudis are looking for an aggressive hedge," said Jon Alterman, director of the Middle East Program at the Center for Strategic and International Studies, a Washington-based think tank. "Given what the Saudis see as a radically unpredictable US policy, they think it's irresponsible not to look for a hedge. And by radically unpredictable, you're looking at a US policy that changed sharply between Obama and Trump and Biden."

In the aftermath of the April 2 move, Saudi officials said it was motivated by national priorities rather than any diplomatic agenda.

“OPEC+ has succeeded now and in the past in stabilizing oil markets, and contrary to claims by Western and industrial states this has nothing to do with politics,” former Saudi oil ministry adviser Mohammad Al Sabban said, according to Asharq Al-Awsat newspaper

 

The Truth About Coal And The Lies Of The Elite
So much for all the COP 26 banter late last year. Let me remind you. The elites all flew in on their private jets and promptly told us we’re all (royal we) getting off fossil fuels and killing coal.So how’s that turning out? The usage of coal is now at record highs:

If You Look At How Fast Global Trade Is Unravelling, You'll Get Dizzy
Governments constantly make positive noises about the health of their economies although most people who are in work have felt no improvement on the position they were in after the crash of 2008. Wagest are stangnant, employment has reduced somewhat (see below) and while the banks are printing money and the super rich are widening the gap between themselves and ordinary people faster than ever, the real situation is frightening.

Obama's Posturing As Leader Of The Battle Against Climate Change Exposed At home in the USA, where his word does still carry some weight, if only by virtue of the fact that he is still their elected leader, after seven years of waffling (and somewhat under the radar but that is coincidence), Obama at long last rejected the proposed Keystone XL pipeline which would have transported over 800,000 barrels a day of low grade (dirty) oil ...

Another Oil Exporting State Surrenders: Last Nail In Petrodollar's Coffin
While record mainland deficits covered by the petroleum sector is nothing new in Norwegian budget history, the 2016 budget did raise some eyebrows. The net inflow to the Norwegian Treasury from North Sea oil will be lower than the required amount to cover the deficit. This has never happened before and is testimony of the sea change occurring in the world of petrodollar recycling.

Fracking Truth: Mainstream media reports only corporate lies and government propaganda.
The government, energy companies and their poodles in the science academy have been trying to sell us fracking as the cheapish, cleanish but ultimately more reliable than wind and mirrors way of meeting future energy needs. Nobody believed them of course, only a complete idiot would believe that nonsense. Unfortunately the idiots believed themselves.

Is Russia Selling Its Oil To The World Through An Obscure Egyptian Port?
As this blog predicted when NATO and EU member states shot themselves in the foot by reacting to Russia's invasion of Ukraine with sanctions that prevented Russia from selling oil, gas and vital raw materials to the countries that needed them most, the NATO and EU member states, the Russians have had no problems finding alternative customers for their gas and oil and no problem getting oil into the world's commodity markets through the back door.

British Lawmakers Demand Inquiry Into Saudi / US War Crime In Yemen Members of the British Parliament from both sides of the house have called on the government to demand an international inquiry into alledged Saudi Arabian war crimes committed in iuts ongoing war with neighbouring Yemen. Continue reading 

The Source Of Islamic Radicalism Is biggest US Ally In The Middle East
From the fall of The Ottoman Empire after World War 1, throughout the rest of the 20th century into 21st, the evolution of Islamic culture has not been rational. Rather than moving forwards with Europe and North America, the main Islamic nations seem to have slid backwards toward medievalism. If we accept that social selection (or social conditioning) plays the same role in the evolution of societies as natural selection plays in the biological sciences:

Over 4000 Civilians Have Died In Forgotten War. As attention has focused on Syria ans then on the efforts of the Obama administration, in its dying months, to avenge the defeat of the anointed successor Hillary Clinton and discredit the election victor and President - elect Donald Trump, and simultaneously demonize Russia and President Putin Black Belgians Refute ‘Poverty, Discrimination’ As Causes Of Arab Terror - It's A Cultural Thing “You know, we hear a lot about how the Arabs are a fragile community that suffers, but we, ‘les blackies,’ are discriminated against, too, and we hurt nobody”, Nico Atoba, an African Christian living in Brussels told the National Post for a feature the Canadian newspaper was assembling. USA Extends Drone war To Africa So why we wonder is the USA taking its drone war against the third world into deepest, sub Sahran Africa? There cannot be any reason for it, the cited aim of neutralising Boko Haram is not valid because boko Haram are not a standing army but a guerilla force that strikes and then melts away into the civilian population.

Turkey and Sadui Arabia Already Have Troops Fighting In Syria Even mainstream media has been forced to concede that Turkey and Saudi Arabia are apparently ready to send ground forces to the Syrian battlefield as Assad's forces, backed by Russian air power and Iranian elite troops but continue to grind down ISIS forces equipped with US made arms and ammunition via Saudi Arabia and funded by Turkey's illegal oil trade with the terrorist group. Humanitarian Crisis Unfolds in Yemen, As US-EU-NATO backed Saudi war destoys another nation.

With the attention of the word fixed on the totally misrepresented humanitarian crisis surrounding the evacuation of Aleppo in Syria (it is Obama’s beloved moderate rebels who are attacking convoys of refugees, why would Assad’s troops attack their own convoys FFS), another humanitarian crisis has been building in Yemen. In a small nation crippled by … Continue reading 

The Truth Of What Is Going On In Syria The public in those nations involved directly or peripherally in the Syrian war are not being told the truth of what is going on in that country, and have not been told the truth since hostilities began in 1011. We have tried to report this many times on our main news site The Daily Stirrer

The Truth About Coal And The Lies Of The Elite
So much for all the COP 26 banter late last year. Let me remind you. The elites all flew in on their private jets and promptly told us we’re all (royal we) getting off fossil fuels and killing coal.So how’s that turning out? The usage of coal is now at record highs:

If You Look At How Fast Global Trade Is Unravelling, You'll Get Dizzy
Governments constantly make positive noises about the health of their economies although most people who are in work have felt no improvement on the position they were in after the crash of 2008. Wagest are stangnant, employment has reduced somewhat (see below) and while the banks are printing money and the super rich are widening the gap between themselves and ordinary people faster than ever, the real situation is frightening.

Obama's Posturing As Leader Of The Battle Against Climate Change Exposed At home in the USA, where his word does still carry some weight, if only by virtue of the fact that he is still their elected leader, after seven years of waffling (and somewhat under the radar but that is coincidence), Obama at long last rejected the proposed Keystone XL pipeline which would have transported over 800,000 barrels a day of low grade (dirty) oil ...

Another Oil Exporting State Surrenders: Last Nail In Petrodollar's Coffin
While record mainland deficits covered by the petroleum sector is nothing new in Norwegian budget history, the 2016 budget did raise some eyebrows. The net inflow to the Norwegian Treasury from North Sea oil will be lower than the required amount to cover the deficit. This has never happened before and is testimony of the sea change occurring in the world of petrodollar recycling.

Fracking Truth: Mainstream media reports only corporate lies and government propaganda.
The government, energy companies and their poodles in the science academy have been trying to sell us fracking as the cheapish, cleanish but ultimately more reliable than wind and mirrors way of meeting future energy needs. Nobody believed them of course, only a complete idiot would believe that nonsense. Unfortunately the idiots believed themselves.

[ Currency wars ] ... [ Petrodollar collapse ] ... [ oil, saudi arabia,qatar ] ... [ new world order ] ... [ Net Zero ]

India Takes A Leading Role In De-Dollarization

 

19 March 2023

Reuters reported last Wednesday that “India’s Oil Deals With Russia Dent Decades-Old Dollar Dominance”, which highlighted the growing tendency of those and many other nations using national or or third-party currencies to settle cross border trades thus sidelining the US$ which has dominated international trade since the 1970s. 

The dollar was adopted as the primary reserve currency for international trade in 1945, and the petrodollar was established became the medium for oil trades as a result of an agreement in 1971 between the USA and Saudi Arabia.

The growing use of national or third part currencies is something significant that everyone involved i  international trade or finance should pay attention to. We reported in our currency wars feature soon after Russia’s (ahem,) special military operation began that the West’s sanctions, imposed with the aim of destroying the Russian economy, “could erode the dollar’s dominance”. Naturally we were written off as crazy conspiracy theorists for holding such an opinion but ...

Lo and behold, that’s precisely what happened, with India of all countries accelerating de-dollarization through its non-dollar-denominated energy deals with Russia. 

Since India decided that supporting US / EU sanctions was not in its best interests, Russia has become India’s largest supplier of oil and over the past year has provided a whopping 35% of that country’s needs. India is also the world’s third-largest oil importer and fifth-largest economy. having recently overtaken the UK to occupy that spot. Their new energy ties, and particularly the growing de-dollarization dimension of their deals thus must have effects all around the world.

This refusal to support sanctions or openly demonstrate support for Ukraine does not signify any anti-American sentiment on India’s part since everything is purely motivated by the pursuit of that country’s objective national interests. Delhi had no choice but to distance itself from dollar-denominated energy trades  with Moscow due to Washington’s illegal sanctions on nations that trade with Russia. Its leaders were not going to plunge the world’s most populous country into an economic crisis just to please the Dementia Joe and his whacko administration by eschewing the import of discounted oil from Russia or sacrificing the revenue earned from its exports to Russia.

By defying American pressure upon it to unilaterally concede on those aforementioned objective national interests, India’s economy ended up growing at twice the pace of China’s, which contributed to catapulting that country to the forefront of the  global systemic transition to multipolarity

. India is now well placed to establish itself as the de facto leader the Global Global South in helping fellow developing countries balance between U.S. hegemony  and the  Sino-Russo Entente. However, in spite of claims made by Dementia Joe, Boris Johnson when he was Prme Minister, Emmanuel Macron and leaders of other NATO / EU member states that the world was closing ranks around Ukraine, emboldened by the stances of Russia and China (which has its own little contretemps with the Biden administration over Taiwan, while the EU's 27 member states, the USA, UK, Canada, Australia, Japan and New Zealand (for what its worth), are supporting Zelensky's futile war, the rest of the world seems happy with a 'business as usual' relationship with Russia.

Had India complied with the US’ illegal sanctions, then the New York Times wouldn’t have recently admitted that their sanctions failed as the West’s efforts to “isolate” Russia politically also had. It was largely due to India's truly independent grand strategy that this latest phase of the New Cold War

 didn’t end in the collapse of Russia's economy and the restoration of unipolarity, which would have been detrimental to India and every other developing country’s interests while you could have safely bet your life savings that the Americans would have taken advantage of the loss of Russian oil and gas exports to EU member states to well and truly shaft the major European economies.

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The Business of War: Defense Sales Keep Economies Of Manufacturing Nations Afloat
Tens of thousands have been killed and millions displaced due to 'humanitarian' interventions by the developed nations (led by the USA, France and the UKm the FUKUS axis) in the domestic politics of third world nation. Usually the interventions support rebel groups who if they came to power would be far more oppressive and brutal regime than the one they replaced.

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Dollar Dominance Will Be The Biggest Casualty Of War In Ukraine

While the mainstream news cycle focuses on Ukraine and speculation about when the strategically significant city of Bakhmut, beseiged by the Russian army for months now, will actually fall, with Ukrainian defenders vowing to fight to the last man but gradually being forced into a smaller and smaller area of the city centre, in the more significant economic war Russia, China and Iran, backed by India, Saudi Arabia and many other African and South East Asian nations are pushing ahead with moved to dump the US dollar as the global reserve currency and thus plunge the global economy into chaos and shift the balance of geopolitical power from west to east.

This is not a new concern for western governments, as this blog and our other publications have reported in Currency Wars page, but the diversionary proxy war with Russia being fought by the unfortunate Ukrainians shows leadersd on the USA and their NATO allies don't have a clue how to deal with the economic threat.

It is beyond dispute that the U.S. led the world for most of the 20th century but America's arrogant abuse of its position as the world's leading military power and economic hegemon through its being issuer of the global reserve currency has mad many enemies.

"China is now proposing to replace the U.S. and put itself at the centre of a dominant Asian alliance in the 21st century, but on a much larger scale. It is already building an infrastructure, the Belt and Road Initiative (BRI) which will serve most of the 5 billion people in Eurasia, over 60% of the global population.

Avoiding America's error of trying to dominate and exploit every nation it had a trade deal with, China has ensured that all of the 100+ nations seeking to join the BRI will benefit by their participation, whether building themselves up domestically, or extending their reach internationally.

Chinese propaganda promoting BRI claims, "It is the largest, most compelling, geographically extensive, nationally inclusive, mutually enriching economic enterprise in the history of the world. The U.S. is not part of it...

"...Since the Bretton Woods Agreement of 1944, the global economy has used the dollar as the primary currency of international trade. And This has given the U.S. an exorbitant privilege in all international trades." 

Then in the 1970s the "Petrodollar"was created via a 6-page agreement signed by US President Richard (Tricky Dicky) Nixon and Saudi Prince Fand Ibn Abdel Aziz. Under the terms of the treaty the US agreed to provide military supplies and equipment to the KSA, in return Saudi Arabia , then by far the biggest exporter of crude oil, the world's most traded commodity by value, agreed to exclusively use US dollars for oil trades and futures contracts. This enabled America to control the world trade in oil, the only constraint on US malfeasance being the threat of the Saudis halting the pumps if anything displeased them, a power they have used quite ruthlessly at times.

In effect the US weaponisation of the dollar's reserve currency status has meant that it can essentially write an unlimited stream of dodgy cheques to the world, because countries need dollars to be able to conduct international commerce. The U.S. “sells” them dollars by issuing Treasury debt, which is a universally fungible international medium of exchange.

One of the consequences of this arrangement is that it has allowed the U.S. to spend far beyond its means, running up $32 trillion of debt since 1980, when its national debt stood at a mere $1 trillion. As US bonds carry an interest rate of 3% this means American taxpayers must find $96 billion per year simply to pay the interest due on this debt.

The U.S. uses the fiat money it creates to, among other things, fund the obscene cost of its 800 military bases around the world, which it uses to do things like destroy Serbia, Libya, Iraq, Afghanistan, Syria, Somalia and a host of lesser predations on other countries. All the world sees this and is repulsed by it.

Dollar hegemony has also enabled the U.S. to effect or attempt regime change  in Honduras, Venezuela, Peru, Bolivia, Kazakhstan, Pakistan, Myanmar, Belarus, Egypt, Syria, and, since the CIA egineered coup of 2014, Ukraine, among others. And these are just those in the past two decades.

The same dollar hegemony underwrote U.S. imperialist activity in the latter part of the 20th century against Iran, the Dominican Republic, Guatemala, Vietnam, Nicaragua, Cuba, Chile, Congo, Brazil, Indonesia, and dozens of other countries.

Again, the rest of the world sees this. U.S. citizens, brainwashed by talk of American Exceptionalism and gung ho patriotism and diverted by the decadent LGBT and drug cultures that play such a big role in American society, are blinded to the reality of their government's doomed ambitions to establish global dominance.

"...The U.S.’ military failure agains Russia in Ukrainehas advertised, once again (after Iraq and Afghanistan), the relative impotence of U.S. military solutions. Yes, it can still destroy small, defenseless countries like Serbia, Libya, Afghanistan and Iraq.

"But against a peer competitor that has chosen to stand up to it, the U.S. has shown a pathetic lack of testicular fortitude. The proxy war with Russia that Washington has so long desired was meant to result in a military and economic collapse of the regime in Moscow, as faced with Ukranian forces trained, amed and funded by the USA and its NATO allies since 2014 encountered unexpectedly fierce resistance while economic sanctions caused a rapid and total collapse of the Russian economy.

However since the turn of the century the world has changed greatly, U.S. led trade and military power no longer dominate at they once did. While the threat from the European Union never materialised, China’s economic growth has surpassed that of the U.S. and enabled by growth China has expended its global influence in South East Asia, Africa, South America, Europe and even in the USA itself, where Chinese investment has supported many industries and jobs. 

With Russia also having expanded its global influence on the back of its position as a major supplier of natural resources, the resurgence of Islamism  this can only mean a big reduction in U.S. power and influence  and limitations on the ability to use militarily and economic coercion against smaller nations. And if the Sino Russian plan to launch a new, gold - backed currency for world trade succeeds to any degree we could see over the next decade that the USA will be reduced to a regional power constantly at odds with Mexico and Cuba, ignored by Canada but still able to influence Caribbeasn island nations and a few Central american banana republics.

The future will be very different for the U.S. than it has been for the past 80 years, since the end of World War II when it towered over the rest of the world while former rivals desperately tried to recover from the effects of war. Ukraine will prove to have been the turning point in this transformation,the moment the world ceased to believe in American Exceptionalism and started to stand up to American imperialism.

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We The Good Guys Versus They The Bad Guys Reporting Does Not Make Sense For The Ukraine Crisis
Mainstream media reporting of the conflict in Ukraine has disappointed. Perhaps I was naive to suppose that lessons might have been learned from the hits their print sales and online traffic rates took as a result of their handling the COVID pandemic But instead of focusing on the most obviously newsworthy aspect of the build up to and escalation of the war, Russia’s view of NATO expansion into Ukraine and even further to Georgia and Kazakhstan, news reports have simply demonised Russia and portrayed Ukraine as the good guys.

Europe's Depleted Gas Storage Might Not Get Refilled Ahead Of Next Winter
While mainstream news reporting of the conflict in Ukraine continues to pump out a torrent of anri - Russia, pro - war propaganda the catastropic effects of this war that could so easily have been avoided are not mentioned. Well why would warmongering governments admit they have inflicted an energy crisis, food shortages and soaring living costs on their people for no good reason ...

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U.S. President Donald Trump is adopting a tough on the European Union, after the Union's unelected leaders threatened to impose punitive tariffs on leading American brands in retaliation for his attempts to protect the jobs of American steelworkers. “So now we will also impose import tariffs,” threatened Jean-Claude Juncker, the president of the unelected European Commission, at an event in Hamburg, Germany.

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.

 

Saudi Arabia Just Killed The Petrodollar

 

by quoth the raven

Wednesday, Jan 18, 2023 - 13:46

Submitted by QTR's Fringe Finance

The last 24 hours have marked another major waypoint along the path to my long-held contention that Russia, China and Saudi Arabia are going to make a massive, collective push to try and dethrone the U.S. dollar as global reserve currency.

Anybody who has read my 23 Stocks To Watch For 2023 (or any of my other recent articles discussing how I am personally positioning myself for this thesis) knows that I believe we are on the precipice of an unprecedented era geopolitically.

Put simply, I believe there is a historic divide in the making between the BRICS nations, led by Russia and China, and the West, led by the United States.

I was one of the few outlets last summer to even report on the fact that Russia and China openly announced a “new global reserve currency” (announced in July 2022, predicted by me in February 2022). And of course, Russia and China can’t do it on their own: they are working with nations like Saudi Arabia and India to help put their plans into practice.

Crucial to dethroning the U.S. dollar would be the removal of its use for buying and selling oil - a system that has been in place since the 1970s when the U.S. promised security for the Saudi Kingdom in exchange for the petrodollar system that underpins the dollar’s strength as global reserve currency. It’s a topic that I discussed at length back in September with Andy Schectman on this podcast.

Andy told me back in September 2022: “The dollar hegemony is right about ready to break when you realize that Saudi Arabia is about to join the BRIC nations. Do you think Biden is going to fly there to ask for more oil? He went there to beg them not to join BRIC.”

“The dollar was made reserve currency only because of our protection of the Saudi kingdom,” Andy continued. He then noted astutely that Saudi Arabia had signed new protection agreements with Russia. ... Continue reading >>>

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