Our friends the Russians, the Chinese, the Japanese, France and Saudi Arabia have here entered into an agreement to marginalize the dollar as a world currency, according to an important article in the The Independent.
“In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.”
Does anyone recall how Ronald Reagan of blessed memory marginalized the Soviet Union.
Here’s how: He made arrangements with our friends the Saudis to lower the price of oil. This plunged the Soviet Union into near bankruptcy. Why? Because Russia was then and is now rich in oil. Russia now controls the oil pipeline to Europe. China – drinking oil as if it were water – buys a large part of its supply from Russia and Iran; Iran gets some of it from our friends in South America, such as Hugo Chavez, who will help Iran develop its oil resources. That resource will be mostly exported.
Here is where it gets dicy: If the dollar is replaced with the so call “basket of currency” -- Chinese, Russian and Euro currency (Iran has already switched to the Euro) – then the US loses its monetary leverage and cannot do to Russia, China, Iran what formerly it did to the Soviet Union, which pulled out of an unwinnable war in Afghanistan, largely owing to its precarious monetary situation. China, Russia and Iran together now form the new axis of Anti-Americanism.
Does anyone see a pattern here?
The US is going to lose its monetary leverage in mega-foreign policy; already poor in energy, it has hobbled itself by refusing to pull oil out of the oil rich Gulf (Cuba is in the process of mining it, with some help from our pals the Russians); we are engaged in an unwinnable war in Afghanistan (just like the Russians); and we have a president whose understanding of real politic is, ahem … simplistic.
It doesn’t look good.
A day after the report had been published, denials poured in.