InfoBrics
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of this site. This site does not give financial, investment or medical advice.
Submitted by InfoBrics, authored by Johanna Ross, journalist based in Edinburgh, Scotland…
The dollar has been the world’s dominant currency since the 1950s, but this is now changing thanks to aggressive use of sanctions by the United States. This has been particularly noticeable under the Trump administration, with its cut-throat approach, exchanging traditional diplomacy for financial warfare, as only Donald Trump knows how. The financial hegemony created by the US last century is now showing definite signs of waning, as global powers such as China and Russia are looking to alternatives in a world that is undoubtedly edging towards multipolarity.
The beginning of the end for the dollar’s dominance can probably be traced back to 2001, with the terrorist attacks on September 11th. After that the US began to impose hefty fines on banks overseas for money-laundering and sanctions avoidance. Since then, Trump has taken financial warfare to a new level, using sanctions against Iran, North Korea, Russia and Venezuela. Then there has been his trade war with China. This has seen not only tariffs placed on Chinese goods but legal assaults involving companies such as Huawei, whom he has accused of espionage, and whose CFO was arrested in Canada in 2018 (on behalf of the US) for alleged ‘fraud related to sanctions against Iran’.
This particular case of Meng Wanzhou, the chief financial officer of Huawei, highlights just why nations are looking to assert their independence from the dollar. Wanzhou was arrested at Vancouver International Airport in December 2018 at Washington’s request, just as tensions were building between the US and China over trade tariffs imposed by the Trump administration. She was accused of defrauding financial institutions and lying in an attempt to get around US sanctions preventing other countries from doing business with Iran.
Huawei’s CFO has been subject to the full works: forced to surrender her passports, abide by a curfew and wear a GPS tracker. She has had to live under house arrest in Vancouver since she was released on a $10-million bail. Canada has been criticised for its handling of the case, including the father of Wikileaks founder Julian Assange, who has said it is another example of the US abusing justice systems to target its geopolitical enemies.
In its actions, the US has exposed China’s vulnerability to a financial system still very much dependent on the dollar. The US’ ability to blacklist Chinese tech firms such as Huawei, effectively relies on sanctioning the suppliers and business partners who use the dollar-based banking and payments system to do business with them. Some of the evidence against Meng Wanzhou is in fact from a US-appointed overseer from HSBC in London. In October last year the US sanctioned eight different Chinese tech firms for alleged human-rights abuses in the Xinjiang provinces. Human rights abuses or not, we don’t see any such sanctions against US allies such as Saudi Arabia with its abysmal human rights record. There is clearly a geopolitical motivation here.
Russia, on the other hand, has long understood the need to release itself from the clutches of US financial domination. It has gone furthest of all to secure its own independent economic future, creating expendable entities to do business with the countries on America’s blacklist, so that its own firms can be spared. It has also been actively de-dollarising parts of its banking system, reducing the dollar share of its foreign-exchange reserves from 40 percent to 24 percent. Recently the Ministry of Finance announced future plans to lower the dollar share of its $125 billion sovereign-wealth fund. Russia’s debt is also being gradually de-dollarised, with new issuance often in roubles or euros. Figures show that for 2019 62% of Russia’s goods and services were settled in dollars, compared with 80% back in 2013.
The Russian Central Bank’s governor, Elvira Nabiullina, has confirmed that the decision to move away from the dollar is a reaction to US sanctions – which were imposed after the reunification of Crimea and Russia in 2014 – but she has also spoken of a desire now shared by many in the international community, to shrug off the dollar’s dominance. As Russian President Vladimir Putin has said ‘We aren’t aiming to ditch the dollar. The dollar is ditching us.’ In June it was announced that both Russia and China would work towards more bilateral trade in their own currencies.
This new reality is also being recognised in the West. Bank of England governor Mark Carney said in August last year that a system dominated by the dollar ‘won’t hold.’ Trump has taken financial warfare to a new level, and so other countries have had to up their game also. The shift away from unipolarity has begun, as the US may soon pay its own price for its aggressive sanctions policy.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of this site. This site does not give financial, investment or medical advice.
And not only for the sanctions should the US pay…for all the misery inflicted around the globe too.
The hundreds of millions butchered, starved and immiserated across the planet by those wonderful exceptional and indispensable folk for decades. The millions slaughtered and maimed across the planet in a score of countries. The half a million dead Iraqi children under 5. The children dying right now in Venezuela, DPRK, Syria, Iran. They all cry out for justice and revenge from beyond the grave. The 40% of humanity subjected to US economic strangulation. The legions of tortured and murdered by sick and diseased minds in its gulags, concentration camps and torture chambers. That is an awful lot of very bad… Read more »
This United States has been the most deadly warmongering nation in the history of mankind, and even in its short existence of 243 years, America has been at war over 93% of the time. That is 226 years of war out of 243. This statistic is staggering, especially considering that virtually all U.S. wars, domestic and foreign, have been wars of aggression, and never for actual defence. This alone is reason for condemnation of the state, and reason for the American and world populace to finally awaken to the truth that the USA is the world’s greatest terrorist threat to… Read more »
The sheer hypocrisy of the Americans !! Still trading with the barbaric head choppers in Saudi land who cut up a journalist and put his body parts into suit cases , as opposed to a business woman who went behind their back and kept trading with the so called enemy !!
From the point of view that Mr Trump is actually hastening the decline/demise of Washington’s Axis of Evil and embarrassing those who still believe in him — by his fawning adulation of Netanyahu’s bloodthirsty goons and indebtedness to the hedge fund managers who own him — Trump has shown up even Obama. And may yet compete with George W as being the worst US leader. But of course Trump will never match the Clinton’s for sheer ignominy, depravity, and corruption. Meanwhile the US dollar is just one notch above bog paper and $1 *might* just fetch one decent quality axx… Read more »
Many of the US sanctions have been imposed by the US Congress; so it’s not just Trump. Let’s not get too carried away…. becoming to sound a bit like TDS.
Steve “IndyMAC” Mnuchin and Statists like Pompeo/Bolton are just plain downright evil. Trump helped put them there. But the ‘president’ is just a stooge no matter who.
Right now, China has too much tied up in us dollar trade to be able to de-couple, so they need TIME to get their house in order. Any outright warfare by China against the us dollar will destroy their economy beyond recovery, so it is essential for China to “appear” to do whatever it takes (trade deals, etc.) to gain that time necessary to make the required changes and be able to drop the dollar totally. At that time, the us toilet paper will be truly fucked, so to speak. Hence the reasons for seppo-stan slapping tariffs and other constraints… Read more »
Despite all this, the Chinese are absolutely aware any ‘deal’ with the US is worth shit and they will further diversify it’s trade with the world away from the USD, increasing their gold reserves just in case and they will further reduce their US-treasury holdings but with an slower pace than the Russians. They playing a long game and the AmeriCunts despite their unending ‘Wars Of Terror’ and their ‘Economic/Financial Wars+Terrorism’ literally against the rest of the World for their deluded goal ‘Full Spectrum Dominance’….they will fail.