President Nicolas Maduro of Venezuela has spoken in Moscow as part of Russian Energy Week and proposed that key energy producers work to implement trading strategies which ditch the US dollar in favour of currencies including the Chinese Yuan and Russian Rouble.
Venezuela recently announced that it would begin trading its oil in Yuan and today, President Maduro said that his country seeks to expand the use of other global currencies, including the Russian Rouble.
As reported by RT, the Venezuelan President as suggested,
“Introducing alternative currency baskets, including the Yuan, Rouble, and other currencies will eliminate the impact of futures trading, according to the Venezuelan president”.
Maduro’s thinking is very much in line with the of other BRICS countries, including China and Russia who have begun engaging in bilateral trade using local currencies. Turkey and Russia reached a similar agreement earlier this year.
This comes hot on the heels of the recent BRICS summit in Xiamen where China announced that it will begin issuing oil futures contracts in gold backed Yuan. Furthermore, the summit placed a heavy emphasis on developing new methods of trade including in local currencies, a new BRICS crypto-currency and perhaps most importantly in a BRICS currency basket.
A currency basket is a name commonly assigned to a value derived from the pooling of different traditional currencies. The most commonly used currency basket is something called Special Drawing Rights, a basket which pools the value of the US Dollar, Euro, Japanese Yen and UK Pound.
As I previously reported,
“The US has previously taken drastic measures when foreign leaders decided to abandon the Dollar as a trading currency. In the year 2000, Iraq stopped trading its oil in the US Dollar, opting instead to trade in Euros, a move that a month prior to the US-UK illegal invasion of Iraq, was reported as having positive effects on the Iraqi economy.
Likewise, former Libyan Revolutionary leader Muammar Gaddafi’s plan to begin trading in what would have been a pan-African gold backed Dinar was exposed in declassified emails as being a source of anger for then US Secretary of State Hillary Clinton who later masterminded the NATO war which illegally overthrow the Libyan government.
In 2011, the same year that the US and its allies invaded Libya, Dominique Strauss-Kahn, the then Managing Director of the IMF was arrested in New York on assault charges. The charges were later dropped but not before he was forced from his powerful position at the IMF while simultaneously ruining his chances to become the President of France. Prior to his arrest he was a favourite to win the Presidency.
Strauss-Kahn’s flagship policy at the IMF was favouring something called Special drawing rights (SDRs), a trading value based on the aggregate value of 4 or 5 major currencies. If countries began using SDRs as a main trading vehicle rather than relying exclusively on the US Dollar, this could have greatly damaged the prestige and international value of the Dollar.
Why was Strauss-Khan arrested in a move which destroyed his pro-SDR career and then later fully exonerated of wrongdoing? The trend in relation to Saddam Hussein and Muammar Gaddafi speaks for itself.
Many link the US led wars against Iraq and Libya as being proximately related to the two resource rich states moving away from Dollar dependency.
Unlike Libya and Iraq, Russia and China are nuclear superpowers. Even if the US wanted to overthrow the governments in Moscow and Beijing, any attempts to do this would almost certainly lead to a nuclear world war.
The US has therefore boxed itself into a corner. By leaving Russia, China and their trading partners, including NATO member Turkey with no better option than to begin moving away from the Dollar, the US may well have cooked its own golden, or in this case, green goose”.
When it comes to Venezuela, the government has nothing to lose and much to gain by working with international partners to help create new means of trading oil and other energy futures contracts. The US has already imposed multiple sanctions which means that Venezuela’s only realistic option is to more or less fully ditch the Dollar. Furthermore, Russia and China’s robust defence of Venezuela against Washington’s’ threats of military action and further sanctions, put Caracas in a position of having a kind of geo-political insurance policy that Iraq did not have in 2003 and likewise, Libya did not have in 2011.
As Russia, like Venezuela and Iran are all under US sanctions, all countries would be able to more freely exercise their prerogative in international trade via creating a new means or multiple means of exchange. In Moscow today, Venezuela’s President has made it clear that this is the future he sees for his country and his partners, including Russia and China.