The end of the dollar between Russia, China and Saudi Arabia!
The end of the dollar between Russia, China and Saudi Arabia!
2024-10-25
The dollar’s global dominance began after World War II, when leaders of 44 nations met to establish a stable, reliable and permanent international monetary system. In the Bretton Woods Agreement, the dollar was made the primary means of international settlement for trade and investment as well as savings, including the holding of international reserves.
According to that agreement, the dollar was linked to gold at a price of $35 per ounce, but the crises of 1970 in the United States led to a decline in the exchange rate of the US currency and the collapse of the Bretton Woods system. At that time, the US government refused to exchange the dollar for gold.
When stagflation destroyed the gold standard, American leaders quickly replaced it with a floating gold exchange rate to maintain the dollar’s pivotal position.
Oil then became the new backbone of the global economy. OPEC agreed to trade exclusively in US dollars. The so-called “petrodollar” remained virtually unchanged until the last few years.
The global financial crisis of 2008 thus exposed the weaknesses of the existing approach, as the internal problems of one country, the United States despite its economic strength, were “contagious” to other countries. The internal mortgage crisis in the United States turned into a financial crisis, and that domestic crisis turned into a global economic crisis.
It would have been impossible to establish and consolidate the “petrodollar” without the cooperation and support of the Kingdom of Saudi Arabia. With the increasing initiatives to get rid of dealing in dollars at various levels, and governments beginning to reconsider the dollar and not consider it an indispensable asset, Saudi Arabia also began to follow this approach.
Multiple reports in March 2022 said that Saudi Arabia was in talks with China about using the yuan instead of the dollar in oil and gas deals.
Egypt is also continuing its steps towards reducing its dependence on the US dollar, which its local market has been suffering from a shortage of since the first quarter of 2022. In this regard, it was agreed to deal in local currencies with Turkey, while Cairo continues to seek to deal in the same way with Saudi Arabia and India.
The process of eliminating the dollar from international transactions is gradually taking place around the world. China, for example, which has the largest economy in the world after the United States, reduced its investments in the US public debt for the first time in 12 years in May 2022 to less than $1 trillion. By the end of August of the same year, the figure had reached $971.8 billion.
Russia has been actively abandoning the dollar since 2022. Russian President Vladimir Putin announced in a remote speech at the BRICS summit held in South Africa in August 2023 that abandoning the dollar as a global currency is an irreversible process in Russia and the world, noting that the BRICS summit “discusses a whole range of issues related to the transition to national currencies in all areas of economic cooperation between our five countries.” From here, the world begins to change for the better in a real way.
burathanews.com
