For months now we’ve been hearing Washington ring alarm bells regarding what they have cited as an “imminent Russian invasion of Ukraine.” According to the latest so-called US “intelligence,” a full-scale invasion would take place this week. Yet, as some of us have for months insisted would be the case, no invasion has transpired, nor, I believe, is one likely.
Moscow, which has announced that its troops are pulling back from Russia’s border with Ukraine, has consistently denied that it has any intention of invading. But Washington, with its repeated accusations regarding an imminent false-flag incident, to its stationing of troops in Eastern Europe, has appeared desperate to goad Russia into making such a move. The more Russia’s President Vladimir Putin refuses to take the bait, the greater the despair in Washington.
Why is Washington – and by extension NATO and the EU – so obsessed with Ukraine? What is it that they hope to achieve? Once one understands the mechanism by which Washington derives its real power, its actions in relation to Russia become easier to understand.
It wants to conflate and stoke the Ukraine issue in order to contain Russia. Why does it want to contain Russia? Well, Washington derives its global power through its control of the US dollar, also known as the world’s reserve currency. This special status enables Washington to amass obscene deficits that do not in any way reflect America’s true productive capacity.
The US dollar has been utterly dominant as the currency used for international trade since it replaced sterling in the 1920s. Commodities such as oil, gold, base metals and agricultural products are priced in, and paid for, in dollars. This created large worldwide demand for the greenback, adding massive value to its worth, and created strong demand for US Treasuries. All this enables the American federal government to print dollars by the trillions, borrow without limit, and spend with abandon.
The dominance of the dollar has afforded America great global power, but it is now under threat as never before as Russia, China and others economically challenge the US. Many are now seeking to ditch their dependence on the dollar as Washington has continued to abuse it’s status as issuer of the world’s reserve currency over the decades.
Russia and China have, in particular, drastically cut their use of the dollar. In 2015, around 90% of their bilateral transactions were conducted in dollars. But since the start of the US-China trade war, that’s fallen to 46% and is rapidly declining further. Even US allies and partners, like Turkey and India, have begun trading in their respective national currencies when it suits them. Countries are questioning why US financial institutions should serve as the intermediaries for international banking.
Beijing is actively encouraging the use of its currency, the renminbi, in trade transactions, especially under its massive Belt and Road Initiative. With China recovering more strongly than the other big economies from Covid-19, foreign capital has been flooding in, too, as Beijing opens its financial markets.
Alexey Maslov, director of the Institute of Far Eastern Studies at the Russian Academy of Sciences, has told The Nikkei Asian Review that the Russia-China “dedollarization" was approaching a “breakthrough moment” that could elevate their relationship to a de-facto alliance.
This alliance, and its threat to the supremacy of the dollar, deeply worries Washington. “The current dollar-centric system cannot continue forever,” saysBarry Eichengreen, Professor of Economics and Political Science, University of California, Berkeley. “A multipolar international monetary and financial system is coming, as the United States accounts for a declining share of the global economy.”
Goldman Sachs strategists have predicted that there are now “real concerns around the longevity of the US dollar as a reserve currency,” while billionaire US fund manager Stanley Druckenmiller has warned that the dollar could cease to be the predominant global reserve currency within 15 years.
Ironically, America’s growing use of severe sanctions against countries it doesn’t like, such as China and Russia, has fuelled this trend, as countries seek new ways of financing trade without Washington having the ability to seize their money. “The U.S., by continuously using sanctions, is beginning to cut off its nose to spite its face,” Anuradha Chenoy, formerly the dean of Jawaharlal Nehru University’s School of International Studies in New Delhi, has said.
No comments:
Post a Comment