The beginning of the decline of the era of the dollar - Part Two
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By: Dr. Bilal KhalifaIn the previous article, we talked about the emergence of the era of the pound sterling (the pound) and its decline, and then we went back to the beginning of dealing and the rise and then the dominance of the US dollar over the world until now, but as we previously indicated that the current period is the beginning of the decline or shrinkage of the dollar’s role in global transactions, especially after the Ukrainian crisis . In this article, we will show how the dollar began to decrease in commercial transactions and the beginning of the emergence of other currencies that may be competing with the dollar.The emergence of other currencies in oil transactionsOil is an indispensable strategic commodity for any country. Despite the rapid development of the contribution of renewable energy, oil still occupies a world dominant position among the energy sources currently in use. However, its market has witnessed the pure dominance of the US dollar since the end of World War II and the adoption of the Bretton Woods system, and this made the US dollar dominant in the global market, and this domination gained America complete control over the fate of the most important source of energy necessary for any industrial and economic activity, especially the Chinese market.A - ChinaChina sensed this danger, and it opened an international stock exchange to deal with petro yuan instead of petro dollar, and this is in March 2018, as there are five factors that may support its success, namely:First: It may constitute a way out for countries that have long suffered from the US embargo, such as Russia, Iran and North Korea, as Russia and since 2015 have concluded its oil deals with China in yuan, and Venezuela, which announced in September 2017 that it would sell its oil in currencies other than the dollar, in addition to Iran, which has threatened more than once To stop dealing in dollars, and other anti-American countries.Second: It provides an opportunity for the oil-exporting countries to reduce the risks of complete dependence on the petro-dollar system, especially the countries of the Gulf Cooperation Council, which have great trade, economic and investment relations with China, as a recent report issued by the Commercial and Industrial Bank of China indicated that the volume of trade exchange The Chinese Gulf has doubled 600 percent in the last ten years. He also pointed out that the volume of Chinese investments in the Middle East has reached about $160 billion. This may prompt the Gulf states to transfer part of their oil trade to the Chinese yuan in order to preserve their share, commercial interests, and relations with the Chinese dragon.Third: This stock market may be highly attractive to Asian countries, which have long looked for an Asian market for oil that is close to it, and is not affected by American domestic factors. Asian countries whose dependence on imported oil is very high, reaching 100 percent for Korea and Japan, about 80 percent for India, and 67 percent for China.Fourth: This stock exchange may contribute to strengthening the globalization of the Chinese currency, the yuan, and accelerating the diversification of currencies traded in settlement operations for global trade, including increasing the diversification of global reserves of the Chinese currency.Fifthly: This stock exchange may constitute support for the BRICS countries and countries from the European Union that seek to get rid of the dominance of the US dollar in global trade, and establish a new monetary system in the world that does not depend on the dollar alone.Sixth: The Ukrainian war greatly accelerated the dependence on Petro-Iwan, especially Russia's removal of the SWIFT system for global financial transfers, which led to the adoption of a second financial and banking system.Seventh: China, Russia, Iran, Korea and many Asian countries have a common alliance, which is the (Shanghai Conference), which is a political, economic and military alliance, and therefore the ground is completely prepared.Eighth: Since the advent of Putin, the Russians have been seeking to revive the Russian Federation and the return of the second pole of the world, with the help of China, the dragon that will sweep the whole world, and therefore the opportunity is very favorable for the countries of Asia.Ninth: China has taken a step in this field and established a bank to deal in petro-yuan instead of petro-dollar, which is the most important step in this field.Tenth: I also established the Asian Infrastructure Investment Bank, which is concerned with the Silk Road, which is parallel to the work of the World Bank.http://non14.net/public/145815
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By: Dr. Bilal KhalifaIn the previous two articles , we talked about the demise of the dollar era and the dawn of the era of other currencies, and as we explained previously, the steps taken by China in this field of adopting its currency in some commercial transactions, and also the establishment of the Shanghai Oil Exchange, which deals with petro-yuan, and now it is the turn to complete the review of other countries that have followed The same approach is not to deal in US dollars.
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B - Iran
After the revolution in Iran succeeded in overthrowing the Shah's regime, Iran replaced the applicable accounting unit (the dollar) with the German mark to evaluate its exports (before the advent of the euro), which raised problems with banks. In 2007, the vice president of the National Iranian Oil Company stated that 65% of oil is sold in euros and 20% in yen, while only 15% is sold in dollars. It is a very advanced step in finding an alternative to dealing in dollars.
As we said earlier that China established a stock exchange and the Shanghai Bank deals in yuan instead of the dollar, and this was a space for the Iranian side to be freed from the grip of the United States and the grip of the dollar.
In the agreement of the international group (5+1), the agreement to lift the embargo on Iran, the National Iranian Oil Company, requested in its European sales contracts that were drawn up after the lifting of the embargo, on the basis that the value of the oil sold would be delivered in euros and not in dollars. Iran also requested that the oil money that was held in foreign banks be received in euros and not in dollars.
The representative of Tehran to the Organization of Petroleum Exporting Countries (OPEC) had submitted a request to abandon the dollar in the sale of oil from the Organization of Petroleum Exporting Countries (OPEC) in 2007.
The summary of the Iranian position is that it has the lead in establishing oil and commercial transactions outside the US currency, dealing in the Chinese yuan, the European euro, and even the UAE dirham.C - Russia
In 2016, the Turkish president proposed to Russian President Vladimir Putin to move away from the dollar currency in trade between Russia and Turkey, and to adopt either the Turkish lira or the Russian ruble in the trade accounts between the two countries. It is worth noting that the volume of trade exchange between the two countries is $30 billion, and the two sides hope that the volume of exchange will reach $100 billion.
In 2018, China and Russia decided that the exchange between them would be without the US currency, that is, without the dollar and relying on national currencies, as Moscow and Beijing intend to use the Russian ruble and the Chinese yuan in contracts that were concluded between them in dollars.
The trade exchange between Russia and China for the year 2017 exceeded the level of $100 billion, of which $56 billion were Russia's exports to China, compared to imports worth $52 billion. Moscow and Beijing have close trade and economic relations, and the two countries are seeking to raise trade between them to reach the level of $200 billion annually in the coming years.
As for these days, in the midst of Western sanctions and those allied with them imposing sanctions on Russia and preventing it from dealing with the Swift program for financial transactions, it hastened what the East was striving for by finding alternative currencies for the dollar and the irreversible triple divorce of the US dollar, as intense coordination is currently taking place between China, Russia and the countries of the Shanghai Organization, and this we referred to previously, and the Eurasian Economic Union to quickly abandon the dollar in financial and commercial transactions, in addition to the assertion of the Chinese leadership that it will not support Western sanctions against Moscow, and it confirms that it will remain a strong partner for it (Moscow) in transactions It will increase the volume of trade exchange between the two countries, especially in the fields of energy and technology. It is known that China is the largest consumer of energy in the world, and its markets can absorb the majority of Russia's production of gas and oil.
Last night, on March 23, 2022, the Russian President decided to adopt the Russian currency, the ruble, instead of the dollar, in selling gas to friendly countries and Europe, and thus the beginning of the end for the dollar.D - Saudi Arabia and the Gulf states
are some of the indicators that have appeared recently, including what was published by the American newspaper "The Wall Street Journal" this month, i.e. March, where it indicated that Saudi Arabia is in talks with China to price its oil sales to Beijing in the Chinese yuan instead of the dollar, in a move from It would reduce the dollar's dominance in the global oil market, according to the newspaper's sources.
It is worth noting that a quarter of Saudi oil exports go to China, at about 1.750 million barrels per day, while its exports to the United States are less than half a million barrels, after it was in the 1990s, two million barrels per day, and if Saudi oil exported to China is priced in yuan, these sales will boost position of the Chinese currency. http://non14.net/public/145816
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By: Dr. Bilal KhalifaThe current article will differ from the previous articles. The focus will be on Russian President Vladimir Putin's decision to use the ruble in sales of gas and oil to Europe and other countries. What shows his insistence on this decision is that Putin gave the Russian Central Bank a week to implement these changes and find a way to transfer those payments away from other currencies.He also sent a diplomatic message to the European Union when he said that "Russia will continue to supply gas in the quantities proven in previous decades."Here, several questions can be asked about the repercussions of the Russian decision, the most important of which are:1 - The repercussions of the decision on Europe?"If someone does not want to buy gas in rubles, he has a chance to get it from other places and at other prices," Russian President Vladimir Putin said. As Germany has stated more than once that it cannot dispense with Russian gas, this means that President Putin has caught Germany and Europe from the place that hurts them and that they cannot do without, and therefore they are forced to work according to a method set by the Russian President.As Europe is now between two options in the field of gas:The first option: is not to deal with Russia and to import gas from Qatar or others. We explained this in a previous article and in numbers that Qatari gas is not enough and that Qatari gas reaches them in liquid form (LNG) and will be four times the price that reaches them from Russia through pipelines. Thus, it would be a disastrous and infeasible option due to the insufficient Qatari gas or others.The second option: is to continue to buy gas from Russia in the way that Putin drew, that is, in the Russian currency, but there are two possibilities in this area, namely:The first possibility: direct dealing: the Russian currency buys the ruble directly from the Russian Central Bank, and here it is not easy because of the sanctions imposed on financial dealings, as well as the presence of another difficulty, which is that European banks use the Swift financial banking system and that Russia is excluded from this system. Handling:A - Transactions related to the purchase of gas are excluded from the sanctionsB - Dealing with cash (cash), and this is very difficult and unlikely.C - Dealing through an intermediary, i.e. intermediary banks, and here too, sanctions should not be imposed on those intermediary banks because they deal with Russian banks.D - The second possibility: Indirect dealing: It is indirect dealing with Russia through an intermediary country such as China and through because money transfers and the Swift system are still in work with China, although it has a special system in it, but dealing with the rest of the world is either with the Swift system or its system After that, the money will be transferred to Russia. It is certain that this process costs additional money, and it is the administrative and banking downloads.2- The repercussions of the decision on Russia:The last decision of the Russian president is not without risks, although the current data confirms the success of his decision, because Europe cannot dispense with Russian gas. The decision has its pros and cons, which are as follows:Negatives: 1 - It is possible to reduce the revenues generated from the sale of gas due to the difficulty of achieving this in the complex financial transfers that must be passed through to bypass the European-American sanctions against Russia,2 - All currencies in the world, except for the dollar, are covered with gold, meaning that the currency and cash are limited to what he owns of gold, and therefore the exit of the Russian currency, the ruble, outside the Russian borders, could cause a lack of liquidity inside Russia.Advantages:1 - The decision will raise the value of the Russian ruble2 - It will encourage the emergence of financial systems parallel to the SWIFT system in the world3- The decision will give centralization and authority to Russia in the global economy4 - The decision will bring China into the global economic arena more, especially as it is prepared for that.5 - It will accelerate the emergence of another global pole against the American one.Conclusion1 - The Ukrainian war is getting fiercer day by day, especially since Poland will soon enter the furnace of war.2 - That China will not continue its neutral stance, especially since it is in an alliance with Russia at the Shanghai Conference, and that its economy will benefit from that because attention is directed to it in its position as a mediator of financial transactions between it and the Russians.3 - The world began to realize the existence of another economic pole at the beginning of its appearance, and the evidence for this is the tendency of some countries to deal in yen as well, and the best evidence is Saudi Arabia.4 - Increasing economic and military pressures is hastening the emergence of a new financial system in the world.http://non14.net/public/145817
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