Saudi Arabia decided in the last week not to renew agreements with the United States regarding the marketing of its oil. This agreement, signed on June 9, 1974 in response to the 1973 oil crisis, required Riyadh to sell its oil in dollars. In this way, the reign of Salman bin Abdulaziz (photo) announces the end of the exclusivity of the US currency, contributing – in a combined way – to the process of monetary disintegration and global de-dollarization.
The United States has used its greenback, fundamentally, as a geopolitical instrument aimed at establishing mechanisms of global domination in relation to financial institutions, their indebtedness, the management of the capital market and investment flows to benefit the Real Power Triad , the Transnationals, Wall Street and the Military Industrial Complex. This manipulative capacity has allowed it to impose unilateral sanctions, demand third countries to complement them, damage potentially competitive economies, threaten sovereigntist political actors, extort governments, and even co-opt media corporations and buy (pseudo) journalists.
The paradox of global monetary control begins to break down with the proliferation of sanctions promoted by the State Department: several countries – especially the People’s Republic of China and Russia – exhibit a growing distrust of a currency that is progressively losing its capacity of arbitration to become primarily a weapon of war aimed at fragmenting markets and global trade. Can the different government actors continue to trust in a currency that abandons – by its own decision – its power to guarantee equivalence and its potential for cross-border propagation?
This is the fundamental reason why many countries are gradually beginning to get rid of US Treasury Bonds due to distrust of the arbitrage capacity of their currency. Gold and the diversification of currencies – usable in international transactions – appear as new, certain alternatives for global reconfiguration. In the last decade, hundreds of sanctions have been imposed since the Crimean Peninsula decided to join the Federation in 2014. NATO – that is, the G7 and the 32 members of the European Union (EU) – has systematically blocked the exports from Moscow, transferred tons of military equipment to Ukraine, frozen around 300 billion dollars of Russian assets deposited in different Central Banks and granted the respective interests of those enormous assets to Volodymyr Zelensky.
After a decade of sanctions, the GDP of the Russian Federation increased by 3.6 percent in 2023 and in the first quarter of 2024 the indicators show a growth of more than 5.4 percentage points. The BRICS+ bloc – made up of Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Saudi Arabia, the United Arab Emirates and Iran – together with Turkey and several Central Asian countries has allowed Moscow to avoid the scheduled sanctions by NATO and the international institutions that support it. In this framework, the ruble achieved a record participation in foreign trade with European countries (an increase in April 2024 of 58 percent).
The increases were largest in Oceania, where contributions in rubles increased by 13 percentage points. This same curve was observed in relation to Africa and in the countries of Central Asia. The proliferation of sanctions and the institutional, bureaucratic and financial fabric that is established to guarantee their reach and achievement generates mistrust and a progressive flight of dollar assets. According to the International Monetary Fund (IMF) – whom no one could accuse of favoring de-dollarization – the reserves in that currency by the Central Banks sank to their all-time high since records were kept. In 2023 it obtained its lowest level, reaching 58.41 percent.
In 2001, a little more than two decades ago, this indicator reached 73 percentage points. This deterioration process is complemented by (a) the stratospheric increase in US public debt, which is already close to 127 percent of its Gross Domestic Product, (b) the loss of value of existing bonds for their holders, as a result of the rise in interest, (c) the depreciation of the FED’s balance sheet, which has gone from maintaining assets of 9 trillion dollars in 2022 to 7.5 trillion dollars in 2024, and (d) the reduction of assets in American bonds, mainly by China, which between 2018 and 2024 have been shed by 36 percent.
The advantages obtained by the West to continue the exactions on the rest of the world seem to be less solid than what is intended to be evident.
