WHILE there is a decline in Washington’s standing as a superpower, the United States is facing another harsh reality – the decline of the US dollar as it falls from international grace in one country after another.
All indicators show that the amount of US dollars held in reserves by non US central banks has fallen to its lowest level.
The United States of America, the most indebted nation ever, also has a sovereign debt crisis, another sign that we may be heading toward the collapse of the US dollar.
The ‘weaponisation’ of the US dollar, not to mention the imposition of US sanctions on perceived adversaries has made other countries wary of using the greenback in their financial transactions.
Thus, countries such as Iran, Russia, and China, are moving towards eliminating the dollar altogether.
The process of ‘de-dollarisation’ is something Russia has been working on for years.
Russian Deputy Foreign Minister, Alexander Pankin, has said: ‘Against the growing geopolitical pressure from the collective West, the only way to guarantee stable trade, economic and investment ties, between Russia and its partners, is to avoid the dollar and the euro and switch to settlements in acceptable alternatives, primarily, in national currencies’.
Pankin also pointed to the growing geopolitical pressure from the west, combined with sanctions from the US and its European allies, over Russia’s special military operation in Ukraine.
However, heavy sanctions have been used against Russia since 2014, long before the Ukraine special military operation.
‘The European Union and NATO are gathering a coalition for war with Moscow,’ Pankin warned, adding:
‘When it comes to trade, if you want to move away from the dollar and move to the Russian rouble, it’s going to be very difficult indeed.
‘Of course, you can trade in the rouble, and other currencies, but the key thing is you need them to be liquid … easier to buy and sell and the decent size and margin, or the difference between the buying and selling costs, can make it too difficult … and you will not be able to trade.’
Justin Urquhart Stewart, Seven Investment Management, Director, said: ‘The de-dollarisation move was fast tracked when the US Treasury Department decided to confiscate Russia’s US dollar foreign exchange reserves.
‘This has caused other countries to reconsider keeping their financial reserves in US dollars and to conclude that their country could be the next to be harassed and vilified if it does not abide by US foreign policy.
‘They could face secondary sanctions at the very least.
‘Therefore, it was a natural progression for countries like Russia, China and Iran to trade with their own national currencies.’
Gazprom has stopped sending gas to Latvia, adding it to the list of countries already excluded from Russian energy supplies.
According to Russian Deputy Foreign Minister Pankin, mechanisms for international settlement in national currencies, rather than Western currencies, have been successfully created with a number of nations, and the possibility of paying in roubles for certain categories of Russian and export goods, including energy and food products, has been set up.
‘It’s going to be interesting to see what happens with the dollar now’ he said, ‘because I suspect there’s going to be quite a lot of weakness in it.
‘Why? Well because the global economy is slowing down, for one key reason, but nonetheless, the dollar is normally seen as a safer haven than other currencies.
‘So what you’ll find is actually people will go for the (national currency) in times of emergency because then it’s actually got debt, liquidity, and, obviously, the Treasury stands behind it.
‘When you’re using another currency, those things would not be as strong and it would not be as straightforward to be able to run a business like that.’
Pankin also commented that China and Russia appear to be embroiled in a battle, both economic and military, with the West – which the West seems to be losing.
‘The BRICS (acronym for the five major emerging economies: Brazil, Russia, India, China and South Africa), and the SCO (Shanghai Cooperation Organisation, the Eurasian political, economic and security body) as well as many other international organisations have intensified their multilateral discourse on the subject, which is highly significant since the US has fallen out of favour with so many countries, most of which are gravitating eastward or away from the US,’ he said, adding:
‘Leaders of South and Central American countries have boycotted the so called Summit of the Americas, officially aimed at strengthening hemispheric solidarity.
‘Take the case of Brazil; The presidential candidate, Luiz Inácio Lula da Silva, has recommended using a Latin American currency in order to be free of the US dollar.
‘Lula da Silva has pledged many things that do not involve the US or the US dollar, such as strengthening its relations with all Latin American countries, vowing to revive the BRICS system, integrating Brazil, Russia, India, China and South Africa, in an independent economic architecture to challenge Western financial hegemony.
‘The BRICS group of nations has also been discussing the development of a BRICS-specific multilateral wallet and currency.
‘The United States has shown, time and again, over many decades, that it has no compunction about taking unlawful, unilateral measures to get what it wants, as evinced by its harsh sanctions policy against many nations.’
- United Nations Secretary-General Antonio Guterres has warned that the risk of nuclear conflict is currently at the highest point in decades, urging all nuclear countries to commit to the ‘no-first use’ of these weapons.
Guterres made the remark in an address to the UN Security Council on Monday, organised by China which holds the presidency this month, on ‘promoting common security through dialogue and cooperation.’
‘Countries with nuclear weapons must commit to the ‘no first use’ of those weapons,’ Guterres stressed.
‘They must also assure states that do not have nuclear weapons that they will not use – or threaten to use – nuclear weapons against them, and be transparent throughout.
‘Nuclear sabre-rattling must stop.’
The Secretary General also urged ambassadors in the UN Security Council to recommit to ‘dialogue, diplomacy and mutual trust,’ saying: ‘The path to peace is forged by dialogue and cooperation,’ and shaped by ‘a common understanding of the threats and challenges.’
Russia’s UN Ambassador Vassily Nebenzia, however, told the council that the trust between key international players in nearly all the UN institutions is at ‘a critically low level.’
‘The international security system is experiencing a profound crisis’ he said, and for over 200 years, Western countries have blamed Russia for everything.
He accused the US and its allies of ‘acting in the same reckless and provocative manner in Asia and Africa’ as they are in Ukraine.
He also accused Western countries supporting Ukraine of ‘essentially helping Kiev in its attempts to nuclear blackmail’ while ignoring the shelling of the Zaporizhzhia nuclear plant by Ukrainian armed forces.
Ukraine has accused Russia of using the plant as a military base and shelling it and the surroundings.
Russia called for an emergency meeting of the Security Council on Tuesday over ‘Ukrainian provocations at the nuclear facility’.
Citing Russia’s February invasion of Ukraine, US Ambassador the the UN, Linda Thomas-Greenfield, told the council that one of the greatest threats to maintaining global peace and security is the military conflict in Ukraine.
President of the Nuclear non-Proliferation Treaty (NPT) review conference, Gustavo Zlauvinen, told the Security Council without specifically naming any country, that, since February, ‘the NPT faces a raft of challenges, the diversity and scope of which are unlike anything that has come before.’
Russian President Vladimir Putin, however, has repeatedly said that ‘a nuclear war cannot be won and must never be fought.’
Russia has dismissed media speculations about a possible deployment of nuclear or chemical weapons in Ukraine, saying Moscow has ‘no need’ to use its nuclear arsenal to achieve its goals in the conflict.
The council meeting took place during the pandemic-delayed conference to review the 50-year-old Nuclear nonProliferation Treaty which is considered the cornerstone of international disarmament efforts.
The 50-year-old NPT seeks to prevent the spread of nuclear arms beyond the five original nuclear powers — the US, Russia, China Britain and France.
It also requires non-nuclear signatory nations not to pursue atomic weapons in exchange for a commitment by the five powers to move toward nuclear disarmament and to guarantee non-nuclear states’ access to peaceful nuclear technology for producing energy.
A senior Russian diplomat warned the Review Conference earlier this month that NATO was waging a hybrid confrontation that ‘dangerously balances on the edge of an open military clash’ with Russia.
Russia’s Embassy in Washington also said at the time that the US had been increasing the threat of ‘a direct military clash of nuclear powers’ through ‘hybrid confrontation’ in Ukraine.
Russia launched the military offensive against Ukraine on February 24. President Putin said at the time that one of the goals of this ‘special military operation’ was to ‘de-Nazify’ Ukraine.
Since the war began, the US has been providing Kiev with military aid, including at least 16 High Mobility Artillery Rocket Systems (HIMARS).
