by Jeff Thomas http://internationalman.com
One of the symptoms of a declining empire is that it becomes less and less productive and therefore less relevant to other countries. Any empire, whilst in its prime, will have a strong currency. As its productive relevance declines, so will its currency. Invariably, its leaders attempt to keep the currency strong, in spite of the decline in national relevance. Rather than return to a more productive condition, the empire almost invariably resorts to force.
The US has been unusually forceful in this regard. In order to retain the dollar as the currency upon which oil is denominated and paid for, the US has attacked countries (Iraq, Libya) when their leaders have announced that they will, in future, accept other currencies or gold as payment for oil.
The US has also attempted to retain the dollar as the default currency of the world by applying sanctions (refusal to allow the use of the SWIFT system, lowering oil prices, demanding that its allies cease to trade with offending countries, etc.).
This approach to solving the waning strength of a currency rarely works and in the case of the US, has failed spectacularly.
For hundreds of years, Russia and China have been less than friends and even when they are getting along, have always remained suspicious of one another. However, the measures imposed by the US have caused them to join forces out of mutual interest. They have both built up their gold reserves, are in the process of laying their own trans-Atlantic cable to allow independent worldwide communications, are creating their own SWIFT system (the Double Eagle Project), and have recently inked the largest energy deal the world has ever witnessed, to be paid for in the ruble and the yuan.
In each case, these developments have been undertaken to sidestep US force, which had been intended to retain its level of power in the world. Had the US not applied such force, it might have declined to slowly become one of three major powers. Instead, it’s actually achieving the opposite to what was desired: it’s pushed Russia and China into creating alternatives to the US, making the US, in some ways, unnecessary.
Of course, both countries, especially China, will wish to continue trading with the US, but they’re creating a condition in which the US is the odd one out. Its teeth are being removed one at a time, leaving it soon to be a lesser player in the world.
At first, the moves to side-line the US were performed quietly, but increasingly, as each development by Russia and China has been successfully achieved, they’ve become emboldened, and in November 2014, Russian President Vladimir Putin stated publicly that he plans to leave the “dollar dictatorship” of the market and to increase the use of the ruble and the yuan in trading with China. (Between January and September of 2014, settlements in yuan between China and Russia have increased 800%.)
Of course, we’re talking about the major players here. Those of us who are citizens of smaller countries do our best to make decisions independently from the majors, but when one of the big boys starts to apply the muscle to us, we often find that we must do as we’re told. And, of course, we resent it.
Generally, our independence as sovereign jurisdictions is respected by the US and we’re left alone, but increasingly, the US has brought pressure to bear on us all. The number of countries the US has intervened in is alarming to us (Iraq, Syria, Libya, Egypt, Ukraine, etc.). More alarming is the worldwide US economic invasion, under the guise of FATCA.
What this has done has been to create fear in sovereign nations the world over—not just of the invasion that FATCA represents, but of what might come next. Will the US begin raiding bank accounts in foreign jurisdictions? Will it begin taking possession of assets in other countries that it deems to be owned by its citizens?
This brings the discussion close to home for the citizens of all the world’s countries, and the result is that, although the citizens of a given country might at one time have favoured the US over Russia and China, they may now find themselves siding with the latter countries as a result of the overreach of the US.
If this is true, we might begin to find the “lesser” countries taking the first quiet steps to distance themselves from the US and to make themselves more independent of it.
Once we’ve projected a future trend such as this one, we might keep an eye out for early developments in this direction… and they’ve begun.
Beyond the US and EU
Recently, the Eurasian Economic Union (EEU), made up of Russia, Belarus, Armenia, and Kazakhstan, announced a plan to create a single market by 2025. The objective will be dollar-free trading. Of course, the EEU is Russian-dominated, so this plan is not a surprising one. However, two of these countries are also members of the Shanghai Cooperation Organization (SCO), which additionally includes China, Kyrgyzstan, Tajikistan, and Uzbekistan and has, as observers, Afghanistan, India, Iran, Mongolia, and Pakistan.
Once the EEU is under way with its plans, it would not be at all surprising if the SCO got on board. Might this then trigger the much larger Eurasian Union to also agree to the plan? And the Association of Southeast Asian Nations (ASEAN)? If so, virtually every country east of Iran would be on board.
What then of the rest of the world? Would they be likely to wait their turn and begin to create safety for their own currencies after the Asians have already done so?
Apparently not. On 2nd November 2014, Brazil and Uruguay, who have traditionally used the dollar for bilateral trade, decided to switch from the dollar to the Brazilian real and the Uruguayan peso. Carlos Francisco Teixeira da Silva, Professor of International Relations at the Federal University of Rio de Janeiro described the move as "the best opportunity for the countries of South America to get rid of the old mechanisms of economic regulations dictated by the United States."
This is no dryly phrased comment. It leaves no uncertainty as to the resentment toward the US, nor as to the intent of the two countries. Such developments serve as a reminder to us that even the smaller countries of the world, whilst fearful of empires, will seek out opportunities to work together with larger countries to escape the oppression of an empire.
Each small country in the world is unable to combat an economic attack from the empire unilaterally, but when they act in concert, particularly if a major power sets the stage for them, they can have enormous overall effect.
By mid-2015, the Russian Double Eagle Project is expected to be in operation. The world will have a second SWIFT system. If it is devoid of the US-imposed restrictions of the existing SWIFT system, it will not only immediately be used by Russia and China, but, in my belief, will be used by the overwhelming majority of countries.
Further (and the reader is encouraged to offer an opposing prediction if he has one), importers, exporters, and investors who are citizens of the EU and US are also likely to make use of the Double Eagle, instead of SWIFT, wherever they are able to do so.
If this premise is correct, the rejection of the dollar will occur from within, as well as without.
The ability of the world to ditch the dollar will be a major, major change in world economic balance… and a major step forward for world economic freedom.
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