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Analysis
Confirmation of Pressure on Dollar
and US Decline
by K. Gajendra Singh
 London’s ‘The Independent’ of 6 October has
focused attention on the coming fall of US hegemony beginning
with the pressure on US dollar, following the not so secret
meetings between Arab states, China, Russia, Japan and France
to stop use of the US currency for oil trading. Its intrepid
correspondent Robert Fisk points to a incoming epochal financial
paradigm with the Gulf Arabs along with China, Russia, Japan and
France moving to a basket of currencies including the Japanese
yen and Chinese Yuan, the euro, gold and a new, unified currency
planned for nations in the Gulf Co-operation Council, including
Saudi Arabia, Abu Dhabi, Kuwait and Qatar. “The transitional
currency in the move away from dollars, according to Chinese
banking sources, may well be gold.”
China has a hoard of US $ 3 trillion (China’s GDP is 3
trillion and India’s one trillion, USA’s around 13 trillion and
fast going down) while Abu Dhabi, Saudi Arabia, Kuwait and
Qatar together hold an estimated $2.1 trillion in dollar
reserves. There is no mention of Indian rupee yet in the basket
of currencies. After 26/11 no one talks of India as a power to
reckon with, having become a US poodle and a victim of US
policies and whims on China, Pakistan, Kashmir or even
Afghanistan, in the process angering Iran, a regional power. Washington has been forced to negotiate with directly and
indifferent relations with Moscow, which is unlikely ever to be
India’s strategic enemy. This is a result of India’s ham handed
and bankrupt foreign, defense and security policies.
“Secret meetings have already been held by finance ministers and
central bank governors in Russia, China, Japan and Brazil to
work on the scheme, which will mean that oil will no longer be
priced in dollars.”, as confirmed to The Independent by both
Gulf Arab and Chinese banking sources in Hong Kong .No wonder
there is sudden rise in gold prices.
While the transition from dollar markets is planned within nine
years but once the momentum gathers, the change can be fast and
traumatic.
Remember its military equivalent; US citizens hanging on to the
last helicopter fleeing the embassy in Saigon or the flight of
Shah of Iran with the 1979 onrushing Khomeini led Shia
revolution in Iran. US gendarme in the region, Reza Shah Pehelvi was armed to the teeth with an omnipresent hated spy
Savak trained in torture by CIA , the old masters. But his
regime collapsed like a house of cards.
I recall another example. In 1994, while posted at Ankara and
concurrently accredited to Azerbaijan, I went to make first
courtesy call when in Baku on the Head of the Mission of the
Russian federation. His Excellency received me in a two room
suite at the Intourist hotel -equivalent of a two star hotel.
This is what had befallen the Ambassador Extraordinary and
Minister Plenipotentiary (a highly misleading designation for
most of the ambassador now a days) yester years mighty Union of
Socialist Soviet Republics with Azerbaijan till recently its
satrapy.
At the same time Azeri President Haidar Aliev, a former senior
member of Soviet Politburo, had allotted a huge building to the
US ambassador and a good sized one to the British. The Israeli
Ambassador was getting a big embassy extended and renovated,
ostensibly to keep a watch on Iran from the North, while most
missions were accommodated in nondescript hotels like the
Intourist.
Washington which spends $ 600 billion on defense, almost as much
as the rest of the world put together, aka to protect its
hegemony and control of world resources is aware of the meetings
and would fight tooth and nail “this international cabal“ which
includes even loyal allies Japan and the Gulf Arabs.
This could lead to also an economic war between the US and China
over Middle East oil and gas, to begin with, further aggravating
the regions ongoing tensions and conflicts into a big battle
for supremacy. China relies very heavily on oil from the region
and would need even more for its still galloping economy. China
imports 60 per cent of its oil, much of it from the Middle East
and Russia. The Chinese have oil production concessions in Iraq
- blocked by the US until this year - and since 2008 have held
an $8bn agreement with Iran to develop refining capacity and gas
resources. China has oil deals in Sudan (much to west’s chagrin
and hence stories of genocide but not in Iraq even after death
of 1.3 million since the invasion and ongoing occupation) and
has been negotiating for oil concessions with Libya.
China has invested hundreds of millions of dollars in
Baluchistan’s port of Gawadar, next door to the oil wells of the
Gulf, from where it wants to lay oil and gas pipelines to
Xinjiang. It is believed that West would like to detach
Baluchistan and control north-west non-Pushtun Afghanistan, when
Pushtunistan, already taking shape ,comes into being .India
should encourage this development to counter China’s hegemonic
designs to surround India from all sides.
Iran announced last month that its foreign currency reserves
would be held in Euros rather than dollars. Of course, what
happened to Iraq when it tried to sell its oil in Euros rather
than dollars? A few months after Saddam Hussein announced his
decision, the US and UK invaded Iraq.
So this brings into the picture Tehran, which has been under US
led Western aggressive pressure since 2003 on the false claims
about its legitimate nuclear programme, almost like Washington’s
similar false allegations before its illegal invasion of Iraq
for its oil, as its subsequent action showed including public
admission that the war was for its oil by US deputy defense
secretary Paul Wolfowitz and Federal Reserve Chairman, Alan
Greenspan (The Yanks have the vanity ! or the hubris of telling
the truth). Therefore, since the last few years many sensible
western writers have been warning of a US and/or Israeli bombing
of Iran. The oil prices will skyrocket, China, Japan and others
including India will suffer. US has enough reserves for some
time and believes it can use force to get oil.
It is easy to start a war but difficult to predict its outcome
as US should know by now from its ‘Operation Iraqi Freedom’, a
racist appellation. It is caught in a quagmire and it will be
interesting how it would rescue its troops and heavy equipment
from there, as Iraqi Shias, and Shias elsewhere like Hezbollah,
in oil producing region of Saudi Arabia. Kuwait etc including
India will be very annoyed and have a tradition of martyrdom.
Like Pyongyang which has made clear of an attack on US troops in
South Korea and Japan, if North Korea is interfered with, Tehran
has made it known that attack from anywhere will lead to the
stopping of the flow of Gulf oil and attack on all US bases and
installations of its Gulf allies.
While the allies have been forced to buy arms worth hundreds of
billions of dollars from US and the West, they are unlikely to
be used very much. Few were used when Iraqi troops entered
Kuwait in 1990. An American diplomat, rather mischievously told
me, the Kuwaiti elite used their latest communication equipment,
the cell phones, to contact each other, got into their Cadillacs
and Mercedes and crossed over into Saudi territory.
In a clear sign of China's growing financial muscle, the
president of the European Central Bank, Jean-Claude Trichet,
pleaded with Beijing to let the Yuan appreciate against a
sliding dollar and, by extension, loosen China's reliance on US
monetary policy, to help rebalance the world economy and ease
upward pressure on the euro. The decline of American economic
power has been also admitted by the World Bank president Robert
Zoellick. "One of the legacies of this crisis (current) may be
recognition of changed economic power relations," he said in
Istanbul before the IMF and World Bank.
Apart from China's extraordinary new financial power - there is
historic anger among oil-producing and oil-consuming nations at
Washington’s manipulations of international financial system to
maintain its hegemony.
Brazil has also shown interest in collaborating in non-dollar
oil payments, along with India. Indeed, China appears to be the
most enthusiastic of all the financial powers involved, not
least because of its enormous trade with the Middle East.
Chinese exports to the region are now considerable which include
a huge range of products from cars to weapon systems, food,
clothes, even dolls.
“Ever since the Bretton Woods agreements – the accords after the
Second World War, which bequeathed the architecture for the
modern international financial system – America's trading
partners have been left to cope with the impact of Washington's
control and, in more recent years, the hegemony of the dollar as
the dominant global reserve currency.”
“The Chinese believe, for example, that the Americans persuaded
Britain to stay out of the euro in order to prevent an earlier
move away from the dollar. But Chinese banking sources say their
discussions have gone too far to be blocked now. "The Russians
will eventually bring in the Rouble to the basket of
currencies," a prominent Hong Kong broker told The Independent.
"The Brits are stuck in the middle and will come into the euro.
They have no choice because they won't be able to use the US
dollar." Chinese financial sources believe President Barack
Obama is too busy fixing the US economy and other internal
problems.
"These plans will change the face of international financial
transactions," one Chinese banker said. "America and Britain
must be very worried. You will know how worried by the thunder
of denials this news will generate."
However a word of caution.
In an article titled, “Beginning of the end of the Chinese
miracle”, Gordon G Chang wrote in South Asian in May 2009 that
after two decades of uninterrupted prosperity, the initial
stages of the downturn are exposing the inherent weaknesses of
China’s economy, and those fissures will be felt near and far.
Chang also wrote “The Coming Collapse of China by, Random House
Inc.” in 2001. Reviewing it in 2004 Yamamoto, a Japanese
described it as ‘one of the greatest books in this decade’ who
was struck by the resemblance between Japan and China. We know
Japan has been in deep economic crisis since long. Led by USA,
the Western nations, who have rolled back Eastern Ottoman empire
from the gates of Vienna, are going to fight tooth and nails. It
will be a fight among sharks with world community inside the
bull ring and shall suffer too.
I have written many articles on the decline and the coming fall
of US hegemony since 11 September, 2002. Some of these are
listed below.
The decline of the American Century Sept11, 2002 Atimes:
http://www.atimes.com/atimes/Middle_East/DI11Ak06.html
The US Empire –Beginning of the End Game 24Nov, 2006
http://www.informationclearinghouse.info/article15729.htm
The Decline And Coming Fall Of US Hegemony March 30, 2008
http://www.uruknet.de/?p=m42600&hd=&size=1&l=e
-- An editorial titled ' Collapse of U.S. economy ' in
Belleville Intelligencer of 27 Feb, 2008 confirms, by now
generally accepted ill health of US economy. Harry Koza in the
Globe and Mail recently quoted Bernard Connelly, the global
strategist at Banque AIG in London, that the likelihood of a
Great Depression is growing by the day. Martin Wolf of U.K.'s
Financial Times cited Dr. Nouriel Roubini of the New York
University's Stern School of Business, who outlines how the
losses of the American financial system will grow to more than
$1 trillion, an amount equal to all the assets of all American
banks.
The next domino to fall will be credit card defaults, and after
that... who knows? There are so many exotic funds out there,
with trillions of dollars in paper - or rather computer-screen
money - all carrying assorted acronyms, and all about to
disintegrate into nothingness. Over the next couple of years,
scores of banks that have thrived on these devices, based on
quickly disappearing equities, will fail.
The most frightening forecast so far comes from the Global
Europe Anticipation Bulletin (GEAB), "The end of the third
quarter of 2008 (thus late September, a mere seven months from
now) will be marked by a new tipping point in the unfolding of
the global systemic crisis.
"At that time indeed, the cumulated impact of the various
sequences of the crisis will reach its maximum strength and
affect decisively the very heart of the systems concerned, on
the front line of which (is) the United States, epicenter of the
current crisis.
"In the United States, this new tipping point will translate
into - get this - a collapse of the real economy, (the) final
socio-economic stage of the serial bursting of the housing and
financial bubbles and of the pursuance of the U.S. dollar fall.
The collapse of U.S. real economy means the virtual freeze of
the American economic machinery: private and public bankruptcies
in large numbers, companies and public services closing down."
"We are not experiencing a "remake" of the 1929 crisis nor a
repetition of the 1970s oil crises or 1987 stock market crisis.
What we will have, instead, is truly a global momentous threat -
a true turning point affecting the entire planet and questioning
the very foundations of the international system upon which the
world was organized in the last decades."
Western Military-Capitalist Civilization in Disarray September
25, 2008
http://www.uruknet.de/?p=m47513;
http://www.boloji.com/analysis2/0386.htm
"Credit easing does not and cannot substitute for earnings,
wages or tax revenues." Max Fraad Wolff
"The [US] financial system is out of control and has led the
economy into a wildly turbulent sea of heavily leveraged
speculation. -- the road ahead is dark and unknown." Steve
Fraser author of" Wall Street: America's Dream Palace."
"Before the US economy can truly begin to expand again, the
savings rate must rise to pre-bubble levels of 8pc--$2 trillion
of household debt must be eliminated", Economist David Rosenberg
Corporate Culture and Greed Sink the American Republic 17 May,
2009
http://www.boloji.com/analysis2/0442.htm
"Over-grown military establishments are under any form of
government inauspicious to liberty, and are to be regarded as
particularly hostile to republican liberty." --George Washington
(1732-1799), First US President.
"It is part of the general pattern of misguided policy that our
country is now geared to an arms economy which was bred in an
artificially induced psychosis of war hysteria and nurtured upon
an incessant propaganda of fear." --General Douglas MacArthur,
Speech, May 15, 1951
"[The] conjunction of an immense military establishment and a
large arms industry is new in the American experience. . . . In
the councils of government, we must guard against the
acquisition of unwarranted influence, whether sought or
unsought, by the military-industrial complex. The potential for
the disastrous rise of misplaced power exists and will persist."
--Dwight D. Eisenhower (1890-1969), 34th US President, Farewell
Address, Jan. 17, 1961
And finally,
Falling Empires and their Currencies Rome, France, England and
the USA
Part 2: From England to the United States of America
Rolf Nef January 16, 2007
http://www.financialsense.com/fsu/editorials/2007/0116.html
K Gajendra Singh, Indian ambassador (retired), served as
ambassador to Turkey and Azerbaijan from August 1992 to April
1996. Prior to that, he served terms as ambassador to Jordan,
Romania and Senegal. He is currently chairman of the Foundation
for Indo-Turkic Studies. Copy right with the author.
E-mail-kgsingh@yahoo.com
October 8, 2009
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