Henry Kissinger, the Machiavelli who created the petrodollar, died at the age of 100.
From the Quincy Pact to the petrodollar
Henry Kissinger became President Richard Nixon’s Secretary of State in 1973. That is to say, just two years after the end of the gold standard.
This collapse of the international monetary system established in 1944 at Bretton Woods should have dug the grave of the dollar. This was without counting Henry Kissinger and his brilliant geopolitical poker move: the petrodollar…
In fact, the beginnings of the petrodollar date back to 1945, when American President Roosevelt, returning from the Yalta conference with Stalin and Churchill, met King Abdelaziz Al Saud aboard the USS Quincy.
This meeting was later called the Quincy Pact. Kranklin Roosevelt got Saudi Arabia to guarantee American energy supplies for 60 years.
Due to current events, note that the American president had to promise not to authorize the creation of a Jewish state in Palestine. Unfortunately or fortunately, it depends, Roosevelt died two months later and his successor Harry Truman, hand in hand with the English, recognized the State of Israel immediately after its creation.
Despite this betrayal, Saudi Arabia did not cut ties. She needed Washington to counter Nasser’s growing popularity in Egypt. His pan-Arab socialist policies were indeed an existential threat to the Saudi monarchy. The United States, for their part, saw it as an opportunity to counter the USSR, then an ally of Cairo.
But let’s come back to H. Kissinger.
The masterstroke
His poker move took place in June 1974 during a meeting with King Faisal bin Abdulaziz Al Saud in Saudi Arabia. It was the culmination of a Machiavellian plan with its roots in the Israeli-Arab Yom Kippur War (1973).
At the time, Kissinger convinced President Nixon to intervene on Israel’s behalf. Henry Kissinger was indeed Jewish. In retaliation, Saudi Arabia will raise the price of a barrel from 3 to 12 dollars.
This is exactly what Henry Kissinger wanted, who will end up simply threatening Saudi Arabia with the use of force to remedy what he then describes as “strangling the industrialized world”. It wasn’t a bluff. The newspaper London Sunday Times revealed in February 1975 the existence of the plan “Dhahran Option Four” who planned to invade Saudi Arabia.
King Faisal heard these drumbeats very clearly and, at the end of 1974, came to an agreement with Kissinger who promised him unlimited arms sales as well as a return of Israel to its 1948 borders.
In exchange for which the kingdom had to undertake to respect two things:
– Sell your oil EXCLUSIVELY in dollars
– Invest your surplus dollars in American debt
The petrodollar was born, thanks to H. Kissinger, who was undoubtedly a great architect of the special relationship that the United States maintains with Israel.
European nations which had had the audacity to exchange their dollars for gold found themselves obliged to accumulate dollars again to buy the oil essential to any industrialized nation. Checkmate.
As for the agreement on Israel’s borders, it was quickly forgotten following the assassination of King Faisal a few months later…
Enter Bitcoin
Thanks to H. Kissinger, the dollar has firmly established itself as the international reserve currency par excellence.
Even today, 58% of reserves held by central banks are in dollars. This allows Uncle Sam to enjoy a chronically deficit trade balance without the dollar depreciating.
The reason being that central banks are reinvesting their dollar reserves in American public debt. Clearly, the dollars that the United States spends by going into debt to pay for its large imports come back to the fold, which prevents the dollar from depreciating. Such is the famous exorbitant privilege of the empire.
Several countries have tried to sell their oil in a currency other than the dollar. Iran and Iraq in particular. Without success…
This monetary hegemony is, however, seriously threatened. Russia’s military demonstration has apparently triggered a global revolt against the greenback. The “freezing” of 300 billion dollars (and euros) has not gone unnoticed either.
As the Russian president recently said:
“We are currently fighting for the freedom not only of Russia, but also of the whole world. We openly declare that the dictatorship of a hegemon – now evident to all – is decaying. »
More and more nations, led by the BRICS, are turning away from the dollar, also galvanized by the awakening of China.
The Middle Kingdom is at the forefront, as evidenced by the 40% drop in its dollar reserves since 2014. The recent signing of a currency swap amounting to 50 billion yuan between Saudi Arabia and China is a new nail in the coffin of the petrodollar.
Energy scarcity and geopolitical tensions are fueling inflation and sweeping away certainties. In this context, the world is looking for a new store of value and the fact that gold is at an all-time high is an unmistakable sign.
The barbarian relic, however, has competition. Stateless, uncensorable and an absolute store of value, bitcoin is designed to become the next international reserve currency.
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