Dedollarization is underway. In turn, Iraq throws itself into the arms of China by accepting the yuan as payment for its oil exports.
Petroyuan
After Saudi Arabia, it is Iraq’s turn to announce its intention to accept currencies other than the dollar in payment for its oil. The Iraqi central bank opens the door to settling its trade with China directly in yuan.
This is the first time that imports from China will be financed in yuan. “Iraqi imports from China were financed so far in dollars only”government economic adviser Mudhir Salih told Reuters on Wednesday.
That said, Iraq had already tried to swap the dollar for the euro at the time of Saddam Hussein…
It has often been said that the second Gulf War was a “war for oil”. But there is confusion. It is more accurate to speak of a war aimed at ensuring that oil is sold only in dollars.
Saddam Hussein was hanged for his decision to denominate Iraqi oil in euros rather than dollars. This ephemeral gift allowed the euro, then in distress, to appreciate by 30% in a few months.
Everyone knows the rest… Dick Cheney, George Bush’s vice-president, will push Collin Powel to lie before the United Nations. His assertion of the end of a vial supposed to contain a formidable bacteriological liquid will remain in the annals.
And this while the 300 UN inspectors dispatched to the scene had found nothing… Paul Wolfowitz, Bush’s Minister of “War” will even confess later:
“For bureaucratic reasons, we chose an issue, weapons of mass destruction, it was the only reason that could achieve unanimity”.
[Nous recommandons de regarder le film « Vice »…]
The Iraq war was a show of force to defend the petrodollar. The Americans showed Europe as well as the Gulf countries what it costs to threaten the imperial currency. Oil sales will be restored in dollars immediately after the capture of Baghdad.
frozen iraq
Twenty years after Operation Desert Storm, the Americans control always the money from the oil wealth of the country of the two rivers. The dollar, as often, is used to blackmail Iraqis.
Recently, the United States sanctioned Iraq which does not want to cut its ties with Iran. The Persians indeed helped Iraq to get rid of the DAESH mercenaries under the control of Washington. [La fameuse opération Timber Sycamore financée par le Qatar et pilotée par la CIA…]
Iraq has been unable to access its own dollars for several months. Either the same treatment suffered by Russia from the beginning of the war. We are talking about the equivalent of 300 billion euros in the Russian case.
“Around 80% of transactions are rejected”said the Prime Minister’s financial adviser, reports the PA. “Even when transactions are approved, it takes up to 15 days to get the funds, instead of two or three days in normal times”said al-Hasnawi, chairman of Mosul Bank and first deputy of the League of Private Banks of Iraq.
Consequently, the exchange rate soared to 1,750 dinars for one dollar on the black market, against an official rate of 1,460 dinars for one dollar. This devaluation comes as Iraq’s foreign exchange reserves reach a record level of around 100 billion dollars, inflated by the rise in the price of a barrel.
US officials declined to comment in detail on the confiscation of a sovereign country’s money. Nevertheless, it is clear that Washington is punishing Iraq for supporting friendly countries Syria and Iran.
The Associated Press reports indeed “that large amounts of dollars have been transferred for years out of Iraq to Turkey, the United Arab Emirates, Jordan and Lebanon through false invoices for overvalued items”.
This process allows dollars to be taken out of the country and then sent to Iran and Syria, two countries under US sanctions.
Once again, the United States is using the dollar as a weapon for blackmail. This did not escape Russian Foreign Minister Sergei Lavrov. The latter went to Iraq in early January to discuss the possibility of paying for oil in friendly currencies.
Lavrov said: Given the dollar restrictions for our two countries, it is important to protect legitimate economic relations from western pressure by switching to reliable currencies for payment of oil supply. ».
The extraterritoriality of the dollar…
The United States does not even need to disconnect Iraq from the SWIFT System. Iraqi banks must indeed use an American system requiring the entry of detailed information on the final recipients.
On a global scale, it is 7,000 billion dollars that the central banks of the world hold in the form of dollars which could suffer the same fate as those of Iraq and Russia. Dollars that never actually leave the United States…
Foreign central banks reinvest their dollars in US debt to earn interest. And it is thanks to this so-called “petrodollar” system that the United States can afford to have a chronically negative trade balance without the value of the dollar collapsing.
Not content with having a slate of 7,000 billion via the “recycling” of petrodollars in its debt, as Henry Kissinger said, the United States allows itself to dictate to countries how to spend these dollars.
The dollar has become a tool for financially sanctioning countries that do not align themselves with this extraterritorial US “right” or, to put it more accurately, US imperialist foreign policy.
The greenback will end up paying dearly for this economic interference, which takes many forms. Fines, blackmail, monetary and economic embargoes, but also speculative attacks on exchange rates and debts, freezing of bank accounts and foreign exchange reserves, disconnection from the SWIFT network, etc.
We are talking today about Iraq, but Turkey is also paying the price for its political independence. The Turkish lira has melted by 50% in the space of one summer (2018) under the battering of JP Morgan and City Bank.
Iraq’s decision to start selling its oil in yuan is the latest sign of the dollar’s twilight. From now on, the Yuan and the international payment system CIPS will play an increasingly important role on the international scene.
There is plenty to do on a bilateral level since the total volume of Sino-Iraqi trade amounted to 53 billion US dollars in 2022. China and India now import more than 60% of Iraqi oil, against less than 5% for the United States…
Global sling against the greenback
The Iraqi rebellion adds to the wind of peace that has been blowing in the Arab world since the devastating earthquakes that ravaged entire regions in Syria as well as in Turkey.
Countries like Saudi Arabia, which supported DAESH (especially Qatar), have now expressed the need to end the status quo of enmity with Damascus and send it humanitarian aid.
It is even rumored that the Saudi Minister of Foreign Affairs could soon visit the country. Several Arab states, including Algeria, Tunisia and Iraq, have all ignored the risk of US sanctions. All have provided aid to Syria through the Syrian Arab Red Crescent.
Better still, the foreign ministers of Turkey and Syria will meet soon. This will pave the way for a Putin-Erdogan-Assad meeting in Moscow. With this wound healed, the Arab League could once again provide a united front on the international scene.
All of this suggests that the end of the petrodollar is near. Especially since India is taking off. After Russia, it is now the UAE, Malaysia, Indonesia, Singapore and Nigeria who want trade with India in rupees rather than dollars.
The India Times reports this statement on the sidelines of the recent G20 finance ministers by an Indian central bank official:
“The world can trade in two ways – in one currency and the second option is to trade in other currencies. The second option is obviously less risky”.
India and Singapore have already linked their respective payment systems (UPI and PayNow) to settle transactions.
“The link between UPI and PayNow is a new milestone in India-Singapore relations. Its launch is a gift for the citizens of both countries”said Indian Prime Minister Narendra Modi.
Russia and India are also in talks to mutually accept Russian Mir and Indian RuPay payment cards. The two governments would also discuss the possibility of integrating the UPI and the Russian SPFS. These are their respective versions of the SWIFT system for international transactions.
And Bitcoin?
Since the start of the war in Ukraine, India has strategically increased its purchases of Russian oil. These purchases allowed Moscow to escape the blow of the sanctions.
New Delhi has very clearly chosen to support Vladimir Putin and to embrace dedollarization. A new era is dawning. Now, will the United States and Europe take advantage of geopolitical tensions to not repay their debts?
According to the IMF, the euro and the dollar together represent 80% of global foreign exchange reserves. Or 9,566 billion dollars at the end of the fourth quarter of 2021. They have since fallen to 8,558 billion, a drop of more than 10% in just one year. Not to mention the “freezing” of hundreds of billions belonging to Iraq and Russia…
That’s a lot of money that will probably never be repaid… This is how you can never be sure that a nation will repay all its debts. No one trusts the dollar anymore.
Hence the recent massive purchases of gold by central banks. Except that gold is very expensive to transport (and to verify). The barbaric relic is no match for bitcoin and its monetary mass absolutely limited to 21 million units.
Iran is already using it to pay for its imports and Russia is investing heavily in mining. We even feel that the tide is turning in China. Former PBOC pundit Huang Yi-ping recommends reversing the decision to ban exchanges from selling BTC.
According to the DailyHodl, “China seems to quietly support Hong Kong’s potential decision to allow bitcoin sales”. In any case, this is what the Securities and Futures Commission (SFC) of Hong Kong wants.
And remember in passing that 20% of Mining machines are still on Chinese territory. Four times more than in Russia or Iran.
How not to consider that the bitcoin replaces the Dollar once the American government will have defaulted? Stateless and uncensorable, bitcoin is clearly eyeing the space left behind by the dollar.
Nations need a currency not dependent on any particular nation. We are talking about an 11 trillion dollar pie. Enough to make bitcoin climb to 500,000 dollars…
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