PRESS TV
04/18/2014
The very rich and powerful families who control the US military industry complex reacted by trying to revert to their tried strategy of re-activating a new Cold War that paints Russia as evil and tries to cripple or severely weaken her. Ultimately it was a stupid decision being implemented by very stupid people, who believe they are very smart.
OAO Gazprom, the world’s biggest natural-gas producer, plans to issue Chinese Yuan-denominated debt in the coming days. Because of Obama Administration sanction threats, the interest rate for Gazprom debt in dollars is rising dramatically while that of Yuan debt is falling, making it attractive to issue the Yuan debt. But this is a decision that makes more than business sense. It accelerates a trend by Russia, China, Iran and other countries to abandon the US dollar as world central bank and trade reserve currency.
Wars With Other Countries’ Money
The role of the US dollar as the world’s leading reserve currency is more than a status symbol. Since the creation of the Bretton Woods monetary order in 1944, the role of the dollar as reserve currency has been at the center of American power. After August 1971, when Nixon ended the convertibility of foreign-held dollars for US Federal Reserve gold stocks, the dollar has been a fiat currency whose relative value has fluctuated up and down.
Ironically, that has in effect meant that the US has been able until recently to finance its foreign wars and trillion dollar military budget using Chinese, Russian and other nations’ dollars.
When the Euro threatened the reserve currency status of the dollar in 2010 as Washington ran annual trillion dollar+ budget deficits, the Chinese and others began buying bonds denominated in Euros instead to diversify their risk of a possible US default.
But other national central banks took notice that the dollar was losing its value, as Washington continued to print money without limit, in order to rescue the bankrupt Wall Street banks with what the Federal Reserve calls "Quantitative Easing."
China, Russia and other major trading nations have quietly begun to develop alternatives to using the US dollar for their bilateral trade.
Dramatic Shift in Dollar Role
A new report by the International Monetary Fund reveals a dramatic shift in the role of the US dollar as reserve currency. Some 23 countries today report holding Chinese Yuan as official reserves. That, despite the fact the Yen, much like the French Franc after World War II, is not yet fully convertible into other currencies. The Chinese are moving to convertibility in very carefully measured steps.
The most dramatic point in the IMF report is the fact that the relative role of the US dollar in central bank reserves is rapidly declining. Yes, the dollar is still the largest reserve currency.
The foolish Obama sanctions threats against Moscow are simply accelerating the refocus of giant Russian companies like Gazprom and Norlisk Nickel to the huge Asian market. Russian mining companies, including OAO GMK Norilsk Nickel, the world’s largest producer of nickel, are stepping up activities in Asian markets in the last month.
A China-Iran-Russia Triangle
The NATO-led Ukraine coup and ensuing crisis have dramatically accelerated the trend not only by Russian companies to look east. Other nations realize they could someday be target of Washington sanctions and are looking to lessen their dollar exposure. Iran and Russia recently announced a huge barter deal that allows the two to skirt US-imposed economic sanctions.
And in May, Russian President Putin is scheduled to fly to Beijing where he is expected to sign a mammoth 30-year deal to supply China’s energy-hungry economy with Russian gas. State-owned Gazprom plans to pump 38 billion cubic meters (bcm) of natural gas per year to China from 2018 via the first pipeline between the world's largest producer of conventional gas to the largest consumer. Signing this deal after almost a decade of tough negotiations would mark another major step away from the dollar in international trade as both countries seek to free themselves from dollar wars or threats of same.
When Rosneft’s Igor Sechin was in Tokyo in late March discussing energy deals there, he told the press that US sanctions on Russia over Crimea could have negative consequences for the West. He declared that more sanctions over Moscow's seizure of the Black Sea peninsula from Ukraine would be counter-productive.
What is emerging is a tectonic shift in monetary relations with the largest nations of Eurasia to conduct bilateral trade denominated in either Rubles or Renminbi, or gold. If we add Iran, possibly Iraq and India, and now, with Turkey’s Recep Erdogan looking away from NATO for new allies, amid his life-or-death battle with the CIA-run Fetullah Gülen, Turkey could well join such an emerging Eurasian economic alliance.
Unintended Consequences
The Ukraine NATO coup and Washington’s disastrous attempt to topple Syria’s Assad have accelerated the creation of what they ultimately most want to avoid. It’s what Zbigniew Brzezinski warned of in his 1997 The Grand Chessboard when he wrote, “It is imperative that no Eurasian challenger emerges, capable of dominating Eurasia and thus of also challenging America.” The former Obama adviser went on to state,
"In that context, how America 'manages' Eurasia is critical. A power that dominates Eurasia would control two of the world's three most advanced and economically productive regions. A mere glance at the map also suggests that control over Eurasia would almost automatically entail Africa's subordination, rendering the Western Hemisphere and Oceania (Australia) geopolitically peripheral to the world's central continent. About 75 per cent of the world's people live in Eurasia, and most of the world's physical wealth is there as well, both in its enterprises and underneath its soil. Eurasia accounts for about three-fourths of the world's known energy resources."
Brzezinski then spoke of what he called a “Zone of Percolating Violence.” The heat on the percolator, of course, would be regulated by Washington and NATO.
The people in Washington or Brussels, like Brzezinski or the pathetic Victoria Nuland at the State Department—the former Dick Cheney aide who was given responsibility for the logistics of the Ukraine NATO coup—are essentially stupid people. They are stupid in a very specific way. Not that they are not well-educated, some from the finest “elite” universities, with years of political experience.
Their stupidity lies in their inability to think-through or foresee the global consequences of their actions.
FWE/SL