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Kassioun Editorial 1062: The End of the Petrodollar Era?
The past weeks have revealed sufficiently clearly what Kassioun has previously said since the Ukrainian event started, which is that Ukraine itself is only the tip of the iceberg in a conflict that extends much deeper and broader, and one that revolves around the nature and future of the existing world order in its entirety.
What we are witnessing today of economic-financial-political movements that include Russia, China, India, Brazil, and other countries, and despite the magnitude of these movements in term of their meanings and effects, they are only the beginning of a comprehensive process to change the existing world order. We particularly emphasize the importance of the expansion of exchange in local currencies to oil, which appeared in the recently signed and announced contract for the sale of 3 million barrels of oil from Russia to India in the Indian currency. Other manifestations include using the Chinese yuan as a benchmark, as well as the already existing exchanges in local currencies between Russia and China.
In order to clarify the huge impact not of the deal itself, but of the door it has opened, it is necessary to briefly go back to the petrodollar equation:
With the signing of Bretton Woods in 1944, the dollar gained a unique global position by being recognized as a global currency. However, Bretton Woods did not exempt the dollar from the gold cover. The printing machine has worked nonstop since then, but an important political and financial turning point occurred in the early 1970s, with the US openly canceling linking its dollar to gold. This was a matter that could not have gone through without two basic tools: a) Imposing the pricing of oil and, consequently, almost all raw materials in dollars; and b) the widely spread US military bases around the world to ensure this imposing process by force.
On this basis, the petrodollar era started, during which the dollar continued to be universally recognized despite its massive inflation, and despite the fact that it was the main plundering tool in the hands of the global and American elite in particular, only because it was forcibly the currency in which raw materials are priced, especially oil. What we are witnessing today is the beginning of the end of the petrodollar, with all its major political, economic, and cultural consequences. At least, it has become clear that the battle whose iceberg tip is Ukraine will objectively extend to several major areas, mainly the following:
First: Changing the global political system, represented by the UN and other international institutions, is now on the agenda of history; a change towards restructuring these organizations in proportion to the real balances, and also towards moving their center to a truly neutral place.
Second: Declawing NATO as a prelude to ending it and reaching a balanced world whose disputes will be settled by a new “united nations”, without military alliances of any kind.
Third: Gradually but rapidly ending the unequal exchange system between the West and the rest of the world, which was the main tool linked to the dollar within a continuous and long-term plundering process.
Fourth: Opening the door before really and radically solving the regional crises that have not stopped breeding over the past decades, none of which reached real solutions, and the main factor in the creation of which was the West with its plundering, agents, and bullying.
The Syrian crisis, within these coordinates, is also one of the most important and first crises on the agenda and that will be resolved according to UNSC Resolution 2254, with or without the West’s participation.
