Tishwash: this was in Iraq’s news
The economic shift in the region towards the abandonment of the dollar currency
The Ukrainian conflict led to the acceleration of the global economic transformation in its adoption of the dollar currency, especially by the countries that were imposed on them by economic sanctions by America and its allies from among the European countries, and this means that the days of dollar hegemony are in their last days.
Let us take an example of the above, which is the West Asian region, especially the Arab Gulf countries, which have special and close relations with the United States of America, especially in the field of economy and energy, and began specifically with Saudi Arabia since 1937, the oil concession contract and the establishment of the Arab American Company (Aramco), and since that time until today Saudi Arabia has become the most important ally in the region for the Americans.
20 years ago, trade between the Kingdom of Saudi Arabia and the United States of America was exactly five times the volume of trade exchange with the People’s Republic of China, as a result of several things, including:
1- The great technological and commercial development of China.
2- Licenses for Chinese products and services in exchange for other American and Chinese products.
3- Reading the economic reality that predicts that China will be the country with the largest economy in the world, and therefore it is wise to build trade relations with it.
As a result of these global variables, numbers and equations changed, especially after 2021, the volume of trade between China and Saudi Arabia became three times the volume of trade with the United States of America, and the figure below shows this.
On the other hand, China supplies oil from Saudi Arabia, meaning that Saudi Arabia is the largest supplier and ranks first in the field of oil and petrochemicals, and that China has a large economy, as it is the largest consumer of oil and is the largest country that buys and imports oil in the world, and this is what helps West Asian countries, including the Gulf countries. Arab countries, including the Kingdom of Saudi Arabia, tend to deal in the Chinese yuan instead of the US dollar.
This is a natural thing due to the large volume of trade exchange with China, because its interest necessitates that it deals with China in its currency, and the use of a currency other than the dollar avoids those countries from being subject to American hegemony over the economies of the region by imposing their economic will through their absolute authority over the movement of the dollar.
Examples of that The United States of America froze the assets of many countries, including the Islamic Republic of Iran and Russia, after the start of the Ukrainian crisis, which amounts to the Russian reserves of foreign currency dollars at the limits of 300 billion dollars and the Swift system for financial transfers, and this matter makes many countries, including West Asian and oil-producing countries, to worry from US sanctions.
Especially after America and the European Union imposed sanctions on countries and companies operating in Russia that buy Russian oil, and then followed that with a decision to set the price of a barrel of Russian oil at $60 while the reference crude is around $80, and then also impose sanctions on petroleum products. such as gasoline and gas oil.
The most important solution that countries must adopt in which the dollar is the main currency in foreign trade transactions is diversification and planning for an alternative currency in reserve from hard currency, especially from the yuan currency.
In the past few days, that is, in April of 2023, events began to accelerate in moving away About the dollar currency, and the Islamic Republic of Iran was the first country that resorted to other than the dollar, such as using the euro, the ruble, or local currencies in its commercial dealings. Finally, after Western sanctions on the Russian Federation, the latter resorted to dealing in the Chinese yuan as a way to get rid of dealing in dollars. Russia has been imposed on countries that buy gas and oil in their local currency, which is the ruble.
As we see that at the beginning of 2022, more than 50% of Russian exports took place in the US dollar currency, and on the other hand, no commercial transaction took place in the Chinese yuan currency at a significant rate in Russian commercial transactions, as the percentage was only 0.4%, but Western sanctions from Before America and NATO accelerated the commercial transformation of transactions, as more than 14% of Russian exports are made in Chinese yuan, and this happened within one year only, but the Russians did not impose sanctions on dealing in dollars or euros, and this made it easier for the rest of the banks (except for the Central Bank) deal with that work.
The dollar, as everyone knows, and after 1972 and the Nixon setback, became not covered by gold, and as for the Chinese yuan, it is like the rest of the world’s currencies, it has no cover of gold, and it has become and becomes stronger day after day with the strength of gold and the strength of the Chinese economy, and thus it has become a striking force and this is what China and Russia need to maintain On their political and economic standing against Western sanctions.
The global economic and political change has become clear to many countries of the world, and therefore some countries decided to change the currency in their commercial dealings from the dollar to the Chinese yuan.
Among those countries are Brazil, India, China, South Africa and Russia. Those countries are called BRICS countries, which represent 40% of the world’s population. And just as there are 12 other countries that decided to deal with China in yuan, including Saudi Arabia, which owns the second oil reserves in the world and the largest producer of it as well, which submitted a request to join the BRICS countries.
We also note that the value of the dollar during the past years has decreased year after year, and the reason is that it is not backed by gold and is backed by American hegemony only, and that the United States of America (the US Treasury) prints the dollar according to its need, not in 1972, when US President Nixon stopped valuation of the dollar in gold
And now she began to think Seriously, the BRICS countries will create their own currency and be backed by gold in order for it to have strength, and therefore it will be the first time in more than half a century that a gold-backed currency appears to us, thus giving it priority and preference over the deteriorating US dollar, as well as giving people, countries and companies reassurance in dealing in this currency instead A dollar that is only paper.
The European Union has its own currency, and this currency has respectful dealings with regard to global trade, and it is independent of the dollar.
Therefore, the world will witness a new currency, which is the BRICS currency, in addition to the currency of the dollar and the euro, and thus it will deal according to three global actions.
As for Iraq, it will remain dependent on the dollar only because it does not dare, until now, to make blister money come directly to it, despite the absence of any legal cover for the Americans to put oil money The Iraqi is in the American Federal Bank, and what made the matter more complicated, in the recent negotiations at the end of February between the Iraqi government and the US Treasury, the funds were added to a loop that increases the complexity of the matter, which is that the funds are transferred from the Federal Bank to the GB Morgan Bank and then to the Central Bank of Iraq . link