Cuba, a country subject to US sanctions and a stifling blockade that has continued for decades, decided to cancel free trading in the dollar in the country against the backdrop of the United States’ intensification at the time of its harsh economic war against the “island” of freedom.
The dollar’s global dominance began after World War II, when the leaders of 44 countries came together to establish a stable, reliable, and durable international monetary system. In the Bretton Woods Agreement, the dollar was made the main means of international settlements in trade and investment, as well as savings, including maintaining international reserves.
According to that agreement, the dollar was linked to gold at a price of $35 per ounce. However, the 1970 crises in the United States led to a decline in the US currency exchange rate and the collapse of the Bretton Woods system. At that time, the American government refused to exchange the dollar for gold.
When stagflation destroyed the gold standard, American leaders quickly replaced it with a floating gold exchange rate to maintain the dollar’s pivotal position.
Oil then became the new backbone of the global economy. The Organization of Petroleum Exporting Countries (OPEC) agreed to trade exclusively in US dollars. What is known as the “petrodollar” remained almost unchanged until the past few years.
This is how the need to get rid of “dollarization” arose!
The global financial crisis in 2008 revealed the weaknesses of the existing approach, by transmitting the “contagion” of the internal problems of one country, the United States, despite its economic strength, to other countries. The domestic mortgage crisis in the United States turned into a financial crisis, and that local crisis turned into a global economic crisis.
Saudi weight and the Egyptian role:
It would have been impossible to establish and consolidate the “petrodollar” without the cooperation and support of the Kingdom of Saudi Arabia. With increasing initiatives to eliminate dealing with the dollar at various levels, and governments beginning to reconsider the dollar and not consider it an irreplaceable asset, Saudi Arabia also began to follow this approach.
Multiple reports stated in March 2022 that Saudi Arabia was in talks with China about using the yuan instead of the dollar in oil and gas deals.
Egypt is also continuing its steps towards reducing dependence on the US dollar, whose local market has been suffering from a shortage since the first quarter of 2022. In this way, it was agreed to deal in local currencies with Turkey, while Cairo continues to seek to deal in the same way with Saudi Arabia and India.
The process of eliminating the dollar in international transactions is taking place gradually in the world. China, for example, which has the largest economy in the world after the United States, reduced in May 2022, for the first time in 12 years, its investments in American public debt to less than $1 trillion. By the end of August of the same year, the figure reached $971.8 billion.
As for Russia, it has actively begun to abandon the dollar since 2022. Russian President Vladimir Putin announced in a speech he delivered remotely before the BRICS summit held in South Africa in August 2023, that abandoning the dollar as a global currency is an irreversible process in the future. Russia and the world, noting that the BRICS summit “discusses a full range of issues related to the transition to national currencies in all areas of economic cooperation between our five countries.” From here the world begins to truly change for the better.
Source: RT
#dollar #Russia #China #Saudi #Arabia.
Interview with Dr. Elena Martinez, Economic Analyst and Cuba Expert
Editor: Thank you for joining us today, Dr. Martinez. Cuba’s recent decision to cancel free trading in the dollar comes amid long-standing US sanctions. Can you shed some light on the implications of this move for the Cuban economy?
Dr. Martinez: Absolutely. Cuba’s decision to limit the dollar’s role in its economy reflects its attempt to regain control amid external pressures. The US blockade has severely impacted the Cuban economy, and by reducing dependence on the dollar, Cuba might be seeking to enhance its economic sovereignty and explore alternative trading arrangements with countries that are willing to cooperate outside of US influence.
Editor: Interesting. You mentioned the idea of exploring alternative trading arrangements. Could you elaborate on what that might look like for Cuba?
Dr. Martinez: Certainly. Cuba might look to strengthen ties with countries that have also faced US sanctions or those that are questioning dollar dominance in international trade. This could involve greater use of currencies like the Euro, the Chinese Yuan, or even barter systems. The goal would be to facilitate trade without the added complications of using the dollar, which is often subject to US regulatory oversight.
Editor: Historically, the dollar gained prominence through agreements like Bretton Woods. Given the recent trends away from dollarization, do you see a shift in the global economic landscape?
Dr. Martinez: Yes, we are witnessing a gradual but tangible shift. The petrodollar system, for instance, has been challenged as countries like China and Russia look for alternatives. The global financial crisis of 2008 exposed vulnerabilities tied to dollar reliance, leading to greater discussions around economic diversification. While the dollar remains a major player, more nations are now recognizing the risks tied to relying solely on it, which could lead to a more multipolar currency world.
Editor: You highlighted the role of oil in supporting the dollar. How does the situation in the Middle East, particularly with nations like Saudi Arabia, impact this narrative?
Dr. Martinez: Saudi Arabia’s crucial role in establishing the petrodollar cannot be overstated. However, as they begin discussions around accepting currencies other than the dollar for oil transactions, we could see significant changes. If oil-exporting countries start to question dollar dependency, it could further weaken the dollar’s grip on the global economy. This would have broad implications not just for the US but for nations like Cuba that are trying to navigate through the current economic landscape.
Editor: Lastly, what advice would you give to countries like Cuba as they attempt to maneuver in a landscape that is gradually turning away from dollar dependence?
Dr. Martinez: They should prioritize building strong regional alliances and diversify their trade partnerships. Investing in agreements that utilize other currencies can provide more stability. Moreover, enhancing domestic production can also reduce reliance on imported goods, making the economy more resilient to external shocks. strategic planning and collaboration will be key as they endeavor to redefine their economic relationships on the global stage.
Editor: Thank you, Dr. Martinez, for your insights on this crucial topic. Your expertise is invaluable as we navigate these complex economic changes.
Interview with Dr. Elena Martinez, Economic Analyst and Cuba Expert
Editor: Thank you for joining us today, Dr. Martinez. Cuba’s recent decision to cancel free trading in the dollar comes amid long-standing US sanctions. Can you shed some light on the implications of this move for the Cuban economy?
Dr. Martinez: Absolutely. Cuba’s decision to limit the dollar’s role in its economy reflects its attempt to regain control amid external pressures. The US blockade has severely impacted the Cuban economy, and by reducing dependence on the dollar, Cuba might be seeking to enhance its economic sovereignty and explore alternative trading arrangements with countries that are willing to cooperate outside of US influence.
Editor: Interesting. You mentioned the idea of exploring alternative trading arrangements. Could you elaborate on what that might look like for Cuba?
Dr. Martinez: Certainly. Cuba might look to strengthen ties with countries that have also faced US sanctions or those that are questioning dollar dominance in international trade. This could involve greater use of currencies like the Euro, the Chinese Yuan, or even barter systems. The goal would be to facilitate trade without the added complications of using the dollar, which is often subject to US regulatory oversight.
Editor: Historically, the dollar gained prominence through agreements like Bretton Woods. Given the recent trends away from dollarization, do you see a shift in the global economic landscape?
Dr. Martinez: Yes, we are witnessing a gradual but tangible shift. The petrodollar system, for instance, has been challenged as countries like China and Russia look for alternatives. The global financial crisis of 2008 exposed vulnerabilities tied to dollar reliance, leading to greater discussions around economic diversification. While the dollar remains a major player, more nations are now recognizing the risks tied to relying solely on it, which could lead to a more multipolar currency world.
Editor: You highlighted the role of oil in supporting the dollar. How does the situation in the Middle East, particularly with nations like Saudi Arabia, impact this narrative?
Dr. Martinez: The situation in the Middle East is crucial. Saudi Arabia’s long-standing agreement to trade oil exclusively in dollars has cemented the dollar’s dominance. However, recent reports suggest that Saudi Arabia is in discussions to accept other currencies, such as the yuan, for oil transactions. This potential shift could undermine the petrodollar system and encourage other nations to follow suit, furthering the trend of reducing dollar dependence. As influential economies reconsider their currency strategies, it could lead to significant changes in international trade dynamics and economic power structures.
