Nov 22, 2022
Will the Iranian partnership with Russia destroy the US economy petrodollar? | No Petrodollar? De-dollarization & BRICS!
Iran, which already provides Moscow with weapons, has reportedly volunteered to share its experience in the art of sanctions evasion as Russia faces growing international isolation due to the conflict in Ukraine. This is according to Western diplomats. The diplomats claim that recent discussions between senior Russian and Iranian officials, notably the head of the Iranian central bank Ali Salehabadi and the deputy minister of the economy Ali Fekri, entailed establishing the foundation for that cooperation. If Moscow can replicate the Iranian system, it may be able to lessen the effects of many of the sanctions it is subject to, especially on its key oil and gas industry. By maintaining the flow of oil revenue, a system like this would give Russian President Vladimir Putin a lot more time and flexibility to continue his war against Ukraine.
One of the Western officials said, “Anyone interested in changing the Russian mindset should understand that paralysing the Russian-Iranian financial capabilities is essential.”
The diplomats who issued the warning on sanctions evasion methods also pointed out that Western banks, including Citigroup in the United States and Germany’s Commerzbank and Deutsche Bank, played a part in assisting Iran in continuing to reap export profits through shady dealings. The danger is that Russia might draw those same Western banks into the same type of trade, whether knowingly or unknowingly.
By advocating for the IMF’s SDR reform and supporting the renminbi’s inclusion in the SDR basket, the BRICS countries have worked together to challenge the US dollar’s dominating position in the present global reserve currency arrangement. These measures are a component of the BRICS’ larger reforming of the multilateral international financial institutions that are already in place.
A few months prior to the first BRIC meeting, Chinese officials had stated their country’s interest in changing the monetary structure of the world’s reserves and argued in favour of giving the SDR a bigger role. Zhou Xiaochuan, the governor of the PBoC, called for the SDR to become a “super-sovereign reserve currency” in March 2009. Later, the UN proposed creating a new global reserve system based on the SDR of the IMF, echoing Zhou’s idea. The UN proposal stated:
The global imbalances which played an important role in this crisis can only be addressed if there is a better way of dealing with international economic risks facing countries than the current system of accumulating international reserves. … To resolve this problem a new Global Reserve System, what may be viewed as a greatly expanded SDR, with regular or cyclically adjusted emissions calibrated to the size of reserve accumulations, could contribute to global stability, economic strength, and global equity.
The US dollar’s supremacy and US global leadership have been increasingly questioned since the 2008 global financial crisis, The fact that this crisis originated in the United States raised concerns about the reliability of US leadership and the rationality of preserving the dollar’s hegemonic position in the global financial system.
A “strong BRICS” is poised to destroy the Petrodollar’s hegemony;
Brazil, Russia, India, China, and South Africa are the five main emerging economies that make up the influential group known as BRICS; The group accounts for roughly 16% of global trade, 24% of the global GDP, and 41% of the world’s population; Since the organization’s founding in 2009, all of the member nations have held yearly meetings; The 14th BRICS annual summit was largely held in China this year;
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