History matters. As World War II came to an end in 1944, Europe and Japan were in ruins while the U.S. had become the world’s economic powerhouse. At a historic meeting in Bretton Woods, New Hampshire, forty-four countries agreed to fix their currencies to the U.S. dollar and the dollar was made convertible to gold at $35 per ounce. Thereafter countries would settle their international trade in dollars, and the dollar became the world’s reserve currency.
As one might expect, having the dollar as the world’s reserve currency proved enormously beneficial to America. The U.S. Federal Reserve Bank, and the large Wall Street banks that control it, created and loaned the dollars that supplied the system. Not only did this give America great leverage and control over economic development throughout the world, it also allowed the U.S. to conduct economic warfare on other nations through sanctions or onerous debt plundering. History’s latest empire was taking the stage.
Initially, the Bretton Woods agreement operated as planned. Since the United States held about three-quarters of the world’s official gold reserves, all seemed well. But years passed and Europe and Japan recovered. By the 1960’s their exports became competitive with U.S. products. America’s share of world output decreased, as did trust in the dollar, and converting those dollars to gold became more desirable. The deteriorating U.S. balance of payments, combined with military spending in Viet Nam, eventually resulted in more foreign-held dollars than the United States had gold to back. The country was vulnerable to a run on gold and this was a threat to the dollar’s position as the world’s reserve currency.
In 1971 President Richard Nixon closed the gold window. Foreign governments could no longer exchange their dollars for the precious metal. This prevented a banking collapse, but the dollar was now unbacked fiat money and vulnerable as world’s reserve currency. Something needed to be done.
In a series of meetings in 1973/74, then Secretary of State Henry Kissinger made arrangements with Saudi Arabia that, in exchange for military protection, required all future international oil sales to be done only in U.S. dollars. The other OPEC nations soon followed and the oil-backed “petrodollar” was born. The U.S. banking cartel was once again in control and virtually all energy importing nations on Earth continued to be held hostage to the dollar. The bonanza for America and Wall Street had been saved.
Now we turn to Iraq. In the year 2000, former U.S. ally, Saddam Hussein, had had enough of American hegemony and the dwindling value of the petrodollar. He announced to the world that Iraq would begin selling its oil for Euros. It was the death sentence for Hussein and over 100,000 innocent Iraqi civilians. The oligarchs who run Washington D.C. were not about to give up their reserve currency power and privileges. The gift of the 9/11 attacks and the U.S. lies about weapons of mass destruction provided the excuse.
A similar scenario devastated the people of Libya in 2011. Quoting Attorney and Public Banking Institute founder Ellen Brown:
Before 2011, Libya had achieved economic independence, with its own water, its own food, its own oil, its own money, and its own state-owned bank. It had arisen under Qaddafi from one of the poorest of countries to the richest in Africa. Education and medical treatment were free; having a home was considered a human right; and Libyans participated in an original system of local democracy. The country boasted the world’s largest irrigation system, the Great Man-made River project, which brought water from desert wells to the cities and coastal areas; and Qaddafi was embarking on a program to spread this model throughout Africa.
But Qaddafi made a mistake. He had assumed a leadership role with other heads of African States that wanted an independent, pan-African, “hard currency.” These countries discussed the possibility of using the Libyan dinar and the silver dirham as the only possible money to buy African oil.
Libya now lies in ruin. The Great Man-made River project, which was turning arid regions into a breadbasket for Libya, along with the factory producing the piping for repairing the irrigation system, were among the first targets destroyed by U.S. led NATO bombing in 2011. Libya is now a failed state. Seventy percent of the population has been left with inadequate water. Slavery and human trafficking are common. Millions of refugees risk death fleeing across the Mediterranean to Europe creating an immigrant disaster there. But an example had to be made – – there would be no challenge to the petrodollar.
But now the equation has changed. When, against all the advice of its own most experienced diplomats, the U.S. began to place missiles and arms on Russia’s and China’s borders, including the arming and “NATOising” of Ukraine and Taiwan, America entered the big league. Russia and China aren’t Iraq, Libya, Iran, Syria, Afghanistan, Venezuela, or any of the dozens of other Central and South American or African nations the U.S. has bullied for decades. Russia and China are nuclear armed peer nations. They are not going to be kicked around by the United States, and they are not going to back down.
The U.S. sanctions on Russia have done far more harm to Europe than they have to Russia. Russia is now selling oil and natural gas in Russian rubles, Saudi Arabia itself has agreed to sell oil to China in Chinese yuan, and Russia and China are working to form a basket of currencies to replace the dollar altogether as the world’s reserve currency.
The day of the U.S. unipolar empire is over. The U.S. is but 4% of the world’s population. Americans are completely unaware that 90 % of the world’s people do not agree with the U.S. position on Ukraine and Taiwan. The global south – Africa, South and Central America, Mexico, India, Iran, China, Indonesia, and on and on are sick of U.S. militarism, sick of U.S. perpetrated endless wars from Vietnam to the present, sick of U.S. sanctions, sick of U.S. orchestrated coups overthrowing their democratically elected governments, sick of U.S. financial and resource exploitation, sick of the U.S. destroying their domestic agricultural independence, sick of the “exceptional” nation and its “rules based order” and unipolar dominance forced upon them.
We are living through an extraordinary time in human history – a time of tectonic shift. Planet Earth has become a very small place and there is no longer room for a hegemonic bully. Cooperation is humanity’s only hope and it is long overdue that the United States accept that it is but one member of the world community.
Eurasia and the Global South are now leading the way to a multipolar, cooperative “Spaceship Earth.” The Shanghai Cooperation Organization, the Belt and Road Initiative, the Schiller Institute, the BRICS nations, and the St. Petersburg International Economic Forum are providing the road map. U.S. political and military leaders are increasingly alienating and isolating our nation, our 4% of the global population, from an enlightened and hopeful emerging new world order. But the people of America deserve to be part of this cooperative effort.