Speaking in an exclusive interview with FNA, Pepe Escobar said Beijing may choose the "nuclear option" and trade the oil only in the yuan, "this could be collapse of the petro-dollar. Then, we will have the beginning of a new era of international relations that will be the near end of the Dollar as the world reserve currency".
Pepe Escobar is a Brazilian journalist and the correspondent-at-large at Asia Times. He has extensively covered the central Asia, and the Middle East developments. He appears as an analyst on various TV channels.
Below is the full text of the interview:
Q: Why is the US Dollar the world reserve currency?
A: The US Dollar is the world currency thank to what happened at the end of the Second World War, when the US economy was half of the world's economy, and the United States was running the Western economy by reconstruction of Europe, and making investments in Latin America. That was the Dollar as the world currency, with no other competitors whatsoever. However, in the summer of 1971, when the Dollar was supposed to be backed by gold, Richard Nixon delinked the Dollar from gold and the Dollar started to be backed up essentially by nothing. So, the US could control the whole world's economy by distributing the Dollar everywhere and by forcing people to buy Dollars and use it in their international trades. This was the case especially with oil, out of which petro-dollar emerged. Therefore, any transactions in energy world had to be done with dollars. But, now, what we are watching is the complete collapse of the system; very slowly, but surely, and with unforeseen consequences so far.
Q: Do you believe the US Dollar would be dumped by the developed countries?
A: This is impossible to dump Dollar at once, since it is the world's reserve currency. However, the next move is already on going, which is to have a basket of currencies. The IMF is going into this direction, to have a basket of currencies which includes the Euro, Yen and Yuan. But strategic partnership is happening across the Eurasia, especially driven by Russia and China, to bypass the US Dollar altogether. Russia and China are increasing their trades in the Rubles and Yuan. Bypassing the US Dollar is practiced in the short and mid-terms by the countries which are in the Eurasia. Later they may choose their nuclear option, which is the day the Chinese tells to all major oil producers in the Persian Gulf that it buys oil and gas only in the yuan. This could be collapse of the petro-dollar. Then, we will have the beginning of a new era of international relations that will be the near end of the Dollar as world reserve currency. This is a long term process, but this has already started.
Q: How do Trump's policies affect the position of the Dollar as the world reserve currency?
A: Trump does not have a real foreign policy. Let's not forget he thinks like a real estate developer in Manhattan. He does not know exactly how supply chains work around the world; nor he understands how other countries are getting together to bypass the Dollar. All he thinks is if something is happening, we should attack them, or sanction them, which is what is happening in Venezuela, Iran, and many other countries. In the case of China and Russia, a trade war has been waged to block the internationalization of the Yuan and Rubles. Trump does that to even the US's close allies, like the European Union. This encourages the nations to use their own currencies more and more. So, even Europe to do trades with Asia and South America needs to dump the US Dollar. It means we are getting closer to the day of the demise of the petro dollars. Trump's policies have accelerated the process. When China, Russia, India and many other countries use their national currencies for the bilateral trades, the rate of the use of Dollar descends. If the world transactions by the US Dollar falls below fifty percent, the rule of the Dollar as the world reserve currency will be over.
Pepe sees none of this. China's internal consumption based market isn't ready yet to replace the fake 'American Dream'... and with the same aging population problem of Korea and Japan, that isn't likely to change, which must factor into their push to achieve this OBOR project while they still can. Pepe sees only the best of the game and not the worst. The Chinese empire isn't that much different, Xi has cleaned up the Party but seeks to secure the empire by expanding it... sounds like the rest of the empires to me, especially those following in the Western footsteps like CHina with their western inspired debt bubbles etc. Xi needs to clean up this mess before losing control of it. Putin seems intent on expansion into the Arctic, but hasn't the 'climate change' memo been read yet on that? Lots of wishful thinking on both sides it seems.
De-dollarization, yes, but that means we either go back to the gold backed 'basket' or create a NWO fiat to replace it... or both, isn't that the plan? How to do so without dealing with the reality of each country's debt balances? China isn't that much different than Japan or the USA in that regards... though they are buying the metal instead of selling it like we are... but then, with Mother Nature looking to clean house soon, it seems Cheney was right when he said, "we don't have to worry about that"... as in 'debt'..... and so far, he's been right.
Meanwhile, Mother Nature keeps sending out warning signs... when will Pepe see one of them? De-dollarization is fine and dandy but who will take it's place? This basket of SDR variety? The whole 'worlds currency' is based in success and power and the willingness of others to follow along. We know CHina's currency is the same as the dollar, essentially worthless like all fiat.... leaving gold/silver.... an economic activity index will be inserted on marketplace sizing etc... but how to deal with the debt of most participants? RUssia is turned away from this debt game because they were excluded, sanctioned from doing so. Will the ruble be repositioned accordingly? Or will they not want to overprice their exports too? which was the standard policy of the OWO... which is being outed in favor of the NWO.... why doesn't Pepe see this? Cheney and his kind ignored debt because they knew they didn't have to concern themselves with it.... but in the NWO, so many of our OWO operations like stock and bond markets aren't needed.... will be disposed of in say a global 'debt jubillee' or some sort of cleaning op... which is just another trap is keep the sheeple following along.
China hasn't yet had to make a stand like they are being pushed to do in the South China Sea... having to deal with all the old residual imperialism of the past from Taiwan to Phillippinnes to Japan... all of whom will have to choose sides again.. which leads back to war, which is how most empires fall.... the switch from OWO to NWO isn't going to be pretty.. I've yet seen Pepe mentioned this.... why is that?