US dollar has been the cornerstone of international trade for decades but it started facing strong resistance in the last two decades with countries like Libya opting to trade in gold and Iraq opting to sell its oil in Euros instead of dollars. In both cases, this has caused the war in those countries with their governments removed and the two countries destroyed under the pretext of fighting for democracy, human rights, and rule of law.
It should be noted that the dollar become the reserve currency of the world after the establishment of the Petrodollar in the agreement reached between the US and Saudi Arabia. The agreement said that oil bought in Saudi Arabia was to be paid only in dollars, the standard adopted by other countries which produce oil around the world which gave the US dollars unimaginable power.
With that power, comes confidence and the US has been punishing every country it feels doesn’t support its foreign policy by using sanctions like in case of North Korea, Iran, Cuba, Venezuela, Libya, Syria, Lebanon, Myanmar, Russia, and the list goes on, but this started changing in the mid of the last decade as countries like Venezuela, Iran, Syria, and Russia who were sanctioned try to look for alternative and ways to bypass the influence of US dollars.
In this case countries like Iran, Cuba or Venezuela had little effects when they announced alternatives to the use of US dollar in international trade transactions but it become a different case when Russia joined in with the support of BRICS countries which include Brazil, Russia, India, China, and South Africa.
Those countries are currently working on ways to start doing trade in their national currencies without using the US dollar and it seems more and more countries are willing to join as the fear of US sanctions increases especially in third world countries.
Russia is among the top producers of oil and gas for export which means many countries use Russia’s energy including those in Europe, Africa, Latin America, and Asia to sustain their economies but what happens if Russia stops accepting the payment in the US dollar as it has already done. Of course, countries will look for other means of payment in order to get energy from Russia and that’s where currencies like the Euro come in.
Russia is a military superpower which means the US and its allies will not even think of invading Russia as it’s suicidal so how can the US stop Russia from using other currencies in its international trade transactions other than a dollar.
That’s where the Ukraine fact becomes very important. Recently Russia and China signed an agreement on gas, it was agreed that Russia would supply China with natural gas for 30 years but the agreed payment system wasn’t in US dollars but Euros which is used by 30 European countries that border Russia and which also depend on Russia for a quarter of the energy needs.
Russia is a military superpower, the EU is at the center of trade in Europe and China is an economic superpower, this means that if those countries become successful in removing the US dollar from their transactions then many countries will likely follow and this is a big problem for US which depends on printing the US dollars for its survival.
With the US unable to go to war with either Russia or China, the only option left is to cause tensions in Europe and Asia that people feel threatened and unsafe to live or invest in those regions and when investors feel threatened, they will automatically move out to look for a peaceful environment to keep their money which is currently only the US because if the war breaks out in Ukraine, many European investors will move their money to US stock exchange.
As Chaos engulfs Europe, the US will just open its door for only those who are important, I mean investors with the hope of helping to cool the US stock market that is overheating and threatening to meltdown at any moment.
If US stock markets meltdown then it’s the end for the US dollar and itself as a sole superpower and that’s what the US fears most. With the dollar hegemony gone, the US won’t be able to pay its soldiers to fight wars, support its military modernization or pay government workers. In short, it will be the end of the US as we know it.
But if the US succeeds in Initiating a war in Europe, then there is still some hope of saving the dollar as investors run to the US and small countries fear of becoming another Libya, Syria, or Iraq. It is a dangerous game to play but the US has no choice but to play and hope for the best.