Tehran: 14:57 , 2008/07/03 Print version Email this to a friend

By Chandra Muzaffar
Dollar's reign coming to an end?
TEHRAN, July 3 (MNA) -- One of the most significant trends in the
global economy in recent years has been the decline of the U.S. dollar. It
is a trend that has far-reaching consequences for all the inhabitants of
this planet.
It is partly because the U.S. dollar has declined so much in value
since 2003 that the price of oil -- a lot of the oil trade is denominated in
the dollar -- has shot up. According to an analyst, "Against a basket of
currencies, the dollar has fallen by 25 percent since 2003, and considerably
more since its peak in 2001." What this means is that the dollar value of a
barrel of oil today is much more than it was 5 years ago. Of course, there
are other reasons why the price of oil is escalating.



Since oil is the lifeblood of contemporary civilization, the steep
price hike has impacted upon all areas of life. With the higher cost of
living, not only the poor but even those who are at the lower echelons of
the middle class are struggling to make ends meet. The increase in food
prices on a global scale, for instance, is linked to oil. The rising costs
of both food and oil -- it has to be reiterated -- are directly connected to
the decline of the dollar.



The adverse consequences of the declining dollar go beyond oil and
food. Since the U.S. runs huge trade deficits with countries like China and
Japan, the declining dollar will not be in the interest of the latter.
Neither will it be in the interest of countries which hold most of their
foreign exchange reserves in the dollar. A number of them are already
feeling the effects of the diminishing value of their reserves.



It is not surprising, therefore, that countries are converting part or
all of their reserves into other currencies, notably the euro. Some
oil-producing countries are also switching to other currencies. As expected,
these moves have further weakened the dollar.



The U.S. is not happy about this, though a weaker dollar may boost its
exports and reduce its trade deficit marginally. The U.S. knows that it is
the dominant position of the dollar that enables it to exercise global
financial and economic hegemony. It is because the dollar is the world's
reserve currency that the U.S. has so much political clout in the
international arena. This is why the dollar has been described as one of the
two principal pillars of U.S. global hegemony, the other being its military
power.



It explains why the U.S. leadership was so incensed when former Iraqi
president Saddam Hussein abandoned the dollar and switched to the euro in
2000. He also converted Iraq's 10 billion reserve fund at the UN to euros.
Commentators have argued that it was partly because of these decisions that
the U.S. and British governments pushed hard for the invasion of Iraq, which
at the time of the currency switch was already under tough UN sanctions.



Since 2002, Iran, currently the world's second largest oil exporter,
has converted all its foreign exchange reserves to a basket of currencies,
excluding the dollar. In the second quarter of 2008, it went further and
decided to denominate its entire oil trade in currencies other than the
dollar. Is it any wonder that Israel, the United States' closest ally, has
become more bellicose in its threats against Iran in recent weeks? Of
course, there are also other motives behind the attempts by the U.S., Israel
and their other Western allies to undermine Iran.



For the U.S., any move by a major oil exporter to wean itself away
from the dollar is a direct challenge to its hegemonic power. Look at its
continuous maneuvers to undermine Venezuela's democratically elected
president after Hugo Chavez placed a portion of his country's oil trade out
of the dollar's orbit. It is not difficult to fathom why the U.S. is so
obsessed with perpetuating the oil-dollar nexus. It is partly because most
of the oil trade -- more than any other trade -- is denominated in the
dollar that the U.S. currency is able to dominate the world economy. In
fact, it was the United States' agreement with Saudi Arabia in 1974 that the
oil trade would be denominated in the dollar which gave a huge lift to the
dollar's reign. The U.S. will fight tooth and nail to ensure that that reign
continues.



But the supremacy of the dollar must end if U.S. hegemony is to end.
U.S. hegemony -- like all hegemonies in history -- has been a bane upon
humanity. It has brought death and destruction to millions through wars and
conflicts. It has widened the gap between the 'have-a-lot' and the
'have-a-little' right across the globe. It has reinforced global
authoritarianism and stymied the growth of global democracy and
international law. It has given rise to antagonism and antipathy between
civilizations, especially between the Western and Muslim worlds. It has
denied equality and respect to civilizations and cultures outside the West.
It has led to global environmental degradation and a global climate crisis.
Global hegemony has also provoked a vile and vicious reaction. in the form
of global terror.



This is why citizen groups in both the Global South and the Global
North should campaign with greater vigor to bring global hegemony to an end
by weakening the role of the dollar as the world's reserve currency. More
oil-producing countries should be persuaded to switch from the dollar to
other currencies. In international trade, countries should shift to other
currencies which are more conducive to their short and long-term interests.
If foreign reserves are still in dollars, a concerted endeavor should be
made to convert them into other currencies which will at least protect their
value. Citizen groups should also encourage their governments and
corporations to accelerate regional trade and investment which could be
conducted in their own currencies. Some Latin American states, such as Cuba,
Venezuela and Bolivia, are showing greater enthusiasm for regional
cooperation with the ultimate goal of ensuring that their continent is
liberated once and for all from U.S. dominance and control. Cuba and
Venezuela have even stepped up barter trade, the former's health expertise
in exchange for the latter's oil, which minimizes altogether the role of
money. Intra-ASEAN (Association of Southeast Asian Nations) trade and
investment have also increased significantly in recent years. With the
emergence of China and India as important economic players, ASEAN and other
states in Asia should consider using one of the major Asian currencies for
regional trade and not continue to depend upon the U.S. dollar.



Quite apart from all these efforts, citizen groups should demand
comprehensive reform of the international financial system. This is the
right time to make this demand. They should make it abundantly clear to all
and sundry that the dollar can no longer serve as the world's reserve
currency. It has to be replaced. Shouldn't we start working now -- even if
it takes a few decades -- towards a common world currency which is not
linked to any particular nation or region that can be used for international
trade? Why shouldn't we let our imagination run ahead of reality at a time
like this?



Dr. Chandra Muzaffar is the president of the International Movement
for a Just World (JUST) and Professor of Global Studies at Universiti Sains
Malaysia, Penang, Malaysia.



(July 3 Tehran Times Opinion Column, by Chandra Muzaffar)

"CatMan" <cat@ilnonnononvelodo.it> ha scritto nel messaggio
news:Gllbk.10030$f86.9912@tornado.fastwebnet.it...
> Tehran: 14:57 , 2008/07/03 Print version Email this to a friend
> By Chandra Muzaffar



Se è un collega non lo so.....però è brutto sodo!
http://i147.photobucket.com/albums/r...Muzaffar-2.jpg

> Dollar's reign coming to an end?

E comunque non sono d'accordo con la fine del regno del dollaro.....sì...ha
perso un po' del suo appeal....ma quale moneta potrà
sostituirlo....l'euro..lo yuan...la rupia..il rublo? Non credo che, a parte
l'europa se l'est continua a macinare, tutte queste economie possano
superare quella USA nel giro di qualche decina di anni....

"l'orsotoro®" <lami@com.it> ha scritto nel messaggio
news:486de5fc$0$40311$4fafbaef@reader5.news.tin.it ...
> "CatMan" <cat@ilnonnononvelodo.it> ha scritto nel messaggio
> news:Gllbk.10030$f86.9912@tornado.fastwebnet.it...
>> Tehran: 14:57 , 2008/07/03 Print version Email this to a friend
>>> By Chandra Muzaffar
> Se è un collega non lo so.....però è brutto sodo!
> http://i147.photobucket.com/albums/r...Muzaffar-2.jpg
>> Dollar's reign coming to an end?
> E comunque non sono d'accordo con la fine del regno del
> dollaro.....sì...ha perso un po' del suo appeal....ma quale moneta potrà
> sostituirlo....l'euro..lo yuan...la rupia..il rublo? Non credo che, a
> parte l'europa se l'est continua a macinare, tutte queste economie possano
> superare quella USA nel giro di qualche decina di anni....

APPENA FINIREMO DI SCRIVERE CON LE STILOGRAFICHE
COME NEGLI UFFICI DI TALUNI SACCENTI ECONOMISTI