August , 2023
US dollar losing its dominance
17:05 pm

Ashis Biswas

Contrary to Western calculations, recent anti-Russian economic  sanctions  have turned into  yet another  example of a major financial decision going  disastrously wrong. The 7000-odd sanctions were intended to cripple Russia within days ---to ‘reduce the ruble to rubble’, thundered  President Joe Biden  ----  and to end  European dependence on Russian oil / gas for good.   There were Western prophecies  gleefully describing   Russians pulling out of Ukraine within days,  begging Brussels to resume buying  their   fuel, at  reduced prices Eighteen months on, the fantasies peddled by the almighty   Western media remain,as before, the stuff of fond dreams !  

Russia has been hurt, forced to lower the price of its oil/gas,  but the ruble has not collapsed. Its annual GDP growth has declined only by 2% between 2022 and 2023 as against the 10% forecast by the West. Its  economy  is poised to grow by about 0.7% by end 2023, according to IMF estimates. This record  is  far better than France, Germany (where negative  growth has been reported  for three successive quarters !) and  the UK, where the economic decline has been  palpable...

The US dollar remains strong. But sceptical Republicans and Democrats are questioning the financial wisdom of funding Ukraine over $150 billion to fight Russia. Nobody expects Kyiv to ever repay a fraction of the amount spent already, war or peace  ! Ironically the unforeseen side-effects of the sanctions have been notably positive  for major Asian powers China and  India. China and Russia have imparted a much-needed momentum in their drive  to de-dollarise  World business/trade by working out massive long term deals---something they had been working on  since 2015. Currently over 80% of world economic transactions are conducted in US dollars. However, post sanctions, Russia and China are using national currencies to  conduct over $ 400  billion worth  of trade / business, consisting mostly of Chinese imports at special rates of Russian fuel, for the  next decade . 

Russians are now using the yuan instead of the dollar in international trade. Even Indian companies have used the yuan  in recent  transactions with Russians. This  hurts the dollar. The new trend has not gone unnoticed among experts. US  Treasury Secretary Ms Janet Yellen warned US authorities that the dollar could lose its dominance. Many countries seeing the west seize $600 billion Russian reserves held in US banks, are looking for alternatives. Incidentally, the Indian rupee is emerging as a strong  regionally acceptable currency, on a smaller scale. Bangladesh  and India are using the rupee to run their export-import trade,  enabling Dhaka to save $200 million annually. The UAE and India are using rupees and dirhams in bilateral trade. Sri Lanka could also follow suit. Talks are on with  fourteen other countries including the UK, Singapore, Malaysia and Indonesia, as they have expressed a similar  intent.     

Question : How could the mighty US-EU bloc fail to anticipate the possible negative impact of  their anti Russia sanctions ----- another case of Western hubris ? 

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