"In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar."
First thought: I don't really blame them. Our leaders have been irresponsible enough in handling our economy, and our problems have spilled over and affected the entire world's economy. If the dollar is going to be unstable, swapping to a basket of currencies makes sense.
Second thought: "a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar." - A fledgling pan-Arabic Muslim currency, anyone? That sounds like a portentous global economy shift waiting to happen.
And lest you think that this is merely a hysterical prognosis of some fringe economist:
The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.
The article darkly hints at a future conflict between the US and China over Middle East oil, but we will pass over this idle speculation for the meatier material on actual Chinese involvement in the situation:
China imports 60 per cent of its oil, much of it from the Middle East and Russia. The Chinese have oil production concessions in Iraq – blocked by the US until this year – and since 2008 have held an $8bn agreement with Iran to develop refining capacity and gas resources. China has oil deals in Sudan (where it has substituted for US interests) and has been negotiating for oil concessions with Libya, where all such contracts are joint ventures.
Furthermore, Chinese exports to the region now account for no fewer than 10 per cent of the imports of every country in the Middle East, including a huge range of products from cars to weapon systems, food, clothes, even dolls.
The Chinese tend to be practical economists these days. A burgeoning economy in desperate need of resources such as oil to fuel its rise is well-served by increased economic ties to the countries with said resources. And unlike us, they are not likely to go about things in an ambivalent manner, hesitating between pragmatic manipulation of the areas with the resources we need and condemnations of our "self-serving" involvement there. The Chinese economic engine needs more oil to run on, and thus they will do what it takes to get more oil.
Meanwhile, we won't even drill for the oil we already possess domestically. Small wonder our economy is flagging while theirs is set to pass us by mid-century.
Chinese financial sources believe President Barack Obama is too busy fixing the US economy to concentrate on the extraordinary implications of the transition from the dollar in nine years' time. The current deadline for the currency transition is 2018.
Perhaps this is a misunderstanding. President Obama has given no sign that this would be a move that he disagreed with. In fact, such a shift seems perfectly in line with the "New world order" he likes to give speeches about. (that speech was meant to be uplifting; upon reading the transcript I was instead quite interested in determining exactly what worldview our President holds. Not one in which the British are held in high regard, that much is certain...) I would not be surprised at all if he gave a speech lauding the move away from the US dollar, as a good plan to diminish US hegemony and level the world's playing field. He is, after all, not only a US citizen, but "a fellow citizen of the world." (second paragraph of the transcript)
This means, apparently, that he would never be so jingoistic as to put the concerns of his own country above the concerns of others. Which is lovely, except that he is not the president of the world, he is the president of the United States of America. His responsibility is not to "remake the world once again" (the last words in his speech), but to lead our nation in a responsible way.
So the dollar is on its way out as a global medium of exchange. Is anyone willing to fight for it?
Not our Elected Citizen of the World in Chief.
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