By Owei Lakemfa
It was like a mafia arrangement. A customer pays and is sure to be protected. In this case, it was between the United States and the United States, which prides itself on being the most free, democratic, gender-friendly and open country in the world based on human rights. fundamentals.
Its partner is Saudi Arabia, a monarchy with an anathema to democracy with no claims to human or women’s rights and a history of physically eliminating political opponents.
Both reached an agreement that changed the global economy from purely selfish motives: the United States, as the policeman of the world, would provide muscle and protection to Saudi Arabia, regardless of the atrocities she would commit, while the other would provide financial support to strengthen her protector’s economy against all others.
On June 8, 1974, the United States represented by Secretary of State Henry Kissinger and Saudi Second Deputy Prime Minister Prince Fand Ibn Abdel Aziz signed the six-page milestone pact at Blair House, in front of the White House.
The agreement established joint commissions on economic cooperation and Saudi Arabia’s military needs. He foresees a group “to review Saudi Arabia’s economic development plans, with particular attention to the use of gas flaring to expand fertilizer production.”
A second group was to “examine projects aimed at further developing the skills of the Saudi technical workforce, the expansion of educational and technical institutions, the transfer of technological expertise, the establishment of a Saudi’s comprehensive science and technology program focused on the kingdom’s national goals, and an expansion of relations with sister universities.” A third group was on development projects, including solar power and a fourth on agriculture, especially desert agriculture.
In return, Saudi Arabia, which had the largest proven oil reserves in the world, had to price and sell its oil only in dollars and was also obliged to invest its oil surpluses in American debt securities. In addition, it was about pumping so much oil into the market to drive down prices and pressure members of the Organization of the Petroleum Exporting Countries, OPEC, to also label their oil sales. only in dollars.
Dollar-only oil pricing became known as petrodollars and gave the United States the power to be the banker of the world in the sense of being the dominant currency for international prices, payments and reserves . It has also given the United States the financial muscle to impose sanctions on countries it believes are out of tune.
On the other hand, it gave Saudi Arabia immunity to do whatever it wants because the United States will always protect it. Thus, Saudi Arabia denies its citizens basic human rights, including those to basic representation and freedom of the press.
This is why the Saudi establishment has been so confident in physically eliminating perceived political opponents as dispatching a commando team that on Tuesday October 2, 2018 massacred journalist Jamal Khashoggi in Turkey. Until today, Khashoggi’s body parts have not been found. In 1979, Nassir al-Sa’id, founder of the People’s Union of the Arabian Peninsula, APPU, decided to go into exile in Lebanon and has not been seen since. Saudi Prince Sultan bin Turki, while in exile, was abducted in Geneva and surfaced in a Saudi prison.
The Saudis also operate an opaque legal system where you can be found guilty and punished without being brought to justice. When in 2017 the Saudi establishment estimated that 208 wealthy princes, ministers and businessmen were corrupt, it did not charge them. Instead, he rounded them up, detained them in the five-star Ritz Carlton hotel, and forced them to transfer 70% of their wealth to the state before they could be released.
Internationally, Saudi Arabia has gone wild. When the people of Bahrain protested against the dictatorship in their country, Saudi Arabia invaded twice, carrying out massacres in the streets. Yemen’s ongoing civil war has bombarded thousands of civilians, including clearly marked schools, school buses, hospitals, large markets, weddings and even funerals.
In 2017, he imposed a 13-point demand on Qatar to shut down the international Al-Jazeera news network within 10 days and curb ties with Iran and Turkey. For this, he imposed an illegal air embargo on this country, supported by the United States.
Saudi Arabia was also the main backer of the terrorist group, the Islamic State, ISIS, before losing control of this group. The main objective was to use it to start the Syrian civil war and overthrow the Assad administration. Saudi Arabia violates international labor law by simply detaining and deporting migrant workers from countries like India, the Philippines, Pakistan and Ethiopia without paying them their wages.
While protecting Saudi Arabia, the United States has been quite vicious against countries that want to reverse the dominance of the dollar. When in October 2000, Saddam Hussein decided to no longer use dollars to fix the price of Iraqi oil, he signed his death warrant. The United States, with British backing, asked President Hussein to return the weapons of mass destruction they knew Iraq did not possess. Based on this excuse, the country was invaded in 2003 and Hussein was assassinated.
In 2009, President Mouammar Ghadaffi devised and funded a plan to unify African countries with a single gold currency, and campaigned for oil-producing countries in Africa to demand payment in gold rather than dollars; he, like Hussein, signed his death warrant. A rebellion was engineered; the United States led the North Atlantic Treaty Organization, NATO, to bomb the Libyan armed forces; and on October 20, 2011, Gaddafi was shot at close range in the streets of Libya.
It seemed that nothing could challenge or change the international petrodollar system. That was until March 2022, when the United States and its allies decided to impose sanctions on Russia following the war in Ukraine. Russia then demanded that Europeans and other countries who buy its oil and gas do so in rubles.
In addition, from Thursday, April 7, 2022, Russian coal and oil paid for in yuan began to be shipped to China. Again India is in talks to buy Russian oil at discounted prices and pay in yuan which is a stable currency and the fourth most traded currency after the dollar, euro and pound which are all entangled in the sanctions war with Russia.
Negotiations are also underway on a rupee-ruble trade mechanism in which Indian exporters can pay for their exports to Russia in rupees instead of dollars. Perhaps one of the biggest surprises is that Saudi Arabia is engaging China in negotiations to price some of its oil sales in yuan. Since Russia is not Iraq which can easily be invaded and China is not Libya which can be bombed into submission, the real challenge to the 48-year-old petrodollar regime has come.