More nations plan to ditch U.S. dollar 

January 24, 2023 - 22:40

TEHRAN- Brazil and Argentina are planning on a common currency for the region in a bid to distance themselves from the U.S. dollar.

Washington has been using its currency as a weapon to advance its own hegemony around the world.

As a result, many civilian populations have suffered from unilateral American sanctions imposed on countries who are independent or have taken the course toward independence.

In a joint letter, the new Brazilian President Luiz Inacio Lula da Silva and Argentine leader Alberto Fernandez said they wanted to "advance discussions on a common South American currency" to be used for financial and trade flows.

President Lula, who has made Buenos Aires his first foreign trip since taking office, says that early talks are focused on developing a shared unit of value for bilateral trade to reduce reliance on dollar.

Under the plan, the Brazilian currency (the real) as well as the Argentine currency (the peso), for example, would continue to exist, with the new tender aimed at trade transactions between different Latin American countries.

In a joint letter, the new Brazilian President Luiz Inacio Lula da Silva and Argentine leader Alberto Fernandez said they wanted to "advance discussions on a common South American currency" to be used for financial and trade flows.Brazil and Argentina are the first and second largest economies in Latin America respectively. How the plan will be implemented remains to be seen, but the statement of intent is a very powerful move itself.

South America’s two biggest economies will try to advance the plan during talks at a summit in Buenos Aires this week and will invite other Latin American nations to participate.

Not only Lula is reversing the policies of his predecessor, Jair Bolsonaro, by distancing Brazil from the United States he is also putting more focus on the region itself.

The idea of making trade transactions in local currencies as opposed to the U.S. dollar is not limited to Brazil and Argentina, or Latin America for that matter.

Over the past decade, more countries have made or started similar initiatives to trade in their own currencies in a bid to ditch the U.S. dollar.

The dollar is the world's top reserve currency. Washington’s policy in using the dollar as a financial weapon has prompted many countries to consider other currencies in their trade.

Where the U.S. cannot create instability through invasions, it wages wars through proxies or using other hybrid warfare mechanisms. It has also resorted to sanctions to fuel unrest in countries that don’t see eye to eye with Washington. 

The U.S. goal is to destroy the economy of its adversaries with the hope of turning local populations against their governments.

“There will be... a decision to start studying the parameters needed for a common currency, which includes everything from fiscal issues to the size of the economy and the role of central banks,” Argentina’s Economy Minister Sergio Massa told the Financial Times.

“It would be a study of mechanisms for trade integration,” he added. “I don’t want to create any false expectations... it’s the first step on a long road which Latin America must travel.”

Last year, the governor of the central Bank of China said Beijing will work with Asian countries to beef up the use of local currencies in trade and investment, as part of plans to strengthen regional economic resilience.

For the first time, Saudi Arabia and China have also discussed pricing oil deals in the Chinese yuan instead of dollar.

Iran and Russia have already started trading in their national currencies after Tehran first decided to reduce use of dollar in its foreign trade.

India, among other countries, has also decided to allow rupee payments for imports and exports, which could also boost trade with other countries under American unilateral sanctions. India's central bank has also unveiled a rupee settlement system for international trade, a move which many have said will reduce New Delhi’s demand for U.S. dollars.

Tehran has been subjected to unprecedented unilateral sanctions by Washington. The measures, which include sanctions on Iran’s banking sector, have prevented the country from importing vital humanitarian supplies for cancer patients and children with rare diseases.

Likewise, the West has imposed unprecedented sanctions on Russia over the Ukraine war. Analysts have said that the U.S. sanctions against Moscow could speed up the move by countries to reduce their reliance on the American currency.

The United States and its allies froze about $300 billion belonging to Russia’s central bank’s foreign currency reserves and severely limited Russia’s access to the SWIFT payment system. Similar measures have been taken against other countries including Afghanistan, Iran, and Venezuela.

In a report, Bank of America analysts led by Michael Hartnett pointed out that “U.S. dollar debasement [is the] ultimate outcome as dollar weaponized in new era of sanctions.”

As a result of Washington’s sanctions, countries have been seeking alternative monetary systems which have dealt a blow to the dollar itself. The role of the American currency has been declining over the past two decades, with reports indicating its share of reserve currencies have gone down from 70 percent to 60 percent over that period.

In the summer of 2021, the International Monetary Fund issued a report warning that the share of U.S. dollar reserves held by central banks fell to 59 percent - its lowest level in 25 years - during the fourth quarter of 2020, according to the IMF’s Currency Composition of Official Foreign Exchange Reserves (COFER) survey.

Some analysts say this partly reflects the declining role of the U.S. dollar in the global economy, in the face of competition from other currencies. 

Despite multiple warnings, the U.S. has been pursuing illegal economic policies by weaponizing its currency.

A Washington-based think tank says the U.S. has been “extremely trigger-happy” with its economic measures, and central banks may decide to diversify their foreign reserves instead of relying on the U.S. dollar.

The co-director of the Institute for the Analysis of Global Security, Gal Luft has said that “central banks are beginning to ask questions,” and that they are wondering if their dependence on the dollar and “putting all their eggs in one basket” is an intelligent idea.

“The United States has extended itself, has been extremely trigger-happy when it comes to the use of sanctions and other economic punishments,” he said.

As different governments encourage others to wean their financial affairs off the greenback and regain their economic sovereignty, the U.S. imposed sanctions and the method in which Washington weaponized its dollar looks certainly likely to backfire on the United States.

The removal of the U.S. dollar as a dominant foreign currency will save more civilian lives around the world and help bring about global peace and security.

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