Guan Kiong Teh
Monday 10 June 2024 marked the first international business day since the expiry of the 1974 agreement on military and economic aid signed between the Nixon administration and Prince Fahd Ibn Abd al-Aziz Al Saud. Henceforth, Saudi Arabia is free to sign oil trade agreements that involve payment in any currency, having previously been restricted to US Dollars. Although the actual impact of the end of this agreement will only be apparent in time, it is difficult to envision a future where the US dollar’s status as the dominant foreign reserve currency will not come under threat amongst the United Nations’ G77 nations. In 1999, US Dollars accounted for 71% of global foreign currency reserves, which had dropped to 58% in 2022.
Could Nixon and Kissinger have predicted the present economic climate? Perhaps some of it. Russia and the United States are back at loggerheads, but not directly at war. The opinions of Middle Eastern states still matter, although the term ‘buffer state’ counts for a lot less in an era where any organized (or indeed disorganized) body of people with access to the internet has the ability to broadcast propaganda directly to computers, smartphones, smart watches… the list goes on. Kissinger, who only died last November, believed until his death that Russo-American relations are even more strained than during the Brezhnev years of his premiership. But crucially, neither could have predicted what the Petrodollar would be replaced by upon its demise: the Petroyuan. This, to an extent, is due to China’s immeasurably stronger economic position with Hong Kong (increasingly) under its jurisdiction – a pipe dream without the integrity Britain displayed in its respect of the 1898 Convention (bear in mind – the modern Chinese state did not come into existence for fifty-one years after the convention was signed).
No comments:
Post a Comment