In Europe, some voices are already calling for reducing their dependence on the US dollar and preventing the region from being drawn into a US-China confrontation over Taiwan. This occurs in a context (nothing new) in which the block of the so-called BRICS (Brazil, Russia, India, China and South Africa) does the same to use less and less the green ticket until –one day– dispense with it in their commercial exchange. Undoubtedly, these actions contribute to the “de-dollarization” of the planet, but by no means doom the dollar to a quick deathas some predict.
But let’s go back to the topic of European voices, which are “new”: on his return from his three-day tour of China, President Emmanuel Macron once again highlighted his theory of “strategic autonomy” for Europe, presumably led by his country, France, in order to become a “third superpower” along with China and the United States.
The great risk facing the old continent is that it finds itself trapped in crises that are not its own and that prevent it from building its strategic autonomy, said the French ruler in an interview with POLITICO.
During the meeting on April 5, 6 and 7, President Xi Jinping and Chinese Communist Party leaders enthusiastically endorsed Macron’s concept of strategic autonomy. In fact, the authorities of the Asian country constantly refer to it in their relations with European nations.
The first French president suggested that Europe should reduce its reliance on the “extraterritoriality of the US dollar.” Note at this point that this is a key policy objective of both Moscow and Beijing, since US sanctions policy against Russia, China, Iran and other countries is based on denying access to the dollar-denominated global financial system.
Some countries of the old continent have even complained about the use of the dollar as a “weapon” by Washington, which forces European companies to give up business and cut ties with third countries or face secondary sanctions.
Macron also warned that Europe’s dependence on the United States for weapons and energy must be reduced and that it is now necessary to focus on boosting the European defense industries.
And although he did not address the issue of continued US security guarantees for the old continent, he did say that he had already “won the ideological battle for strategic autonomy” in Europe.
The consensus of analysts warns that if Europe wants to establish its own strategic autonomy, it will need to find a way to increase its defense capacity while maintaining a presence in the North Atlantic Treaty Organization (NATO), and to foster the development of cutting-edge technologies. .
In addition, it will require a significant financial commitment, as well as reducing its dependence on US energy and weapons, while increasing renewable energy production and boosting defense cooperation among European Union member states.
The first step of the BRICS countries
On the other side, that of the BRICS, I tell you that last week at the Business Forum for Development and Growth of the Russian-Indian Strategic Association in New Delhi, the vice-president of the Russian State Duma (or Lower House), Alexander Babakov , announced that the members of that group are already working on the creation of a new currency.
The legislator indicated that they have made important moves away from the financial and international trade system dominated by the United States, and that the first step is the transition to payments in their national currencies. “The readiness to carry out this project will be indicated at the next BRICS summit, which will take place in August in Durban, South Africa.”
Although no further details about such a project have been revealed, it is clear that its scope will be significant. The current BRICS countries already represent 40 percent of the world population and a quarter of global GDP.
Babakov specified that the new currency will be based on a strategy that does not defend the dollar or the euro, and will be linked to the value of gold, but also to that of other minerals (including rare earths), tracts of land and various raw materials.
Good ideas and intentions of the BRICS, but bad results
It is one thing for the US dollar to be doomed to a “slow death” as a reserve currency and to the loss of its purchasing power in the face of the unbridled and endless issuance of debt, and quite another that its debacle is imminent.
Unfortunately for the BRICS, it takes much more than multilateral agreements to establish a “single currency” that everyone can trust (and no one can issue at will). The foregoing, not to mention that no matter how much they intend to use raw materials as “backup”, gold is actually the only one that can function as money -as it has done for millennia-, and it will continue to trade, whether they like it or not. , predominantly in dollars.
So it is, then, that the world is slowly transitioning to a bipolarity in which, no matter how much some like President Macron want it, Europe will not be able to separate itself from the United States, which will continue to lead the Western bloc.
On the other hand, the Eastern bloc will be dominated by China, India and Russia, which historically have not been exempt from differences that will greatly complicate their integration, and when they achieve it -if they do- they will be able to do little or nothing to “bury” the dollar, which –do not doubt it– will not sit idly by.
Editor’s Note: This text belongs to our Opinion section and reflects only the author’s vision, not necessarily the High Level point of view.
MORE NEWS:
William Beard Master in Economics from the Austrian School; liberal, gold market specialist and editor of investment newsletter Top Money Report