The year 2018 was full of events that divided the world into two camps: one formed by countries that still support the use of the US currency as a universal financial tool and the other formed by those who decided to abandon the dollar.
The Russian television channel RT published a list of countries that are part of the “anti-dollar front” and explained why they decided to look for an alternative to the US currency.
The current US-China trade war and the sanctions that were imposed on Beijing’s major trading partners have prompted China to take steps to reduce its dependence on the dollar.
Although Beijing is still the top US lender, the People’s Bank of China has cut its US Treasury stock holdings to the lowest level since May 2017.
Today Beijing is trying to internationalize its own currency, the yuan. In 2018 the Chinese government took several measures to strengthen its currency: it accumulated gold reserves, launched future contracts for oil denominated in yuan and began to use its currency in trade with its partners.
India, being the sixth largest economy in the world, is also one of the largest importers of goods on the planet.
“It is not surprising that most of the global geopolitical conflicts and sanctions imposed on their trading partners directly affect this Asian country,” the authors of the article point out.
Faced with sanctions imposed by Washington against Moscow, New Delhi has decided to pay in rubles for the Russian anti-aircraft systems S-400. The country also used the rupee to buy Iranian oil after Washington reinstated sanctions previously imposed on Tehran.
In December 2018, India and the United Arab Emirates sealed a bilateral exchange swap agreement to boost trade and investment in their own currencies.
A swap is an international contract that is sealed off from a stock exchange and states that the two parties agree to exchange one financial instrument for another within a predetermined term and conditions.
In 2018, Turkish President Recep Tayyip Erdogan announced his plans to end the US dollar monopoly by pursuing a policy aimed at excluding the dollar from trading with its partners. According to the president, Ankara is preparing to carry out commercial transactions with China, Russia and Ukraine using national currencies. In addition, it is possible that Turkey will replace the dollar in trade with Iran.
This decision was prompted by both political and economic reasons. Relations between Ankara and Washington deteriorated after the failed coup attempt of July 2016. That year, several media outlets reported that Erdogan suspected that the US was involved in the coup attempt. The Turkish leader also accused Washington of harboring the exiled cleric Fethullah Gulen, who, according to the Turkish authorities, orchestrated the attempted coup.
In addition, the Turkish economy suffered a currency crisis after Washington introduced sanctions to respond to the arrest of US pastor Andrew Brunson in Turkey. He was accused of maintaining links with the Fethullah Gulen movement and of supporting the Kurdistan Workers’ Party (PKK), considered a terrorist by Ankara.
In October 2018, Brunson was finally released and the US withdrew two Turkish ministers from the sanctions list.
Erdogan has repeatedly criticized Washington for starting the global trade war, for sanctioning Turkey and for trying to isolate Iran. The NATO member’s decision to buy the Russian S-400 anti-aircraft defense systems has thrown more firewood into the fire.
Iran’s triumphant return to the global trading landscape did not last long, said RT.
Shortly after his victory in the presidential election, Donald Trump opted to withdraw the US from the nuclear agreement that had been signed with Iran in 2015. Since then, Tehran has once again been severely sanctioned by Washington, which also threatened to punish any country that violates these measures.
The sanctions forced Tehran to seek new alternatives to the US dollar to pay off its oil exports. As a result, Iran has concluded an agreement with India that New Delhi can import Iranian oil using a rupee-based payment mechanism.
In addition, Iran and Iraq plan to use the Iraqi dinar in bilateral operations to reduce its dependence on the dollar if there are problems in the Iranian banking sector caused by US sanctions.
Russian President Vladimir Putin stressed that the US “is making a colossal strategic mistake, undermining confidence in the dollar as a universal reserve currency.” Russia’s finance minister, Anton Siluanov, said the country has to reduce its reserves of US government bonds in favor of safer assets such as the ruble, euro and precious metals.
Russia has already taken a number of steps to “de-dollarise” its economy because of the sanctions that the US has continued to introduce since 2014. In particular, Moscow has developed its national payment system, which is an alternative to SWIFT, Visa and MasterCard.
Moscow was able to partially abandon the dollar in its exports, signing swap agreements with several countries, including China, India and Iran, write the authors of the article.
In addition, Russia proposed to use the euro instead of the dollar in trade with the EU.