Remember when Saddam insisted on selling Iraqi oil in Euros?

Saddam made a profit, but he never lived to spend it.

Remember when Gadhafi planned on selling Libyan oil in a gold-backed currency?

It was mentioned as a reason in Hillary's emails to bomb Libya.

Iran started selling oil in Euros two years ago.

I'm sure that it's just a coincidence that some in Washington are pushing for war with Iran.

Which brings us to the primary threat to the petrodollar today - Russia.

Russia has gone waayyyy past the "crimes" of Iraq, Libya, and Iran.



I was informed at a White House meeting that U.S. diplomats had let Saudi Arabia and other Arab countries know that they could charge as much as they wanted for their oil, but that the United States would treat it as an act of war not to keep their oil proceeds in U.S. dollar assets.

This was the point at which the international financial system became explicitly extractive. But it took until 2009, for the first attempt to withdraw from this system to occur. A conference was convened at Yekaterinburg, Russia, by the Shanghai Cooperation Organization (SCO). The alliance comprised Russia, China, Kazakhstan, Tajikistan, Kirghizstan and Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia. U.S. officials asked to attend as observers, but their request was rejected.

The U.S. response has been to extend the new Cold War into the financial sector, rewriting the rules of international finance to benefit the United States and its satellites – and to deter countries from seeking to break free from America’s financial free ride.

...The U.S. plan was to hurt Russia’s economy so much that it would be ripe for regime change (“color revolution”). But the effect was to drive it eastward, away from Western Europe to consolidate its long-term relations with China and Central Asia.

Repeated rounds of international sanctions have failed to cow Russia, and the reason is China.



In a symbolic blow to U.S. global financial hegemony, Russia and China took a small step toward undercutting the domination of the U.S. dollar as the international reserve currency on Tuesday when Russia’s second biggest financial institution, VTB, signed a deal with the Bank of China to bypass the dollar and pay each other in domestic currencies.

Russia's deals with China have given it access to the international markets, hard foreign currency and manufactured goods.

That was 2014.

China and Russia (and Iran to a lesser extent) have gotten closer and closer ever since.



Russia and China were considering linking their national payment system, Russian Prime Minister Dmitry Medvedev said on Wednesday, as he called for a more balanced global finance structure.

...That would have "good prospects" and "avoid those problems that sometimes arise when you use American payment systems", Medvedev said, mentioning Visa and Mastercard without elaborating.

Russia started to create the Karta Mir system after Western sanctions were imposed on the country in 2014, during the Ukraine crisis. The system is now widely accepted in Russia.

After new U.S. sanctions were imposed, Moscow promised to intensify work to cut dependence on Western payment systems further. Among other things, it wants to create more domestic financial services such as its own ratings agency.

Russia and China did in fact link their payment systems, thus making a huge part of Asia independent of western banks.



This direct currency settlement move by China and Russian, however, is one of the most dynamic game-changing developments since Washington’s Treasury and Wall Street banks came up with the US Dollar system at Bretton Woods in 1944.

It’s not about reducing currency risks in trade between Russia and China. Their trade in own currencies, bypassing the dollar, is already significant since the US sanctioned Russia in 2014—a very foolish move by the Obama Administration Treasury. It’s about creating a vast new alternative reserve currency zone or zones independent of the dollar.

Russia is also forming trade deals with India.

Plus, the war in Syria has brought Russia and Iran into a military alliance, on top of trade deals.

Russia and China, our only mildly-serious military rivals, are increasingly becoming more friendly and more independent of our influence.

The United States is a dying empire, and dying empires tend get paranoid.

And the U.S. should be paranoid about the petrodollar. The U.S. dollar is not in good shape.

The extended policy of zero interest rates plus all the “quantitative easing”, are indications of systemic weakness.

Put all that dry timber together, and then add a spark - the 2016 election - and you have a full-on hysteria.



The petrodollar has lasted for over 41 years, and has been the driving force behind America’s economic, political and military power. It would be ironic, indeed, were the tensions with Russia inadvertently to become the driver of America finally losing its petrodollar card.