The news of the year is not the Ukrainian War but that OPEC and, in particular, Saudi Arabia, no longer follow Washington’s orders. The Quincy Pact, one of the post-war pillars, has collapsed.
In exchange for oil, the U.S. military became the guarantor of the security of the Saudi royal family and, above all, of its treasury.
The Pact guaranteed that on the world market oil was paid for in dollars, so that when in 1973 prices rose due to the Middle East War, the US currency inflated spectacularly, at the cost of the ruin of many countries in the world, among them the Europeans, who hid the responsibility of the United States, diverting it towards the countries of the Persian Gulf and the Arabs in general.
Oil went hand in hand with the dollar, and vice versa, a situation that was further reinforced when Nixon broke the parity with gold. A bankrupt U.S. economy found relief by filling the world’s reserves with dollars. The world was paying America’s gigantic debts.
Now OPEC has severed its ties with the United States and goes hand in hand with Russia. China has proposed to Riyadh to pay for oil imports in yuan. More than the price of the barrel, it is the currency in which it is paid and the world trade in crude oil is larger than any other commodity, including gold.
Western powers cannot dictate the prices of oil or any other commodity. Nor can they control the methods of payment. If they insist on anything else, the producing countries will end up in the arms of Russia and China.
Reactions have not been long in coming: this morning, US congressmen called for the withdrawal of troops guarding the Saudi royal family and its oil fields. The foreseeable escalation will only worsen the situation for Western countries.
De-dollarization is a blow to world finance, dominated by Wall Street and the City of London and in a galloping crisis, both domestic and international, since it reaches the International Monetary Fund, the World Bank and other financial institutions.
The war in Ukraine has plunged the world into a new era. A new iron curtain has fallen, breaking the world market and creating a bloc in which most of the countries of the world have placed all their hopes for prosperity.
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