by Mike Maharrey, Gold Seek:
The head of Russia’s largest oil producer says gold could become the dollar’s main competitor in world trade.
Russian policymakers have a vested interest in undermining the dollar, so their rhetoric should be taken with a grain of salt, but it’s worth paying attention to what they say. Others around the world undoubtedly sympathize with the Russian viewpoint thanks to America’s weaponization of the dollar.
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Speaking at the Verona Eurasian Economic Forum, Rosneft CEO Igor Sechin said continued restrictions on the dollar create more opportunities for using national currencies in trade and developing new “universal instruments.”
“Using the dollar as an instrument of sanctions is a big mistake because trade will never stop. Both energy security and life in general depend on it. Alternatives will always be found. Gold will be the dollar’s main competitor, which mankind has been using for thousands of years for settlements.”
The U.S. and its Western allies have aggressively sanctioned Russia in the wake of its invasion of Ukraine. They locked Russia out of the SWIFT financial system and froze around $300 billion in Russian central bank assets. U.S. Treasury Secretary Janet Yellen even floated the idea of selling those frozen assets and giving the proceeds to Ukraine.
One can certainly argue that sanctions are justified, but it’s important to consider the blowback. An Associated Press report about Yellen’s comments conceded the weaponization of the dollar comes with risks.
“There are tradeoffs since the weaponization of global finance could harm the U.S. dollar’s standing as the world’s dominant currency.”
As Sechin pointed out, trade will continue, and sanctioned nations will find alternatives if locked out of the dollar system.
He’s also correct that gold is the logical choice to usurp the dollar, given that it has served as money for thousands of years. People universally recognize the value of gold, and it is accepted as money around the world. It can easily be converted into any currency and comes with no counterparty risk.
Sechin also took shots at what he described as sagging U.S. influence globally.
“It is also obvious that the U.S. has allowed itself to lose its leadership in the scientific, technological, industrial, and financial spheres, which was hard to imagine 20-30 years ago.”
He accused the United States of trying to create “special conditions” for its economy at the expense of other countries – including its own allies, saying that it has bungled its leadership role by failing to create the necessary conditions for “maintaining a fair world order.”
“Conflicts are being deliberately aggravated and created in the Middle East, Ukraine, Latin America, and the Asia-Pacific region.”
The Weaponization of the Dollar and Its Ramifications
The U.S. has a long history of using its privilege as the issuer of the world’s reserve currency to further its foreign policy aims.
The U.S. government utilizes a “carrot-stick” approach. It showers billions of dollars of foreign aid on its friends. But enemies can have access to their own dollars cut off, as Russia learned.
