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Death of the US Dollar Hegemony: Military Intervention, Oil Sales, and the Inevitable Collapse

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Kevin Hayden –

According to a recent report by Indy Media, Mexican crude oil will be sold to China without using the US dollar as its trading currency.  Sources inside the Mexican government refuse to disclose if they have been in secret negotiations with China over possible crude oil sales.

If you’re not familiar with the term petrodollar, or why a move such as this by China, Mexico, or Russia is of grave concern, allow me to give you a few points to consider and explain the situation -

In 1975, the members of OPEC agreed to sell oil only in US dollars.  This was for a variety of reasons, but chief among them was to maintain a need for US currency and maintain its reign as the global reserve.  Without this in America’s backpocket, I’m sure that the Dollar would have even less value, to put it mildly.

Greenspan, in his first speech after leaving as Chairman of the Fed, said that gold prices were up because of concern about terrorism, and not because of monetary concerns or because he created too many dollars during his tenure. Gold has to be discredited and the dollar propped up. Even when the dollar comes under serious attack by market forces, the central banks and the IMF surely will do everything conceivable to soak up the dollars in hope of restoring stability. Eventually they will fail.

Most importantly, the dollar/oil relationship has to be maintained to keep the dollar as a preeminent currency. Any attack on this relationship will be forcefully challenged — as it already has been. - Ron Paul, The End of Dollar Hegemony

One such challenge was in November of 2000; Saddam Hussein ended his sales of oil in US Dollars, and instead, demanded Euros.  From a  business perspective, this was a no-brainer.  The US Dollar was situated well below the Euro at the time.  But the Powers That Be would not allow this.

In early 2001,  Treasury Secretary Paul O’Neill was involved in some of the initial administration meetings surrounding Saddam Hussein and Iraq.  O’Neill expressed concern over the cabinet’s talk of how to rid themselves of Saddam and his threat to the Dollar.  Shortly thereafter, the tragic events of 9/11 played out, and the administration and media tried to tie him to 9/11 and weapons of mass destruction.  If you’re able to connect dots with relative ease, it is easy to see that one of the motivating factors for the Iraq war was to regain and maintain US Dollar supremacy and little to do with weapons or physical threats to the United States.

Shortly after the initial “military victory,” all Iraqi oil sales were once more carried out in US Dollars and the Euro was abandoned.

Venezuela: Coup and Countercoup, Revolution

When Hugo Chavez was elected President in 1998, the Clinton administration maintained a “wait and see” policy. Venezuela had been a faithful servant to US interests throughout the twentieth century, and despite the rhetoric of revolution spoken by President Chavez, few in Washington believed changed was imminent.

But after Chavez followed through on his first and principal campaign promise, to initiate a Constitutional Assembly and redraft the nation’s magna carta, everything began to change.

The new Constitution was written and ratified by the people of Venezuela, in an extraordinary demonstration of participatory democracy. Throughout the nation in early 1999, all Venezuelans were invited to aid in the creation of what would become one of the most advanced constitutions in the world in the area of human rights. The draft text of 350 articles, which included a chapter dedicated to indigenous peoples’ rights, along with the rights to housing, healthcare, education, nutrition, work, fair wages, equality, recreation, culture, and a redistribution of the oil industry production and profit, was ratified by national referendum towards the end of 1999 by more than 70% of voters. -

In 2000, Venezuela took over the presidency of OPEC, and with a goal of benefiting those countries that produced oil, as opposed to those who merely consume, Chavez’s actions turned the $7 USD a barrel oil into $25 a barrel.  Washington was not happy, to say the least, but sat on the sidelines formulating a plan to oust the President of Venezuela.

After 9/11 and the military campaign in Afghanistan, President Chavez publicly declared the bombing of Afghanistan and the killing of innocent women and children as an act of terror.  ”This is fighting terror with more terror,” he declared on national television.  The declaration produced Washington’s first official response.

The National Endowment for Democracy, a US entity created by US Congress in 1983 and overseen by the State Department, began pouring hundreds of thousands of dollars into groups within Venezuela to help consolidate an opposition movement and make plans for a coup.  School of the Americas-trained Venezuelan military officers began to coordinate with their US counterparts to organize Chavez’s ouster. And the US Embassy in Caracas, with the recently arrived Ambassador Charles Shapiro, was helping to put the final touches on the coup d’etat. -

Shortly before the ouster, several top secret CIA briefings, uncovered through the use of a Freedom of Information Act request, detailed exactly how the coup would unravel.  Once Chavez had been captured, a new President was immediately named and all that Chavez had done was condemned and reversed, much to the dismay of the Venezuelan people.

Between April 12-13, Venezuelans began pouring into the streets of Caracas, demanding a return of President Chavez and an ouster of the coup leaders. Meanwhile, the Bush administration had already issued a statement recognizing the coup government and calling on other nations to do the same.

But the coup resistance grew to millions of people, flooding the areas surrounding the presidential palace, and the presidential guard, still loyal to Chavez, moved to retake the palace. Word of the resistance reached military barracks throughout the country, and one in Maracay, outside of Caracas, acted quickly to locate and rescue Chavez and return him to the presidential palace. -

As one can clearly see, if any country dares to threaten US Dollar hegemony, they are placed on a terrorist list, or plans to topple the sovereign government are put into place.  We see this time and time again, most recently, and most blatantly, with Libya.

Libya and al-Qaeda

With Saddam dead, and Venezuela blacklisted in the eyes of the world, the US Dollar maintained its title as the world’s reserve currency.  But then our long-time friend and leader of Libya, Muammar Gaddafi, made a bold suggestion.  Instead of merely dropping the US Dollar in oil deals, Gaddafi suggested that the Euro be dropped, as well.  He advised African and Arab countries to adopt a regional currency, the gold dinar, for use in transactions.  Libya, being more in control of its oil resources than any other country, and having no outside, intervening central banks, was poised to change the global oil landscape.

It should be noted that Libya was supplying Italy with a majority of their oil needs, along with several other European nations, having oil that was easily refined by UK standards compared to many other supplies.

Numerous African and Arab countries signed on to Gaddafi’s idea of using gold for transactions, but the West would have none of it.  One of Gaddafi’s closet friends and allies, French President Nicolas Sarkozy, was one of the first to condemn the move and support military intervention in the sovereign country, calling the idea a threat to the financial security of all mankind.

An interesting sidenote, and motive, regarding France’s resolute indifference to the fate of Gaddafi involves Sarkozy receiving £42 million from Gaddafi to fund his 2007 Presidential campaign.  Laws prohibited Sarkozy from accepting cash of that magnitude and by laundering it through various Panamanian and Swiss bank accounts, was able to win France’s election.  Later, Gaddafi’s sons would threaten to tell all and provide details of the illegal arrangement.

Soon thereafter, NATO-member countries, lead by Italy, France, and America, signed on to the use of military intervention in the oil-rich nation.

One seldom mentioned fact by western politicians and media pundits: the Central Bank of Libya is 100% State Owned. Currently [pre-intervention], the Libyan government creates its own money, the Libyan Dinar, through the facilities of its own central bank. Few can argue that Libya is a sovereign nation with its own great resources, able to sustain its own economic destiny. One major problem for globalist banking cartels is that in order to do business with Libya, they must go through the Libyan Central Bank and its national currency, a place where they have absolutely zero dominion or power-broking ability. Hence, taking down the Central Bank of Libya (CBL) may not appear in the speeches of Obama, Cameron and Sarkozy but this is certainly at the top of the globalist agenda for absorbing Libya into its hive of compliant nations. – Eric Encina, Market Oracle

Once the international community got on board with military intervention in Libya, under the guise of “humanitarian aid”, the West began arming insurgents and mercenaries from around the region, including admitted and known top-level al-Qaeda members, with Tripoli and Gaddafi in their crosshairs.  After providing prolonged aerial support and bombing campaigns, along with extensive ground combat, NATO-member countries had allowed the ‘rebels’ to topple Libya’s capital city.

As Gaddafi and his entourage fled the city in a convoy, traveling under diplomatic white flags, French and American war planes, along with unmanned aerial aircraft, stopped the convoy with air-to-ground missiles.  Insurgents and paid al-Qaeda members surrounded the entourage, pulled the Libyan Head-of-State from his vehicle, and promptly executed him.  Within hours, the black flag of al-Qaeda was hoisted above government buildings in Tripoli.

Shortly thereafter, Secretary of State Hillary Clinton applauded the efforts and handed over the Libyan Embassy in Washington, DC, to the “rebels.”  The state-owned oil company, along with the Central Bank of Libya, was also handed over to shadowy factions within this rebel group and the threat to the American Dollar was no more.  Oil once again was exported in US Dollars.

Iran, China, Russia, and Mexico

If you need further proof that American Dollar Hegemony will be protected at all costs, look no further than Iran, and perhaps, eventually, Syria.  Both countries are tied to international terrorism in every mainstream media story, and are the epitome of evil, but what you rarely hear is that they, too, recently suggested the use of gold in oil transactions – a move that is often met with military intervention and “humanitarian aid.”

Iran, with the complicity of major trading partners like China, India, and Russia, is preparing to phase out the petrodollar and begin taking payment in gold and yuans: a calculated move which would only be possible with the military strength of Russia and China behind it.  India jumped on board back in January of 2012,  and in early September, China and Russia both announced that trade between the two nations would exclude US Dollars.

“Crude oil is the standard currency of the world. Not the Yen, not the Pound, not the Dollar. More money is transferred around the world in crude oil than in any other product.”

“On Friday, Sept. 7, Russia announced, that as of today, we will supply China with all of the crude oil that they need, no matter how much they want… there is no limit. And Russia will not sell or trade this crude oil to China using the American dollar.” -Interview with Natty Bumpo on the Just Measures Radio network, Sept. 11

These duo actions by the two most powerful adversaries of the U.S. economy and empire, have now joined in to make a move to attack the primary economic stronghold that keeps America as the most powerful economic superpower. Once the majority of the world begins to bypass the dollar, and purchase oil in other currencies, then the full weight of our debt and diminished manufacturing structure will come crashing down on the American people. –

China is currently the 3rd largest importer of oil in the world.  China’s trade with Iran accounts for 16% of their oil imports, and if Venezuela got in on the deal, it would rise to 40% of their oil being imported and purchased in something other than the US Dollar.  Add Russia and you’ve got an incredibly sizable amount of oil being sold outside of the dollar realm.

With the most recent stories surrounding Mexico, it would appear as though US Dollar hegemony is over.

These large gold purchases by the Mexican Central bank and the successful restriction of the US dollar from use inside Mexico, along with a closer relationship with China and speculation of secret petroleum deals that do not include using the US dollar, are sure to raise new concerns in global markets as this story continues to unfold. These strategic moves on the part of Mexico’s Government and Mexico’s Central bank are said to be protective measures to shield Mexico from what it sees as the imminent and unavoidable devaluation of the US dollar. - Von Helman, Indy Media

Does America dare stand up to both China and Russia over the matter?  Intervention in Iran along the lines of what Libya or Venezuela experienced would cause an uproar across the entire eastern half of the continent and unleash a new cold war with the other superpowers of the world.  War and military action aside, the destabilizing effect these actions have on the US Dollar means it will not last, period.  Market experts from around the world are watching and anticipating a Dollar devaluation, and perhaps a very rapid one.

Major countries are buying and hoarding gold, prepping their economic markets and oil systems for using other currencies, and bracing for a dollar crash; don’t you think it would be wise to do the same?

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