This highly controversial
move is likened to Venezuela giving the U.S. "the middle finger".
Whilst the U.S. is on a path to force Maduro to end his campaign to rewrite Venezuela's constitution, it is highly unlikely that China would assist, which makes the switch to pricing in yuan a very safe one for Venezuela.
It must also be noted
that Venezuela borrowed approximately $60 billion from China in
exchange for selling oil at a discounted price to the Asian
Production fell further
in 2017, with an average of 2, 057 barrels per day in the first
quarter and dipping to a low of 1, 918 barrels per day in August.
These figures contradict the countries massive oil reserves, which
are reported as the biggest in the world.
While the government
continues to attempt to take shots at the U.S. sanctions, the people
of Venezuela are the ones suffering since they are in the middle of
a humanitarian crisis, with intensifying food and medicine
in Currencies Other than the U.S.
De-dollarization by the Eurasian Union
would throw the West into crisis,
especially when Europe is racked
by a banking crisis.
now has the chance
of trading future oil contracts
offered by China,
denominated in yuan.
Venezuela has decided to
start de-dollarizing its economy. To understand what this means,
it's necessary to look at the geopolitical context in which the move
...arguing that anyone wanting to bid in auctions of the Floating Exchange Rate System (DICOM) should switch their bank accounts to another currency.
He emphasized that these
measures are meant to counteract economic sanctions imposed by the
This system was based on the fixed quantity of gold reserves stored in national banks, which set a limit on possible credit.
At that historical moment
the U.S. government managed to appropriate 70% of the world's gold
(except that of the Soviet Union), thus weakening Britain and
bypassing the Bretton Woods financial system set up in 1944.
Some countries developed
alternative military alliances and broke with dependency on the U.S.
dollar to avoid being subjugated.
The U.S. currency was
revived with help from oil exporters like Saudi Arabia, who
exchanged their oil for U.S. armaments. In 1971, U.S. President
Richard Nixon unilaterally cut the convertibility of the U.S.
dollar to gold (the so-called Nixon shock) and so oil became the
basis of the U.S. dollar system, and for that reason keeping control
of oil trading is today a priority of U.S. foreign policy.
That is why U.S. consumers can buy imported goods at extremely low prices, giving them a significant financial advantage, while the high demand for dollars in the rest of the world allows the U.S. government to refinance its debt at very low interest rates.
Libyan leader Muammar
al Gaddhafi was
overthrown and brutally murdered when he decided
to sell oil in Euros, and then to replace the euro by introducing a
gold dinar currency.
...which is based on an
unsupported currency of benefit only to U.S. consumers.
In 2014, the Russian treasury announced a plan to increase the participation of ruble-based contracts while, last May, at the Shanghai Summit, Russia committed to selling China U.S.$400 billion of natural gas over the next 30 years, invoiced in rubles and the yuan.
It has been called "the
deal of the century".
Given the Western sanctions policy against his country, he added,
Over the last few months China has signed currency swap agreements with Canada and Qatar, thus making Canada the first offshore center for the Chinese yuan in North America, while doubling or even tripling trade with China by as much as an estimated RMB200 billion (RMB).
The currency swap between China and Qatar, itself recently the target of sanctions, are equivalent to U.S.$5.7 billion, turning Qatar into a base for the yuan in Middle East markets already suspicious of the U.S. dollar because it exports inflation.
It may only be a matter
of time before other OPEC countries sign currency swap agreements
This is within less than
a month of Singapore, Asia's biggest financial center, becoming an
exchange center for the yuan via a currency swap for Singapore
Nursultan Nazarbayev, has likewise instructed his country's
national bank to de-dollarize the economy. The United Kingdom plans
to issue debt in yuan while the European Central Bank is discussing
whether to include the yuan in its official reserves.
However, military power is also a determining factor in the readjustment of leadership currently taking place with the collapse of the capitalist system.
Many countries are
seeking to withdraw their gold reserves held in the vaults of
the U.S. Federal Reserve Bank,
especially since that bank refused in 2013 to hand over German gold
reserves to their respective owners.
George W. Bush and
Barack Obama used up the state's reserves and
plundered Social Security, among other things, to finance the "War
on Terror", and increasing spending in other departments.
Russia's growth before 2011 was greater than that in,
...and the rest of the G8 countries.
President Vladimir Putin
paid off almost all of Russia's debt selling hydrocarbons during the
period when prices were high.
Furthermore, despite the
blockades NATO has contrived against Russian natural gas via
conflicts in Ukraine and Syria, Vladimir Putin's government has
finessed them via the
South Stream project with Turkey
and the imminent defeat of the Islamic State
Under this type of contract, the parties agree to buy or sell an asset at a price fixed beforehand. This could become the new template for people trading financial instruments in commodities markets and could well become a new standard reference point for traders, since China is the world's biggest oil importer.
Also, according to
Venezuela's vice president, China has expressed interest in paying
for Venezuela's oil in yuan.
But oil and gas exporters like,
...could avoid dollar
trades if their buyers could pay for oil in yuan or even in gold
after converting their yuan into gold ounces.
Unfortunately for the U.S., play has now reached a stage where check mate is within view.
Venezuela is positioning
itself to preserve its peaceful sovereignty and self determination
at a moment of geopolitical reconfiguration that will decide the
world's economic course for decades to come.