De-Dollarization: Dismantling America's Financial-Military Empire
The Yekaterinburg Turning Point
By Prof. Michael Hudson
Global Research, June 13, 2009
The city of Yakaterinburg, Russia's largest east of the Urals, may
become known not only as the death place of the tsars but of American
hegemony too - and not only where US U-2 pilot Gary Powers was shot down in
1960, but where the US-centered international financial order was brought to
ground.
Challenging America will be the prime focus of extended meetings in
Yekaterinburg, Russia (formerly Sverdlovsk) today and tomorrow (June 15-16)
for Chinese President Hu Jintao, Russian President Dmitry Medvedev and other
top officials of the six-nation Shanghai Cooperation Organization (SCO). The
alliance is comprised of Russia, China, Kazakhstan, Tajikistan, Kyrghyzstan
and Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia.
It will be joined on Tuesday by Brazil for trade discussions among the BRIC
nations (Brazil, Russia, India and China).
The attendees have assured American diplomats that dismantling the US
financial and military empire is not their aim. They simply want to discuss
mutual aid - but in a way that has no role for the United States, NATO or
the US dollar as a vehicle for trade. US diplomats may well ask what this
really means, if not a move to make US hegemony obsolete. That is what a
multipolar world means, after all. For starters, in 2005 the SCO asked
Washington to set a timeline to withdraw from its military bases in Central
Asia. Two years later the SCO countries formally aligned themselves with the
former CIS republics belonging to the Collective Security Treaty
Organization (CSTO), established in 2002 as a counterweight to NATO.
Yet the meeting has elicited only a collective yawn from the US and
even European press despite its agenda is to replace the global dollar
standard with a new financial and military defense system. A Council on
Foreign Relations spokesman has said he hardly can imagine that Russia and
China can overcome their geopolitical rivalry,1 suggesting that America can
use the divide-and-conquer that Britain used so deftly for many centuries in
fragmenting foreign opposition to its own empire. But George W. Bush ("I'm a
uniter, not a divider") built on the Clinton administration's legacy in
driving Russia, China and their neighbors to find a common ground when it
comes to finding an alternative to the dollar and hence to the US ability to
run balance-of-payments deficits ad infinitum.
What may prove to be the last rites of American hegemony began already
in April at the G-20 conference, and became even more explicit at the St.
Petersburg International Economic Forum on June 5, when Mr. Medvedev called
for China, Russia and India to "build an increasingly multipolar world
order." What this means in plain English is: We have reached our limit in
subsidizing the United States' military encirclement of Eurasia while also
allowing the US to appropriate our exports, companies, stocks and real
estate in exchange for paper money of questionable worth.
"The artificially maintained unipolar system," Mr. Medvedev spelled
out, is based on "one big centre of consumption, financed by a growing
deficit, and thus growing debts, one formerly strong reserve currency, and
one dominant system of assessing assets and risks."2 At the root of the
global financial crisis, he concluded, is that the United States makes too
little and spends too much. Especially upsetting is its military spending,
such as the stepped-up US military aid to Georgia announced just last week,
the NATO missile shield in Eastern Europe and the US buildup in the oil-rich
Middle East and Central Asia.
The sticking point with all these countries is the US ability to print
unlimited amounts of dollars. Overspending by US consumers on imports in
excess of exports, US buy-outs of foreign companies and real estate, and the
dollars that the Pentagon spends abroad all end up in foreign central banks.
These agencies then face a hard choice: either to recycle these dollars back
to the United States by purchasing US Treasury bills, or to let the "free
market" force up their currency relative to the dollar - thereby pricing
their exports out of world markets and hence creating domestic unemployment
and business insolvency.
When China and other countries recycle their dollar inflows by buying
US Treasury bills to "invest" in the United States, this buildup is not
really voluntary. It does not reflect faith in the U.S. economy enriching
foreign central banks for their savings, or any calculated investment
preference, but simply a lack of alternatives. "Free markets" US-style hook
countries into a system that forces them to accept dollars without limit.
Now they want out.
read more here:
www.globalresearch.ca/index.php?context=va&aid=13969
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