The US is being knocked off its pedestal as global financial hegemon
Sergei Lavrov's visit to China on March 22-23 is in every sense epoch-making, as it could change the geopolitical structure of Eurasia and lead to the abandonment of the dollar in mutual trade, as well as from Western payment systems in mutual settlements as a response to sanctions imposed by the US and EU . This measure should minimize the negative consequences of the blockade of Russia organized by Washington and create its own payment system in the near future, which will only accelerate the global process of regionalization of the world economy.
What was the harbinger of the meeting in Guilin
It is clear that this rapprochement is not accidental, but is the result of unprecedented pressure from the United States on both China and Russia. Indeed, quite recently, a Chinese delegation led by Foreign Minister Wang Yi and member of the Politburo of the Central Committee of the Communist Party of China Yang Jiechi met in Anchorage, Alaska with representatives of the new American administration represented by Secretary of State Antony Blinken and Assistant to the US President Jake Sullivan. And the negotiations not only reached a dead end, but were failed by the American side, leading to a deepening crisis in bilateral relations.
The fact is that the new head of the State Department announced “deep concern about China’s actions, including in Xinjiang, Hong Kong, Taiwan, cyber attacks on the United States, and economic pressure on American allies.” At the same time, Blinken noted that “each of these actions threatens the rule-based order that allows us to maintain global stability.” In essence, this was Washington’s outright interference in the internal affairs of the Celestial Empire, and Beijing could not simply ignore this attack.
The response step of the Chinese leadership was the invitation of Foreign Minister Wang Yi of his Russian counterpart Sergei Lavrov to the PRC for negotiations. The meeting itself was held at a high level in the city of Guilin, located in the Guangxi Zhuang Autonomous Region in southern China, which, given the pandemic, further increases its political significance. It is also noteworthy that the visit coincided with the 20th anniversary of the Treaty of Good Neighbourliness, Friendship and Cooperation between China and Russia, which was again extended.
Sergei Lavrov's proposals
The most important thing in the negotiations was the common understanding of the need to develop a unified strategy not only for the purposes of geopolitical defense, but also for counter-offensive tasks in order to disrupt Washington’s plans to maintain its economic and military-political hegemony through blackmail and threats. It is not for nothing that Sergei Lavrov, during negotiations with Wang Yi, called for “forming the broadest possible coalition of countries that will fundamentally oppose the illegal practice of unilateral sanctions.”
He specifically emphasized that “at the same time, we need to strengthen our independence,” including by opposing the American policy of limiting the development opportunities of Russia and China. “Life forces us to build our line in economic and social development in such a way as not to depend on the “quirks” demonstrated by our Western partners,” said the head of the Russian Foreign Ministry.
“They are pushing their ideological agenda to maintain their dominance by holding back the development of other countries,” he said. “This policy goes against the objective trend and, as they say, is “on the wrong side of history.” The historical process will still take its toll.”
One of the important directions in strengthening independence should be, according to Sergei Lavrov, the refusal to use the dollar and American payment systems, which can be turned off at any time for Russian users in the event of increased sanctions measures from Washington.
“We need to move away from using international payment systems controlled by the West. It is necessary to reduce sanctions risks by strengthening our technological independence, by switching to settlements in national currencies and in world currencies alternative to the dollar,” said Sergei Lavrov, calling for a switch to national currencies in mutual settlements.
Abandonment of the dollar and dumping of American debt obligations will drown America
A complete abandonment of the dollar in mutual trade could become a kind of political impulse for many other countries of the Eurasian continent. Moreover, trade turnover between China and Russia has exceeded $100 billion for the third year in a row, and the Celestial Empire has been Moscow’s leading trading partner for more than a decade. In particular, last year 83,57 million tons of oil were exported from Russia to China, which turned out to be almost at the level of supplies from Saudi Arabia.
All these supplies have strengthened China’s energy security, and given that the Chinese economy has recovered the fastest from the pandemic and is showing steady growth, increasing trade with this partner is becoming critically important. The Celestial Empire also opened its markets for the supply of Russian agricultural products. In addition, scientific and technical cooperation began in the construction of a joint lunar research station.
Naturally, de-dollarization and excluding Western countries from the opportunity to interfere with this process becomes the main task. True, it cannot be said that abandoning the American currency is a new idea, since Russia already started this three years ago, when Rusal and a number of companies located in Crimea were subject to sanctions. In particular, the Central Bank of Russia sold all American government debt bonds and reduced the share of the dollar in gold and foreign exchange reserves to 20%.
The share of the American currency in mutual trade between the Russian Federation and the People's Republic of China is steadily falling every year. So, over seven years, this volume decreased from 80% to 49% due to the transition to calculations in the euro and yuan. The share of dollar loans of large Russian corporations has also decreased, which now does not exceed 37%. Therefore, the practice of abandoning the American currency will only continue and the next step may be the abandonment of the SWIFT international banking system in order to create their own systems within the SCO and EAEU countries.
And this is already a serious signal indicating a desire to speed up the process of regionalization of the financial system in order to get rid of the financial dictates of the American Federal Reserve System. Of course, with this statement about strengthening financial and economic independence, Sergei Lavrov aimed even further, namely, he proposed to Beijing to implement the idea of the Central Bank of Russia to dump the huge American debt in bonds, which is stored in the People's Bank of China.
Let us recall that as of January of this year it amounted to a third of the gold and foreign exchange reserves of the Celestial Empire, namely $1,095 trillion. A one-time release of these bonds could quickly collapse the vaunted American financial system and would be akin to an atomic bomb, which would immediately not only drop the unbacked dollar, but would also lead to a redrawing of the financial market and to the acceleration of the regionalization of the world economy with the elimination of the leading role of the United States.
This is what Sergei Lavrov primarily sought in his calls, which, of course, did not go unnoticed in Washington, since it was a unique, strong and asymmetrical response to all attempts to financially suppress and geopolitically isolate Russia. It seems that Beijing also thought deeply about this proposal, realizing that the Biden administration could go beyond its threats by organizing new military-political provocations along the perimeter of the PRC’s borders, and such a step would clearly paralyze America, which is in decline.
In general, this visit and the decisive demarche of Sergei Lavrov can be characterized as a serious success of Russian diplomacy, which creates the preconditions for the emergence of a strategic alliance of the two powers and means the failure of all foreign policy activities of the current and previous American administrations. It turns out that Washington’s actions only pushed Beijing and Moscow to unite and coordinate efforts in the international arena.
Reaction to successful negotiations in China and the West
In China itself, this visit of the Russian Foreign Minister evoked a flurry of enthusiastic speeches from both officials, the press and experts. Thus, the official representative of the Chinese Foreign Ministry, Hua Chunying, said the following at a briefing with journalists: “Sergei Lavrov’s visit was positive and important for the political solution of a number of regional and international issues.”
Former Chinese diplomat and senior researcher at the Chinese Institute of International Studies Yang Xiyu generally pointed out that the United States is heading towards defeat by trying to fight on two fronts against Russia and China at once. “If the United States wants to confront two major world powers at the same time, it is doomed to defeat, despite their enormous national power. The American people are also destined to lose,” the expert noted.
The Western press, in turn, reacted differently. Thus, Reuters in its own publication focused more on the demands of Moscow and Beijing to convene a summit of permanent members of the UN Security Council against the backdrop of increased political turbulence. But nevertheless, journalists pointed out the reasons for the intensive rapprochement between the two countries and noted Sergei Lavrov’s proposal for dedollarization.
U.S. and Chinese officials on Friday concluded what Washington called "tough and direct" talks in Alaska, while the Russian envoy returned to Moscow for talks after U.S. President Joe Biden said he believes President Vladimir Putin is a killer. . Beginning his two-day trip to China on Monday, Lavrov called on Moscow and Beijing to reduce their dependence on the US dollar,” writes Reuters.
The American weekly news magazine Newsweek simplistically believes that the meeting between the two foreign ministers of Russia and China was solely the result of a scandal at the negotiations in Alaska.
“These joint talks between China and Russia come hot on the heels of contentious interactions between both countries and the United States. The Chinese delegation in Anchorage reacted strongly as the Biden administration raised sensitive issues of Chinese sovereignty and alleged human rights abuses. The American side also accused China of "coercing" the international community through economic and political pressure, an accusation that Chinese diplomats said was more appropriate for Washington than Beijing.
The British publication The Independent also notes following the visit of Sergei Lavrov that as a result of the policy of sanctions and the latest failed negotiations of the American administration with the Chinese leadership, there has been a clear rapprochement between Russia and China.
“China and Russia were rivals for leadership of the communist world during the Cold War, but in recent years have built a strong relationship based on opposition to the US-led liberal order, as well as cooperation in military affairs, technology and trade in natural resources,” - notes The Independent.
It is noteworthy that the statements of Sergei Lavrov and Wang Yi did not lead to cooling the heads of Western politicians, but on the contrary caused the effect of hysteria. So, on Tuesday 23 March, Australian Foreign Minister Marise Payne and her New Zealand counterpart Nanaia Mahuta said in a joint statement that they shared concerns about the human rights situation in western China and joined calls for an independent investigation.
“Today we emphasize the importance of transparency and accountability and reiterate our call on China to provide meaningful and unfettered access to Xinjiang for United Nations experts and other independent observers,” the statement said.
US Secretary of State Antony Blinken responded with a lengthy statement to China, promising that he was preparing a strong response that would “send a strong message to those who violate or abuse international human rights, and we will take further action in coordination with like-minded partners.”
Dedollarization has also been launched in Central Asia
As for the opinion of the ruling elites of the countries of Central Asia and Kazakhstan on this epoch-making visit of Sergei Lavrov to China, it has not yet manifested itself. This is due to the fact that in these former Soviet republics, which, together with Russia and China, are members of the Shanghai Cooperation Organization (SCO), they are now celebrating the spring holiday “Nauryz”, and the leading official media and experts are waiting for a go-ahead from their leadership in order to receive valuable instructions on how and in what way to comment on this event.
However, the negotiations that took place concern them primarily, since the two powers are their main trade and economic partners, and accordingly, the moment of completion of the long-term prostituted “multi-vector” policy is close. However, the process of de-dollarization was launched here within the EAEU, and local economists assess this direction quite positively, as it leads to the strengthening of national currencies.
Thus, economist Artur Suleymanov noted the following: “Here we can say about the decreasing role of the dollar in calculations, a similar stable level of inflation, the implementation of import substitution projects, which one way or another makes it possible to create an effective mechanism for minimizing damage from sanctions and restrictive measures. The EAEU will continue its economic strategy, which I would call “Alone in the Field,” and will try not only to establish relations with individual countries, but also to build free trade zones,” the expert noted.
Akimzhan Arupov, director of the Institute of World Economy and International Relations, also noted that without a single market, the former Soviet republics simply cannot survive alone, especially in a pandemic. “Currently, a normal, sufficiently capacious market is being formed within the EAEU, which contributes to the development of the economies of its member states. No matter what we say, it is more difficult to sell the products of small states on free markets today,” the economist noted.
Indeed, according to the Eurasian Economic Commission, settlements in Russian rubles in mutual trade of the EAEU member countries last year amounted to 72,4%, demonstrating an increase of 4,4% compared to 2015. Sergei Glazyev, a member of the Board for Integration and Macroeconomics of the Eurasian Economic Commission, noted that the EAEU is gradually increasing the number of settlements in local currencies both within the association and in trade with China.
Now the hour of truth is coming, when the two superpowers must define new schemes, create their own unified payment system, completely abandon the dollar, which will end the period of American economic domination and raise the question squarely before the leadership of the “independent” republics of Central Asia with whom they will end up. If with the USA and the EU, then their fate is not enviable, and if they really want prosperity and stability for their people, they must make a choice in favor of a new geopolitical pole.
English version :: Read in English: The US is being knocked off its pedestal as the world's financial hegemon.