In the following we present a translation containing facts that touch upon, and will most likely impact, the lives of every human being on planet earth. Commentary and [bracketed notes] are by Vince Dhimos.
If you read our analysis and translation entitled “Uh oh! Saudis side with Putin against US sanctions,” you are prepared for this next chapter in the same saga of a Saudi uprising against their masters in Washington.
I daresay that many readers will not understand what the author is talking about. Because very few people actually know what the word “petrodollar” actually means. The media rarely discussed the deal between Nixon and King Faisal and most have been unaware of its existence and its far-reaching implications for US foreign policy, not to mention its moral implications.
I will be as clear as I can possibly be for those who don’t understand the petrodollar concept.
After WW II, as most Westerners know, the US dollar became the world’s reserve currency and, at the same time, the legal tender for virtually all international trade settlements. If you were an American residing in the US, and wanted to buy a chess set from Italy by mail order, you paid the Italian merchant in US dollars using a draft of some sort made out to the merchant. At first that might have been a cashier’s check or something of that sort sent by mail. Later, credit cards were internationalized for such purposes. But at any rate, you paid in dollars.
This was due to the fact that representatives from the 44 allied nations got together in June 1944 at a monetary conference at the Mount Washington Hotel in the village of Bretton Woods, New Hampshire, and decided to adopt the US dollar as the currency for international trade settlement. The US agreed that the dollar would be backed by gold at the rate of $35/oz. Most readers will already know this part as well. Then in 1971, President Richard Nixon was forced to abandon the gold standard for the dollar because too many foreigners were demanding physical gold for their dollars and the US could no longer keep up with the demand. This left the dollar unbacked by anything of value and the economy was suffering as a result. Added to this was the Saudi cutback in oil sales to the US in retribution for US support of Israel against the Arabs. After much deliberation and at the advice of his advisers, Nixon, in desperation, decided to enter into a deal with the devil, almost literally, signing an agreement with King Faisal, the head of the brutal dictatorship Saudi Arabia whereby the US agreed to “defend” this dictatorship (euphemistically called a “kingdom,” both then and now) governed according to the precepts of the world’s most intolerant and violent death cult, Wahhabism, in exchange for the Saudis propping up the declining dollar by accepting only US dollars in payment for their oil and also keeping their cash reserves only in dollars. (The mechanism by which this works is somewhat complex but economists generally agree that the exclusive use of a currency in international trade bolsters its value). The petrodollar is therefore a currency backed by the oil of the Saudis and the Gulf statelets but literally at the price of America’s soul and the blood of innocents, both American and foreign.
The US military went far beyond just defending this kingdom and the tyrants who ruled it, as is plainly evident from the outcomes of all the wars waged by the US (not counting the ones in Latin America) since the deal was signed. Each war benefitted the Saudis and aided them in the spread of their bloody religion and its principles that make a mockery of all things decent and civilized, to say nothing of a nation of people who hypocritically claim to accept Christian principles but who never questioned the motives of wars that killed hundreds of thousands on incomprehensible pretexts that no president could adequately articulate. And here is direct evidence that Saudi has long dominated the US:
QUOTE from the below translation:
“...the country that leads the Arab world is not only threatening senior US officials, but also preparing actions that will cause enormous damage to the US economy.”
It calls to mind the proverb: he who goes to bed with dogs wakes up with fleas.
If you wonder what I mean when I say the US has been helping Saudi spread its violent and intolerant death cult, I have plainly spelled it out in this analysis:
Remember that every member of ISIS and al-Qaeda, and of its rebrandings that the US has cynically funded, armed, assisted with air cover, and called “moderates,” is an adherent of the death cult of Wahhabism. None of them are ordinary Muslims and of course, none claim to be Christians like the people who support their mischief.
For half a century, Americans calling themselves Christians failed to stand up and denounce this barbarism on the part of their government and repent of their immoral indifference to this supremely immoral petrodollar deal all in the name of vile money. As our translated article shows, it is probably too late for repentance in any case now and they will almost certainly pay the price.
Romans 6:23 – the wages of sin is death.
Finally, this Saudi nuclear option also softens the impact of media war mongers like Fareed Zacharias and politicians who try to goad Trump into being more warlike with Russia. They ought to know that the power shift we are discussing herein has not only been US vs Russia. It also includes the Middle East, which is no longer the ally that backed the US dollar. It is now threatening to destroy the dollar. And the US can’t fight a war without dollars. Further, if the dollar collapse, watch the allies abandon the US like rats deserting a sinking ship.
"The nuclear option": they’re threatening to kill the petrodollar
The British Reuters news agency reported that a serious threat was looming over the dollar financial system. Senior officials in Riyadh are discussing the possibility of using the so-called “nuclear option” against Washington — not charging dollars as payment for Saudi oil if the US adopts a law to eliminate OPEC.
The Saudi threat has not yet been voiced and is not confirmed at the official level. However, high-level Reuters sources state it as reality, and Saudi diplomats have refused to issue an official refutation, which can be considered an indirect, but very strong argument that such a scheme of influence on the American authorities and the US financial system is really being weighed.
It is worth emphasizing: we have repeatedly written that the main factor that will stop the adoption of the so-called NOPEC bill, which allows the US government to file anti-monopoly lawsuits against OPEC + Russia member countries in US courts, is the response measures of "affected" countries that will begin to have their dollar-denominated assets and assets under American jurisdiction expropriated.
As the most serious and effective response, we mentioned the attack (or rather, total dismantling) of the petrodollar system, which is crucial for the international status of the US dollar: "The fact is that if this bill is passed and the judicial process starts, which will obviously end with the confiscation of the property of oil-exporting countries, the exporting countries themselves will immediately “kill” the petrodollar system. Just because it’s the only way for them to survive. For the US authorities, who ultimately demand that they are provided with a politically comfortable price level of $30 per barrel (as Trump does), the only possible response is the immediate rejection of oil supplies to the US and use of the dollar [the Saudis refused to sell oil to the US under Nixon, leading to the so-called “oil crisis”]. Such a radical financial restructuring will require effort and will involve serious organizational difficulties, but in this scenario it is better for exporting countries to lose five percent or even 15% of the profits in other currencies compared to losing 100% of the dollar profits when the US bailiffs freeze their accounts."
This forecast was written in July 2018 and at that time seemed to some commentators and experts to be absolutely incredible and too optimistic, because any religious fanatic would envy the level of faith of some of their fellow citizens in the omnipotence of America and the "great dollar."
Nine months have passed - and now even extremely pro-American media outlets like Reuters, have reported that the threat to the petrodollar as a fait accompli: "(Reuters sources) said that this option was discussed domestically by high-ranking Saudi officials in recent months. Two sources confirmed that the plan was discussed with OPEC members, and one of the sources, well informed about the oil policy of Saudi Arabia, stated that Riyadh also reported a threat to senior US officials from the energy sector. "
We are witnessing a situation that a few years ago seemed impossible: the country that leads the Arab world is not only threatening senior US officials, but also preparing actions that will cause enormous damage to the US economy. The thesis of colossal damage is not the “fantasy of Russian propaganda” but a dry statement of the facts presented by mainstream British journalists and their sources: “In the unlikely event that the Saudis really drop the dollar, it will undermine its status as the main global reserve currency, reduce Washington’s influence and reduce its ability to impose sanctions on nation states. "The Saudis know that they have the dollar as a ‘nuclear option,’ said one of the sources familiar with this issue. "The Saudis are saying: Let the Americans accept the NOPEC bill, and the US economy will collapse," said another source.
We can agree with Reuters journalists in their assessment of the low probability of such an event, but not because Riyadh is not brave enough (for Saudi Arabia, the refusal of the dollar will become a matter of survival), but because after the negotiation table option,” it is unlikely that US senators and congressmen will find the courage to accept the NOPEC bill that would plunder the oil-exporting countries.
However, on the other hand, it is hardly possible to rely on the prudence of US lawmakers, who are often guided solely by internal political logic, the desire to get good public relations and ideas about unlimited American greatness and omnipotence. So there is, albeit not very big, but the chance that Riyadh will have to fulfill its threat if the American lawmakers and the Trump administration do not heed the voice of reason and the demands of American oil companies opposing the scandalous bill.
From the point of view of Russian interests, both options are good. If the NOPEC bill is quietly (or even with a scandal) buried somewhere in the halls of Congress, the Senate or the White House, oil prices will receive an additional factor of support, and the whole world will see that “keeping the petrodollar hostage” is a good pressure point tactic against the decrepit world hegemon. If Washington passes the bill (which also cannot be ruled out), then in the event the Saudis make good their threat, the damage inflicted on the American economy and the dollar financial system more than compensates for any discomfort that will have to be experienced in the process of transferring the entire oil trade to alternative currencies. And this is not to mention the fact that the collapse of the petrodollar will be a unique chance to expand the role of the rouble in the energy trade.
Already, this raises an important question: where did Saudi Arabia find such courage in relations with the United States? What makes it possible to ignore Trump's tweets, which demand an immediate reduction in the price of oil, and at the same time threaten the United States with the elimination of the petrodollar? In recent years, by and large, only one key factor has changed in the world which makes it possible to perfectly explain these events: Russia has established the export of services to protect against Washington's aggression, clearly demonstrating its effectiveness and inflexibility in Syria. Now, everyone who wants to do something that will provoke the anger of the White House, knows that they (if there is really benefit in it to Russia) can find effective protection from furious American politicians.
The process has just begun, but Russia is already bringing tangible benefits, such as the five trillion roubles earned on the OPEC + Russia deal. Further, there will definitely be more. And if suddenly news about urgent deliveries of, for example, Russian air defence systems to Saudi Arabia begins to appear in the news, it can be assumed that not only are the days of the petrodollar numbered, but the entire petrodollar system may collapse in just one day.