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Andrew Korybko |

Venezuela recently announced that it is de-dollarizing its future oil contracts and switching to euros and yuan instead.

The move comes after the US tightened sanctions against the Hybrid War-beleaguered Bolivarian Republic and can be seen as a clever asymmetrical response designed to hit the US where it hurts – the petrodollar. One of the main reasons why the US was able to ascend to its preeminent global position was because the sale of oil has always been conducted in its currency, but there have been tepid moves to de-dollarize this and other aspects of the world economy across the past decade or so.

Russia and Iran are also interested in de-dollarizing, too, so if – and that’s a key qualifier – the right amount of multilateral coordination is present, then this might become a game-changing reality sooner than later

Venezuela’s decision is one of the boldest thus far, however, since the country is a member of OPEC and has the world’s largest oil reserves in the Orinoco River Belt. This led to many people worrying that the US will escalate its Hybrid War on the country just as they did against Gaddafi when he proposed selling oil in euros and then creating a new gold dinar currency for industry-wide transactions. These fears are well-founded, and it’s likely that Trump will try to make President Maduro pay for what he’s done in one way or another.

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Instead of speculating on the specific forms that this could take, it’s more pertinent to examine how Venezuela’s decision fits into the larger paradigm of de-dollarization. The BRICS countries, and especially the core strategic partnership of Russia and China, have been pushing ahead with conducting commercial, investment, and energy transactions with one another in national currencies, but this has yet to generate the crucial inertia that’s needed to implement fundamental system-wide reforms in the global economy.

That’s precisely why the US will probably punish Venezuela soon enough because it’s scared that the demonstration effect of allowing this to happen with impunity will soon catalyze a chain reaction all throughout the industry

It’ll take time for this to happen, and it’s precisely in this interim transitional period that the US is pulling all of its various destabilization levers from sanctions to Hybrid Wars and even economic espionage in an attempt to prevent this. What wasn’t expected, however, was a major OPEC member to suddenly announce that future oil contracts would be conducted in euros and yuans, as this accelerates the de-dollarization process by giving it a renewed impetus. It also encourages other energy-exporting countries, whether OPEC members or not, to consider following suit.

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That’s precisely why the US will probably punish Venezuela soon enough because it’s scared that the demonstration effect of allowing this to happen with impunity will soon catalyze a chain reaction all throughout the industry. It might surprise some people to hear this, but stereotypical oil giant and long-standing American “ally” Saudi Arabia might be on the verge of de-dollarizing future energy contracts as well, at least if one considers just how close it’s become to China over the past year after Beijing signed over $110 billion worth of deals with it just in the last six months.

It’ll take time for this to happen, and it’s precisely in this interim transitional period that the US is pulling all of its various destabilization levers from sanctions to Hybrid Wars and even economic espionage in an attempt to prevent this

China, more so than any other country, wants to see de-dollarization succeed as soon as possible in order for the yuan to become a more competitive global currency for all transactions, whether energy or otherwise, so it might predictably lean on Saudi Arabia to seriously contemplate doing this in exchange for Beijing having invested billions of dollars into its economy. Russia and Iran are also interested in de-dollarizing, too, so if – and that’s a key qualifier – the right amount of multilateral coordination is present, then this might become a game-changing reality sooner than later.

https://sputniknews.com/radio_context_countdown/201709221057611023-rosnefts-kurdish-turkish-pipeline-saudi-crackdown-venezuelas-oil-trade/

DISCLAIMER: The author writes for this publication in a private capacity which is unrepresentative of anyone or any organization except for his own personal views. Nothing written by the author should ever be conflated with the editorial views or official positions of any other media outlet or institution.

Andrew Korybko is a political analyst, journalist and a regular contributor to several online journals, as well as a member of the expert council for the Institute of Strategic Studies and Predictions at the People’s Friendship University of Russia. He specializes in Russian affairs and geopolitics, specifically the US strategy in Eurasia.The views expressed in this article are author’s own. It does not reflect Global Village Space Editorial policy.

Andrew Korybko is a political analyst, journalist and a regular contributor to several online journals, as well as a member of the expert council for the Institute of Strategic Studies and Predictions at the People’s Friendship University of Russia. He specializes in Russian affairs and geopolitics, specifically the US strategy in Eurasia.

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