Former Defense Secretary Roberts Gates has famously said on more than one occasion that though he liked Joe Biden personally, Biden has been wrong on every major foreign policy issue throughout his entire half-century political career.
And he and his handlers are handling the war between Russia and Ukraine exactly the wrong way as well.
Specifically, the policies of financially isolating Russia are creating a bifurcated world that the United States will no longer dominate. In the process, he is ensuring that the U.S. dollar will no longer reign as the world’s reserve currency — which is going to lead to a collapse of our economy when countries stop buying our debt.
Case in point: India’s mass purchases of cheap Russian fossil fuels are more frequently being made in currencies other than the dollar, according to Reuters.
“U.S.-led international sanctions on Russia have begun to erode the dollar’s decades-old dominance of international oil trade as most deals with India – Russia’s top outlet for seaborne crude – have been settled in other currencies,” the report this week began.
The dollar’s dominance has been challenged from time to time, but it has persisted due to the undeniable benefits of utilizing the most universally recognized currency for commercial purposes.
India’s oil trading, prompted by the upheaval of sanctions and the conflict in Ukraine, presents the most compelling proof to date of a move towards alternative currencies that could have long-term implications, the report continued.
Ranked as the third-largest importer of oil globally, India began procuring the majority of its oil from Russia, which emerged as its top supplier after European nations rejected Moscow’s oil in response to its invasion of Ukraine that started in February of last year.
Following the imposition of an oil price ceiling on Russia by a coalition opposing the war on December 5th, multiple sources from the oil trading and banking sectors have disclosed that Indian purchasers have been utilizing non-dollar currencies, such as the United Arab Emirates dirham and, more recently, the Russian ruble, to pay for the majority of Russian oil. This shift, which has not been previously reported, has amounted to several hundred million dollars in transactions over the last three months, according to the sources who spoke to Reuters.
Last year, the Group of Seven (G7) economies, the European Union, and Australia established a price cap with the aim of prohibiting Western services and shipping from trading Russian oil, except when it is sold at a mandated low price, to deprive Moscow of funds for its war.
According to three sources with direct knowledge, a few Dubai-based traders, as well as Russian energy firms Gazprom and Rosneft, have been seeking non-dollar payments for certain specialized grades of Russian oil that have been sold above the $60 per barrel price limit in recent weeks, the report noted.
Due to the sensitivity of the matter, the sources requested anonymity.
Although these sales constitute a minor portion of Russia’s overall sales to India and do not seem to breach the sanctions, which US officials and experts believed could be circumvented by non-Western services such as Russian shipping and insurance, the trade sources and former Russian and US economic officials told Reuters that three Indian banks supported some of the transactions. This is in line with Moscow’s efforts to decrease its dependence on the US dollar, while traders aim to evade sanctions, Reuters added.
If the dollar loses its global reserve currency status, it would have a significant impact on the United States and the world economy. The demand for the dollar would decrease, which would lead to a depreciation in its value.
This would make imports more expensive and increase inflation in the United States. Moreover, the United States would lose the privilege of being able to borrow in its own currency, meaning it would have to pay higher interest rates to borrow money from other countries. This could lead to a decrease in foreign investment in the United States, which would slow down economic growth.
And that’s exactly what is happening under Biden.