The US and CHINA in the Oil and Dollar Game

This cartoon depicts the poor mouse (Trump) in a trap and the question (by China) for him to rate his dining experience. Trapped, the US will be in no position to rate the experience.

The cheese represents the Chinese bait, not necessarily N. Korea. This article is not about the cancelled Trump-Kim summit. It’s about oil and US dollar domination.

The US little understands that countries like China, Russia and Iran have a history of cultures and civilizations as well as empires that had been around for centuries. An Iranian diplomat once stated while we’ve mastered the game of chess, the US is just learning to play the game of drafts. Chess requires skill. Strong negotiators attempt to understand the weaker points and calculate every move of their adversaries and learning from history is vital to success. Lacking negotiation skills, Trump and team resort to bullying whether it is politics or trade.

Iran and Iraq have defeated ISIS in Iraq and now Iran and Russia have scored a major victory in Syria against the rebel forces and ISIS supported by the US, Israel and Saudi Arabia. The battle will now move to Yemen.

Indisputably the invasion of Iraq was to rid it of Saddam Hossein- regime change- who wanted to trade Iraqi oil in other hard currencies besides the dollar and euro. Same was the fate of regime change meted out to Moammar Gaddafi of Libya. Seems like the US relishes changing regimes. Old habits just don’t fade. The US has the same goal for Iran and N. Korea. The two neocon hawks selected for implementing regime change are Mike Pompeo and John Bolton for Iran and N. Korea.

Iran established Iran oil bourse (IOB) on Kish Island in February 2008, intended for trading crude oil, petroleum, petrochemicals and gas in various currencies primarily the euro and Iranian rial and a basket of other major (non-US) currencies. It is a minor bourse in comparison to New York and London oil exchanges. On the other hand, the recently inaugurated Yuan-dominated Shanghai oil bourse on March 25, 2018 is a direct competition and within a short time it is proving to be successful as major traders like Trafigura, Glencore and Freepoint traded contracts in yuan . China is now the largest crude oil importer and the second largest consumer.

The recent OPEC and Non-OPEC pact which led to recovery of oil prices was is in large part due to the Russian role played out by Vladimir Putin. Saudi Arabia was in economic doldrums while it was involved in proxy wars in Syria and Yemen. Even the Saudi funded ISIS has been an investment loss. It needed money and Putin helped out to balance global oil supply and demand. Russia will certainly demand the proverbial pound of flesh.

China, Iran and Russia are the tripartite countries that intend to dominate oil by slowly weakening the US dollar dominance which it enjoys in collusion with Saudi Arabia. The two best books on the subject matter are “Petrodollar Warfare” by William Clark (2005) and “Colder War” by Marin Katusa (2016). Both have discussed the bleak future of the dollar in relation to oil as its being played out with a massive economic and geopolitical shift to Russia and China along the fault lines of energy security.

Why would N. Korea’s Kim Jong-Un travel to meet Chinese leader Xi Jingpin on March 25, 2018? China extended the invitation to N. Korea for political discussions but according to analysts the visit was a courtesy call aimed at shoring up Pyongyang’s ties with China which has no issues when it comes to total and unconditional denuclearization but at what price?

Trump had even suggested “that Chinese President Xi Jinping could be behind the more hostile rhetoric out of North Korea.”

Mike Pence, US VP said in an interview on May 21, 2018 on Fox News that “There was some talk about the Libyan model last week, and you know, as the President made clear, this will only end like the Libyan model ended if Kim Jong Un doesn’t make a deal.” The deal that Pence was referring to was denuclearization but he forgot that Libya did not possess the weapons that N. Korea does. Of course Libya paid the price for surrendering simple blueprints it possessed.

If N. Korea agrees to denuclearization, it is assured that the US will not hesitate to offer it economic bribery and then renege as it did with Libya or Iran. It is really China that holds the wild card. What it is will be known if the Trump-Kim summit goes ahead some other time as Trump suggested instead of on June 12 in Singapore. China has an upper hand in Asia.

China has two nuclear all-weather Asian friends, N. Korea and Pakistan but many more adversaries in the region. India is a close US ally in the south with aspirations of naval supremacy in the Indian Ocean. The US has several bases in Japan while Taiwan is a close US ally in the east and S. Korea in the south east. China has no intentions of giving up friends but at the same time it’d like to get rid of enemies on its doorsteps. Brinkmanship is about a strategy of political maneuvering and bluffing. In the case of Iran, it never needed a N-weapon but it certainly needed the economic assistance from US, France, UK and Germany. The game was well played out. Iran won and that now hurts US and Israel.

For the US, it’s not about denuclearization but about preserving the sanctity of the currency domination with which it controls oil and global trade. China too aspires to be a major player for oil trading and global trade with the yuan. It is a challenger to the dollar domination. China has partners in Russia and Iran with their vast resources of oil and gas. The US did not ditch the Iran N-deal for any other reason than the objective of controlling oil and protecting its currency.

The philosopher and writer Voltaire stated in the 18th century that “Paper money eventually returns to its intrinsic value – zero,” and he was absolutely right. There have been many different paper currencies throughout the history of mankind. But all of them, in one way or another, eventually reverted to zero and vanished. So is the dollar’s destiny.

G. Asgar Mitha recently retired from working with a large oil company in Canada as a Technical Safety Engineer


Support Countercurrents

Countercurrents is answerable only to our readers. Support honest journalism because we have no PLANET B.
Become a Patron at Patreon

Join Our Newsletter


Join our WhatsApp and Telegram Channels

Get CounterCurrents updates on our WhatsApp and Telegram Channels

Related Posts

Join Our Newsletter

Annual Subscription

Join Countercurrents Annual Fund Raising Campaign and help us

Latest News