What do conspiracy theory fans keep silent about?
“Washington consensus” was violated at the place of its invention. Motherland of the free market is willing to live up to its laws. Somehow, Dominique Strauss-Kahn and Muammar Gaddafi happened to fell victims to Washington attacks. What do these two contrary persons have in common and why did they fell out of the United States favor?
“Washington consensus” was violated at the place of its invention. Motherland of the free market is willing to live up to its laws. Somehow, Dominique Strauss-Kahn and Muammar Gaddafi happened to fell victims to Washington attacks. What do these two contrary persons have in common and why did they fell out of the United States favor?
Let’s start with Gaddafi, who has recently become the main promoter of the…new African currency at the Black continent. He attempted to carry out the African integration policy within the African Union — it was to make the Black continent independent from the transnational financial institutions. For this sake Libya deposited more than 143 tons of gold, which might have secured the existence of the dollar-free zone, with the golden dinar as the international African currency. Military intervention of the USA, Great Britain and France hindered these plans.
Dmitry Medvedev’s concept, which he presented at the BRIC summit in April of 2011 at the Chinese Sanya resort, can put up quite a fight to the dollar. Russian President offered to build up the commodity exchange in the national currencies of the importing and exporting countries between the members of this informal club. This will help the BRIC members decreasing the economic dependence over the fluctuations of currency rates at the international markets, thus improving the state of their national economies. The main subject of the summit was the development of the long-prospect inter-banking contacts for the sake of improving trade relations and the supporting important local projects.
This is a step towards the change of authority structure of international finances. About 3.5 billion people of Asia and Africa use the Chinese Yuan in the mutual settlements and approximately 2 billion people use Indian rupee. Quite convincing demographic argument to give up dollar it is. China has already started to bring this plan to life. On the night from the 13th to 14th of April, 2011 (during the BRIC summit in Sanya) an announcement was posted at the web-site of the PRC national bank — it stated that by the end of this year China will stop using dollar for the international trade matters.
The plan was tested on 67.000 companies from 20 provinces, which were allowed to wage foreign trade activity in Yuan. Turnovers of these companies made up the sum, equal to €65 billion. Improvement of Yuan is connected to the 12th five-year plan adopted by the Pan-Chinese Convention of People’s Representatives in March of 2011.
This plan may enter the history textbooks as one of the boldest strategic initiatives. It stipulates a dramatic change of the Chinese economic model, shifting the center of masses from the infrastructure of the last 30 years, oriented towards export and foreign investments, to the growth dynamics, stimulated by the increase of internal consumption. This innovation will be of great importance for China, Asia and, perhaps, an entire global economy. After the crisis of 2008–2009 China — foreseeing the forthcoming age of the great economic shocks — came to a conclusion about the necessity of strategic changes. The end of economic synergy of the USA and the PRC will be one of the consequences of the change of Chinese economic strategy.
China disposes approximately $2 trillion currency reserves, earned at the trade with the USA. The U.S. state bonds make up 70% of it. It turns out that the Celestial Empire hangs in the state of critical contradiction between the geo-economics and geopolitics: in exchange for the access to American outlet China was forced to accumulate American bonds, thus, falling into double dependence upon the well-being of American economy.
An attempt to get rid even of a part of this “dead weight” will immediately trigger the collapse of the bonds market, thus depreciating with capitals that China accumulated. Simple calculation shows that this way the PRC about a 1% of its GDP, i.e. $40 billion, which Chinese might have invested into their own economy, crediting its own companies and citizens and developing infrastructure instead.
New five-year-plan means giving up this model and, accordingly, growth of tensions between Washington and Beijing. China has already declared that transactions with Russia and Malaysia will be done in Yuan, rubles and ringgits. In order to attract international interest to its own currency, China allowed foreign companies issuing Yuan bonds and liberalized the access to Chinese currency for non-residents. This is yet another stage of dismantling the control over Yuan exchange rate, which will let it “float” more freely.
Paradoxical is the fact this is exactly the thing that Washington constantly solicits Beijing with, but, complying with its demands, China deprives the USA of the grounds for the accusations of its own currency troubles and of ways for influencing the situation.
As for the troubles of American currency, they’ve recently become every bit as popular among the global media as the battlefront reports. All the news flashes all over the world start with the updates on the talks between American President and the Congress regarding the new ceiling of the U.S. budget deficit. Somehow, exactly this, 11th, procedure is paid such a great attention, albeit being quite an old issue.
American legislators have conducted this procedure, necessary for the calm of the global financial system, for 10 times already but only since this May it, without a hint of exaggeration, became such the central issue of entire humanity. The last, 11th, attempt to counterpoise the global currency system was covered by the media in such a detailed manner, that we don’t really have to cite all the stages of this desperately expected event with a quite predictable resume. American state apparatus is unwilling to admit the need to put the state spending on the short rations.
Discords between Republicans and Democrats in the issue of a well-balanced budget have stumbled at the plain conflict of interests of a wealthier part of society and those, in need of a help from the state. Democrats are willing to tax the wealthiest Americans more, while Republicans want to rob the poorest ones of the social security, consisting of the spending on health care and education. It’s quite characteristic that neither side goes as far as merely discussing the opportunity of curtailing the defense spending — the largest in the world, at that.
In 1989 English economist John Williamson introduced the term “Washington consensus” as a code of economic rule, defining the economic policy of poised state spending, subjected to the free market laws. According to Williamson, he mostly described the principles that reflected the general position of the U.S. office, key international financial institutions — the IMF and the World Bank — and the leading American analytical centers. All of them were headquartered in Washington — hence the origin of the term.
Paradoxically enough, it was Washington, which, carelessly breaking the principle of the same name, that caused the global anxiety. I wouldn’t like to make my conspiracy-loving friends happy, but it was this policy that two recently failed politicians have stood up against. I’m talking about Dominique Strauss-Kahn, who claimed that that the neo-liberal model of “Washington consensus” had exhausted itself in April of 2011 and Muammar Gaddafi, who attempted to replace dollar with the golden dinar in the internal accounts of the African Union.
Due to a weird coincidence, both of them were attacked by the United States of America. Strauss-Kahn fetched himself in an American prison, Gaddafi — under American bombs and missiles. However, while Dominique Strauss-Kahn’s testosterone boom is actively discussed in the French media, for some reason suggestions regarding the link between sudden outbreak of American hatred towards a Bedouin Colonel and his currency initiatives occur to no one. Still, Americans can always refer to the famous Latin proverb: “Post hoc non est ergo propter hoc[1]”.
Strauss-Kahn’s arrest has aggravated the currency crisis in the euro zone — habitat of the natural rival of the dollar and an apparent contender for the global dominion after the possible fall of its transatlantic counterpart. However, crisis of the European currency is separate and quite voluminous subject to review it within this article.
All these currency have the only meaning of course — financial crisis of 2008 is far from over. Only the complete changed of the global currency configuration may put the natural end to it. Multipolarity of the world should become currency-dimensional as well; the age of regional currencies, which will inevitably replace the hegemon currency, this embodiment of the unipolar world, is coming.
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