A famous saying goes, “Do not invite a trouble to trouble you.”US President Donald Trump’s trade war against China and slapping economic sanctions on Iran and Turkey reflect the same situation. The countries that have a large share in global economy are going to extend support to Turkey to relive the pressure created by the US sanctions on it that has tumbled Lira. Russia, China, Iran and Turkey are fleeing the dollar and promoting bilateral trade in their national currencies amid the US tariff and sanctions spree. Indonesia has also followed them, rejecting the sanctions against Turkey and lending support in the trade war imposed on it by the by the United States.
A top Russian Deputy told Anadoulu agency that the use of US dollar to put pressure on other countries will lead to the creation of an alternative world currency costing the dollar its global status. Anatoly Aksakov, who heads the Russian State Duma Financial Committee, said that dollar gained its “world currency” status in 1944 when, because of World War II, the national currencies of many countries were devalued while the dollar stayed stable. This resulted in more payments in dollars and its denomination in international transactions. “But today the US administration is doing everything for the creation of new world currency”, he said.
Anatoly Asakov said, “More and more countries are considering transactions in national currencies. Meanwhile, the BRICS economic bloc members, which Turkey seems to be interested in joining, are discussing the possibility of creating a new currency for payment with in the BRICS. The bloc presently comprises Brazil, Russia, India, China and South Africa. It possesses half of the world population, 30 percent of world’s industry and 40 percent of the world’s agriculture as well as the biggest natural resources deposits.
The Russian deputy disclosed that the process of creating an alternative currency can be completed within five years. “Once the alternative currency appears, the dollar will lose its significance, costing it half its current value. And with the loss of the dollar’s value, the US will lose its significance,” he said. The oil rich Persian Gulf currency may also think about moving away from dollar. Speaking to Sputnik Middle Eastern economists have shared their views on whether Persian Gulf States will follow suit. Egyptian economist Muhammad Abdel Jawad said it is very difficult to move away from the dollar alone, but if the countries of the Persian Gulf decided to do this together, if they introduced single currency, this would have a huge effect and a push for progress. However Abdel Aziz Arayar, a member of Advisory Committee of Gulf Cooperation Council said there is no need for the Gulf States to forgo the dollar.
Prior to the Iran Nuclear deal, India has successfully done trade by free convertibility of Indian Rupee into Iranian Riyal and its stable exchange with rupee. Indian External Affairs Minister Ms. Shusma Suraj has once again made it clear after meeting with her Iranian counterpart Jawad Zareef that US sanctions on Iran are not binding on India. Likewise, US western allies are still trading with Iran.
Ahmad Zaman, head of research at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has advised the government to go for product- based preferential agreements in bilateral trade to achieve economy in using the US dollars in bilateral trade. He said that in the current era of intensified competition and US-China trade war, the centuries’ old barter system has been revived, but with a different approach. Countries are now adopting production-based preferential agreements, eliminating tariffs and taxes on the import of specific commodities. Many countries are now adopting this model of bilateral trade including Russia and Iran. Pakistan has undertaken it in its trade with Iran, importing oil while exporting rice and Kinnow. The same recipe can be useful in trade with Kenya by exporting rice, wheat flour and pharmaceuticals, while importing tea leaves. Product-based preferential agreements with a number of countries will relieve pressure on rupee, which depreciated by 22 percent against the dollar. The growth of such agreements and creation of a new currency in transactions of international trade will erode the international monetary and financial order controlled by the United States through World Bank and International Monetary Fund (IMF) which were established after the Breton Wood Conference. It must be realized that US led New Economic Order is on the decline and China led Economic Order is emerging.