By Ken Schortgen | The Daily Economist
In a fascinating dichotomy where both the United States and Russia are implementing different foreign policy angles that will inevitably kill the petrodollar, their main target happens to be the same in the Arab Kingdom of Saudi Arabia.
Back in 1973 Nixon’s Secretary of State Henry Kissinger went to Saudi Arabia to forge what would become the next global backstop for keeping the dollar as the world’s reserve currency. But in doing so the U.S. made a promise to protect the Kingdom from foreign invasion, and in return the Saudi’s would ensure that OPEC used only dollars in their global selling of oil.
But what the U.S. did not anticipate was the fact that the Saudi monarchy followed a radical form of Islam that was hell bent on seeing all other sects utterly destroyed. And through their use of money, arms, and terrorism over the past 40 years, the U.S. has been forced to intervene in many of these unprovoked attacks on Saudi’s Arab neighbors, and have played a major role in both toppling governments, as well as aiding terrorism.
And in 2017 with the election of Donald Trump, this all appears about to change, and could signal that the new U.S. President is content with letting the old petrodollar agreement dissolve away.
Unlike every president since the petrodollar’s birth, Donald Trump is openly hostile to Saudi Arabia. The Saudis did not want Donald Trump in the White House. And not because of some bad blood on Twitter. There are real geopolitical issues at stake. At the moment, Trump seems determined to walk back on US support for the so-called “moderate” rebels in Syria. The Saudis are furious with the US for not holding up its part of the petrodollar deal. They think the US should have already attacked Syria as part of its commitment to keep the region safe for the monarchy. Toppling Syrian President Bashar al-Assad is a longstanding Saudi goal. But a President Trump makes that unlikely. That’s not good for Saudi Arabia’s position in the Middle East, nor its relationship with the US. This is just one of the ways President Trump will hasten the death of the petrodollar. – International Man
On the other side of the gambit is Russia’s President Vladimir Putin, who has not only sided with Syria’s Bashir Assad in fighting the Islamic Caliphate’s attempts to topple the government, but in a recent and unprecedented move invited Sunni clerics to a conference in which they castigated Saudi Wahabism as being deformed in the construct of Islam.