Whatever happens, if the dollar crashes or dies, there will be wailing in Washington and parts of the world. But there will be jubilation in many parts including Europe, which may try to position its Euro as the alternative reserve currency; if there can be petrodollars, there can also be petroeuro, and of course, petroyuan.
The ongoing debate, fake news and propaganda against China-African relations, loans and economic cooperation, are essentially diversions. The reality is that the West, especially America, is in a panic mode over China in Africa.
Before examining the real issues behind the Western warnings to Africa, let us examine some of the matters arising from the relationship. There is a claim that the relationship is a new form of colonialism in Africa. My response is that this is not impossible. The argument that the loans would lead to a debt trap is neither here or there. First, the America that is warning Africa, is itself indebted to China to the tune of $1.18 trillion. Second, it depends on what African countries use the loans for. So far, many are using them to build basic infrastructure like railways and power plants, which are necessary for African development. Third, unlike loans from the West, there are no known ‘conditionalities’, such as Africans being forced to divest from public works, reduce social spending or devalue their currencies. Fourth, unlike the West, China is not known to meddle in the internal politics of African countries.
There have been some video tapes allegedly showing Chinese officials making racist remarks about Africans. My response is that there are racists in all countries.
There have also been claims of unfair labour practices and even conflicts between Chinese and African government officials, and I say there is nothing strange in these. All African countries have labour laws and regulations and the Chinese must be made to obey them and the International Labour Standards and Conventions. As for conflicts, these are inevitable in all relations, the issue is how they are resolved. In Africa, we say even the teeth and tongue quarrel; sometimes, the teeth bites the tongue, and that does not mean their relationship is not working. All these do not mean that the Chinese are angels. No, they are not. The truth is that all countries have their national interests which they pursue.
The concerns of the West and America about the China-Africa cooperation is not because they are in love with Africans or concerned about the Black Race. The reality is, after over 500 years of forced trade, slavery, colonialism and neo-colonialism, Africa is beginning to slip from their fingers. The real concern is the rise on the horizon of a New World Economic Order, a new globalisation, which the West cannot manipulate and may not control. The reality is that China is the nuclear warhead of that new order.
There have been various moves to escape the American financial strangulation. One of it is through countertrade, a reciprocal system through which countries, especially in the underdeveloped world, exchange goods and services rather than use hard currency. It is a modern form of trade by barter. Not unexpectedly, America frowns at such attempt to subvert its currency.
The current Economic Order evolves around the West. The Second World War weakened Europe, and with the Marshall Plan, America became the dominant power, and its dollar, the reserve currency of the world. This was further strengthened in July 1974 when in return for American support and military supplies, Saudi Arabia used its clout in the Organisation of Petroleum Exporting Countries (OPEC) to ensure oil is traded in dollars. This became known as petrodollar, which is OPEC members obtaining American dollars when they sell their oil. So part of the American domination of the universe is the contrived need of the American dollar for international trade. As the reserve currency of the world, all major commodities are tied to it. So even as America manipulates its currency and prints it virtually for sale across the world, the rest of humanity bends backward to ensure it is stable as its instability may negatively affect all.
With petrodollar, and international transfers passing through it banks, America has whipped many countries into line. It seeks to strangulate countries that would not fall in line, and when it decides to impose sanctions against particular countries, it seeks to force other countries, banks and corporations to join the sanctions regime or be punished.
There have been various moves to escape the American financial strangulation. One of it is through countertrade, a reciprocal system through which countries, especially in the underdeveloped world, exchange goods and services rather than use hard currency. It is a modern form of trade by barter. Not unexpectedly, America frowns at such attempt to subvert its currency. At a point, Europe also got fed up with petrodollar and tried to use its Euro as a reserve currency. But this has had quite limited impact.
One of the most direct challenges to the petrodollar was when Iraq under Saddam Hussien, decided to trade its oil in Euro. The Americans would have none of it. Within two years, America using the falsehood that Saddam not only possessed weapons of mass destruction, but was about to use them, invaded and destroyed that country. It also executed Saddam and other Iraqi patriots, while bringing the country and its oil wealth under its direct control.
Perhaps the most audacious step China is taking is to use its huge oil purchases, including from Saudi Arabia, to make payments in Yuan rather than the dollar. If this were to succeed, we would be witnessing the process of de-dollarising the world. The implications would include the dollar losing its value, American political clout waning and the country facing financial crisis…
Then Mouammar Ghadaffi followed suit by deciding to trade Libyan oil in gold or other currencies, apart from petrodollar. Libya was invaded like Iraq, Ghadaffi was killed, the country destroyed and its oil brought under direct American control.
The latest challenge to American dominance is coming from five countries. In 2010, Brazil, Russia, India and China held an inaugural summit of a new bloc which they named BRIC, the acronym from the first letters of their countries. The following year, they brought in South Africa and changed the name to BRICS. They are building a New World Economic Order with China, relying on its economic power, turning its Yuan or RMB currency into a convertible one and getting countries to use it rather than the dollar. For instance, it has entered into an agreement with Nigeria for a Yuan-Naira convertibility arrangement, which would see Chinese products converted directly rather than through the dollar. Perhaps the most audacious step China is taking is to use its huge oil purchases, including from Saudi Arabia, to make payments in Yuan rather than the dollar. If this were to succeed, we would be witnessing the process of de-dollarising the world. The implications would include the dollar losing its value, American political clout waning and the country facing financial crisis as its rent-seeking runs may come to an end.
Just as America has not witnessed war on its turf since independence, so has its currency not fought any serious international war. I foresee America instigating wars to stop the shift from a dollarised world; it could get Taiwan or Japan to attack China or attack countries like Iran who may follow China’s footsteps.
Whatever happens, if the dollar crashes or dies, there will be wailing in Washington and parts of the world. But there will be jubilation in many parts including Europe, which may try to position its Euro as the alternative reserve currency; if there can be petrodollars, there can also be petroeuro, and of course, petroyuan.
Owei Lakemfa, former secretary general of African workers is a human rights activist, journalist and author.
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