By Pasqualina Curcio – Apr 5, 2021
At least twenty countries are formally victims of US “sanctions”. Since 1992, in the United Nations General Assembly, all countries except the US and Israel have voted against the unilateral coercive measures imposed by the United States on Cuba. Despite the evident majority, the US has ignored them. Good wishes, denunciations and calls to lift the blockades have not been enough to prevent these genocidal actions against entire peoples.
To put an end to these interference practices, we must make amends for two serious mistakes we made as humanity in 1944 and 1971. To do so, it is first necessary to know how “sanctions” work. Let’s look at an example.
When food company “X” from, for example, Mexico wants to trade with company “Y” from Venezuela (a sanctioned country), the US government, through the Office of Foreign Assets Control (OFAC) sends a little message and says: “if you sell food to Venezuela, we will freeze all the bank accounts you have in the world financial system. Therefore, if Venezuelan company “Y” pays you for the food, you will not be able to dispose of that money, nor the money already in your accounts. Don’t even bother to transfer it to another bank account because we will block it as well. Oh, and if you put it in the name of another person or company, we will block that one too.”
The US government can block financial resources because it is the owner of the purse strings of all financial transactions made in dollars in the world. Through the Swift (global payment clearing system) the US has the power to decide what financial transactions are made, when and under what conditions. With that power it instills fear, threatens, blackmails, “sanctions” and blockade.
Removing this power from the US is the strategy to be followed to combat criminal blockades, which involves suspending the Bretton Woods Agreement (1944) and the petro-dollar (1971).
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In 1944, in the midst of World War II, 44 countries met in Bretton Woods to decide on the new commercial, monetary and financial order that still prevails today. At that time, when Europe was destroyed and ruined by the war, the United States imposed itself, taking advantage of its status as not only the country that produced 50% of the world total with a surplus trade balance, but above all as the world’s largest lender.
They decided that the US dollar would be, the world’s reference currency. In other words, the US was granted the exclusivity and therefore the power that all the world’s currencies should be referenced to the dollar, which in turn was backed by gold. That was the first big mistake. Incidentally, the IMF was created, which granted the largest share, 31.1%, to the US and with it the greatest voting power and control in that organization.
Then, in 1971, mankind committed the second great mistake by silently allowing the United States to unilaterally disassociate itself from gold as the standard for fixing the price of its currency. Nixon announced to the world that from that moment on, the price of the dollar, to which all the world’s currencies would continue to be pegged, would depend on confidence in the US economy. This announcement was accompanied, not by chance, by the creation of the petro-dollar. From that moment on, all the oil bought in the world had to be traded in dollars, and since there was no country that did not buy hydrocarbons, all of them would need the US currency, which would be available in sufficient quantities because it could be issued without the restriction of the amount of gold in the vaults of the US Federal Reserve.
They flooded the planet with dollars and, in order to be able to trade them, they created the SWIFT payment clearing system, also unilaterally granting themselves the monopoly of the world financial market. It was a masterful move on the part of the country of the North.
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Today, 80 years after Bretton Woods and half a century after the petro-dollar, the world has turned upside down.
The US has gone from being the world’s largest lender in 1944 to the most indebted country on the planet; it literally owes the whole world, its debt amounts to US$ 25 trillion. The situation worsens for those in the North when their international reserves do not even cover 2% of their foreign debt. In contrast, China tops the list with the largest international reserves, which also covers 153% of its foreign debt. Not to mention that the US has had a negative trade balance for half a century, importing more than exporting. The Chinese have been in surplus for 5 decades. US production no longer represents 50% of the world total, it dropped to 24% while China went from 1% to 16%.
Proposal against the economic blockade
In this context, what should be submitted for debate and decision in the United Nations National Assembly is not only whether countries are for or against the “sanctions” and blockades imposed by the United States. The debate should focus on the democratic construction of a new trade, monetary and financial system.
The questions to be taken to the UN Assembly for consultation should be:
Are you in favor of the US dollar not being the only world reference currency? Are you in favor of there being many world reference currencies and not granting exclusivity, and therefore economic power, to a single country? Are you in favor of countries being able to buy oil and its derivatives in any currency and not exclusively in dollars? Are you in favor of all currencies being considered international reserve assets and not only the dollar, the euro, the pound sterling, the yen or the yuan? Do you agree that countries should be free to trade their goods in any currency? Do you agree that there should be several, many, payment clearing systems in the world and not only SWIFT, including the exchange of goods itself? Do you agree that, within the framework of regional integrations, currencies should be created for exchange in that region that can also be used for transactions with other regions or countries? Do you agree that decisions in the IMF should be democratized and, therefore, that each country should have the right to vote, eliminating the quotas that apply there?
The coalition of countries against the blockade that has recently been formed by Venezuela, China, Russia, Iran, Cuba, among others, should, besides continuing to add nations, besides denouncing the criminal “sanctions” of the US, and besides calling for compliance with the UN Charter, include in the agenda of the United Nations Assembly the creation of a new commercial, monetary and financial system that would allow us to move towards a pluripolar, multicentric, truly democratic world in which the sovereignty and self-determination of the peoples would be respected. Thus, in passing, and in the face of the imminent decline of the most genocidal empire that history has ever known, they would give it a little push to finish its fall.
Featured image:Â Â US protest against the blockade of Cuba. Photo: Bill Hackwell
(Resumen Latinoamericano-English)
Pasqualina Curcio
Economist (Central University of Venezuela). PhD in Political Science from SimĂłn BolĂvar University (Venezuela). Master in Public Policies of the Institute of Advanced Studies in Administration (Venezuela). She is a Full Professor of the Department of Economic and Administrative Sciences of the SimĂłn BolĂvar University. She was Deputy Minister of Collective Health Networks.
