Are EU and China agitated by the annoying US dominance? The world is trying to break free of US dominance and this, the United States is countering with aggressive sanctions. Washington is known to set rules and the world following, but this is now slowly changing as various governments from the EU to China have announced initiatives to break free.
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The US dollar runs the world and legitimate businesses cannot risk it. This became evident when Total decided to stop operating in Iran. Sources say that US banks were involved in over 90 per cent of its financing with American shareholders owning over 30 per cent of its shares. In a press statement, the company said it could not ‘afford to be exposed to any secondary sanction’. Another example is the SWIFT payment messaging system, it suspended sanctioned Iranian banks, saying that it was done in the interest of stability and integrity of the wider global financial system.
Euro to Counteract US Dollar
Countries and nations cannot counteract US’s sanctions, thus pushing for structural changes. FP reported, “European Commission President Jean-Claude Juncker has argued that the Euro should become a global reserve currency to reduce financial dependence on the United States.” The EU has additionally called for a special-purpose vehicle that would facilitate trade with Iran in a formalized barter system. This would offer new economic opportunities to Iran to incentivize its continued participation in the nuclear deal.
In the year 2008, during the global financial crisis, policymakers from French President Nicolas Sarkozy to the People’s Bank of China Governor Zhou Xiaochuan called for a system beyond the US leadership. But the US solidified its central role and continues to be the ‘Global Financial Leader’.
The Cunning Duo – China and Russia
After the crash, London collaborated with Beijing. FP highlights that in 2012, London launched its ‘RMB initiative’ to increase its Chinese exposure and smooth market frictions for Chinese customers. Big Ben’s city has also reached out to Russia, one expert calling it a ‘red money carpet’ for Russian money. But it didn’t go down well with the US.
China and Russia are actively looking to exploit the growing divide between London and Washington on sanctions. Beijing has stood up strongly to US’s economic threats, and it has made it very clear that it will continue to import Iranian oil, only partially complying with US sanctions. Experts are of the opinion that “if China could count on more cooperative London, with its key financial services, to circumvent US jurisdiction, it could seriously damage the US sanctions edifice.
The US is a tough nut to crack. It stands strongly on its own. Countries and governments give into its helplessly as they cannot dislodge the world power from the centre of the global financial system. But experts are keenly awaiting UK-China ties to try. Probably in the near future, US might just meet its match.
