End of the U.S. dollar hegemony?

After the Second World War and following the fall of the Soviet Union in 1989, the so-called “dollar diplomacy”, a policy instituted by William Howard Taft and his Secretary of State Philander C. Knox and designed to enhance U.S. commercial investments in Latin America and the Far East, evolved into “dollar hegemony.” Several years later, today, the American dollar’s great influence on the global economy and its dominance seems to be coming to an end.

The reason why the U.S. has been the depreciating value of the American dollar, especially in comparison to the Euro is mind-boggling to the American nation and the entire world specially the past few months. How long will this trend last? Is it a good thing or a bad thing?

To start with, what is the main reason behind the U.S.’s enmity for Iraq, Iran and Syria? It’s not the threat of the weapons of mass destruction that Washington claims those states posses. And it is not the noble mission of spreading freedom and democracy.

Numerous analysts explained following Iraq War and the chaotic situation the U.S. created there, that the main reason behind invading Iraq was the country’s massive oil wealth, which the U.S. and its European allies have no intention to give up.

Some actually suggested that the move that provoked Iraq War was the toppled Iraqi leader Saddam Hussein's decision to sell the Iraqi oil in Euros in the fall of the year 2000, challenging the dominance of the U.S. dollar.

But the issue has been revived back for discussion the last week in the wake of Syria’s decision to switch all of its foreign currency transactions from dollars to euros amid the recent political confrontation with the U.S.

Syrian sources said the latest move is aimed at protecting national economy, especially that U.S. laws stipulate that any financial transactions in dollars must pass through the U.S. banking system.

Analysts have long explained that if the U.S. dollar remained the dominant currency, especially in oil trade, it will be greatly difficult and almost impossible to see how the U.S. can be dislodged from its position as the world's dominant economic power.

Washington has already sensed the potential threat posed by the euro.

Sources: AlJazeera via KAVKAZ Center

Tags: Dollar diplomacy, Dollar hegemony, U.S, Oil, Iraq War, Currency, Euro, Economy