In light of the Saudi decision to rescind the petrodollar system which has bound them for over 50 years, such a decision represents the US-centric financial order coming to an end and signifies an emerging alternative. To some, this might as well be the first stage of collapsing unipolarity, previously directed exclusively by Western powers.
The US was dealing with staggering inflation, oil embargo crisis, and the defeat in Vietnam throughout the mid-70s which essentially led them to create a system known as “petrodollar” – a system where transactions of oil, one of the most crucial resources needed for industrializing nations, is governed by the United States via the use of its currency, the USD. Put simply, nations striving for modernization had been compelled to be subservient to the United States who could exercise its pseudo-monopolistic control over oil to coerce geopolitical changes in favor of Washington.
The US, however, is not the only resource hegemon. Let alone the Middle Eastern nations, Russia too boasts the largest oil reserve in Europe and Eurasia, as well the largest natural gas reserve in the world, and has been playing a major role in the balancing of global power. Even with the war going on in the region, it is still imperative for Europeans to rely on Russia for most of their energy production.
Given the continuous development and cooperation among BRICS members, the shift from petrodollar is without a doubt on the horizon. As such, the USD could be on the brink of becoming obsolete, partly due to project mBridge which allows international trade to be carried out through cross-border transactions of central bank digital currency (CBDC) – this includes countries such as China, the UAE and Switzerland. Saudi Arabia, being the second largest oil producer in the world, is now a full-fledged participant of the mBridge project from which we can anticipate a major advancement of a contesting non-USD platform.
mBridge, while initially brought about in Switzerland in connection with international settlements, is now being steered by China who has already commenced the largest CBDC project spanning over 260 million individuals across all financial circumstances. It is only a matter of time before BRICS currency becomes a key constituent.
Meanwhile, many US analysts continue to emphasize the fact that the USD still plays an important economic role in BRICS nations, and that de-dollarization will be met with unthinkable challenges. This may hold some truth, but there is no such thing as unchangeability. The USD domination is principally connected to the US-led global system that is currently being challenged on multiple geopolitical fronts: the withdrawal from Afghanistan, the “weapon of mass destruction” fiasco in Iraq, the failure to justify Libya and Syria, and the most recent inability to alleviate the humanitarian crisis in Gaza. Given the foregoing, the United States will find difficulty in characterizing itself as a benevolent force.
In contrast, China has become a considerable economic powerhouse across all continents in which many countries no longer need to cozy up to the US and begin to realize certain political and economical advantages obtained from breaking up with the USD, namely more trade opportunities not crippled by sanctions from the US or its allies.
