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PaperclipPerfector  5mo ago (text post)   1549 thread views

Transnational Thursday for June 13, 2024

Transnational Thursday is a thread for people to discuss international news, foreign policy or international relations history. Feel free as well to drop in with coverage of countries you’re interested in, talk about ongoing dynamics like the wars in Israel or Ukraine, or even just whatever you’re reading.

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I considered putting this in the Culture War thread but decided it fit better here. US Saudi "petrodollar" pact ends after 50 years.

One of the reasons, if not the main reason, the US Dollar is the world's reserve currency is that OPEC agreed to index the value of oil in US Treasury bonds. That agreement is a big part of how the US has managed to ring up only modest national debt despite sizeable budget deficits, and has a been significant factor in maintaining "Pax-Americana". It seems to me that the State Department and the Senate both allowed the agreement to expire with little (if any) effort put into negotiating an extension or consideration for the implications.

To my lay-person's eyes this looks like it should be a big deal but it also seems to have been completely ignored by all the big name news sources outside NASDAQ and the WSJ. Are media moguls trying to bury the story or am i just being paranoid?

FYI, there does not seem to be an actual "pact" or "agreement" for 50 years of petrodollar. (If you look at your link, it's not an article by the actual "nasdaq" but by some affiliate "tipranks")

China for example has been buying oil denominated in RMB since last year, this "petrodollar going away" isn't a singular event that happens.

US will still be the most used currency in world trade by some margin, though its share of the total will gradually decrease... probably.

I mean, are there any indications that Saudi Arabia is actually going to start accepting other currencies?

It is the biggest possible nothingburger or the smallest possible real world impacting event. Nothing will change drastically, but it is a sign that the US ability to control the whole world is slipping further. The real world consequences will be meh.

It does seem interesting. What remains to be seen is to what extent the Saudis will actually start pricing or selling at least some oil in currencies other than USD, and whether the US will be less committed to defending the current Saudi regime.

and whether the US will be less committed to defending the current Saudi regime.

Presumably they would? My loose understanding is that the Saudis would likely start developing their own nuclear deterrent without the US defending them, and the US is pretty keen on avoiding nuclear proliferation.

I've seen a lot of hype over this being the Doom of America over the years but the present reaction has indeed been subdued. Is this not the thing the doomers were dooming about, or is it not doomy after all? Or is the doom yet to come?

It makes the doom possible but does nothing to bring the doom about in and of itself.

My (admittely amateur) impression is that this is not the thing the doomers were dooming about and the effects are likely to be pervasive and long term rather than immediate and flashy.

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