Because of the legacy of former US President Donald Trump for those who come after him, and the fatigue and bitterness that the traditional ally Europe feels due to the threats and sanctions imposed by the US presidency from time to time, European countries are determined to strengthen the role of the euro in international trade.
Writer Martin Orange said in an article on the French Mediapart website that Europe sent a strange message with the start of the new US president, Joe Biden’s term, and despite his welcoming statements calling for the restoration of old relations to the transatlantic alliance, Europe is thinking at the same time about the means to do To ensure and confirm its monetary independence from the dollar.
The writer quoted information revealing a draft resolution that was discussed on January 19 at a meeting of the European Commission in order to enhance the capabilities of attracting the euro, to obtain a decent financial power of the size of the eurozone that would take it out from the mercy of unilateral sanctions decided by the US authorities.
This means – according to the writer – that the European Commission wants to impose the euro as an alternative reference currency to the US currency in international trade, and to this end it will seek to strengthen the role of the euro as a reserve currency for central banks, especially since it represents today only 20% of the central bank’s reserves against 62% for the dollar. And about 10% for gold, and the rest is distributed among currencies, including the Chinese yuan, which represents 1%.
Europe has set itself the goal of imposing the euro as the reference currency on all financial products associated with environmental transformation.
The European desire to escape from the hegemony of the dollar is part of the legacy of Trump’s presidency, which for 4 years has remained Europe at the mercy of its anger, its unexpected decisions and its threat of customs sanctions, retaliation and embargoes.
Washington’s exit from the Iran nuclear deal and its imposition of a blockade prohibiting all commercial relations with Tehran was a dangerous indicator that made Europe aware of its weakness and impotence, as it did not find a way to escape from the American dictates for one reason, which is the dollar, which laws allow America to prosecute all companies that use it.
The dollar is the only international reserve currency that allows settlement of all international trade exchange operations. It is also the standard of the global financial system through the SWIFT system, which guarantees all global transactions through a network of 3,500 banks around the world.
The tremendous strength of the dollar has enabled US courts to prosecute and punish a number of European companies over the past decade. BNP Paribas has been fined nearly $ 9 billion, and placed under the supervision of US regulations, for circumventing the ban on Sudan was considered a terrorist state by Washington at the time, which shows the world’s reliance on the “kindness” of the American president, according to the writer.
To circumvent this ban, the main European countries established a special tool to support trade exchange, “INSTEX”, in order to facilitate at least humanitarian exchanges with Iran without resorting to the dollar and without using the “SWIFT” platform, but these circumvention attempts had a very limited effect, Because many multinational companies fear sanctions and exclusion from the US market, and therefore did not dare to use the European mechanism.
The first step of divorce
What happened next at the NATO summit in July 2018 opened the eyes of European officials to Trump’s tyrannical and degrading treatment, and since then Europe, starting with Germany, has taken the step of divorce with the United States.
Trump shook the Europeans’ certainty in the unquestionable US protection for the continent, when he demanded that they abandon the “Noor Stream 2” gas pipeline project, which aims to import gas from Russia and buy American gas, and his administration continued to do everything in its power to stop That project, threatening to impose sanctions on all companies involved in building its pipeline.
At the end of this summit, all European officials had to face the bitter truth that the United States was no longer a trusted partner, that the era of ideal relations had passed, and that in conflict with it they were just dwarves.
Based on this observation, then European Commission President Jean-Claude Juncker decided to start thinking about the means available to Europe to escape from the hegemony of the dollar, especially since the policy adopted by Washington had at times harmed the legitimate trade and investments of European Union companies.
More stable floor
The matter begins for Europe by canceling the dollar in favor of the euro in a number of international trade exchanges, especially since a number of countries, such as China and Russia, are seeking to escape from the control of the dollar as well, and several countries have signed agreements in order to facilitate the payment of exchange in their two currencies, and even Saudi Arabia agreed to establish budget systems outside Dollar with India in order to sell its oil.
But all these attempts remained limited in scope, unless Europe joined this movement and developed transactions in the euro, which could fundamentally change the balance of monetary power, and it seems that Brussels does not hide its desire to return many financial activities in order to strengthen the European financial system and control the euro.
The European Commission denies any aggressive behavior towards the United States in this approach, explaining that strengthening the international role of the euro would “protect the economy from exchange rate shocks and reduce its dependence on other currencies,” and it would also help achieve globally common goals such as flexibility of the international monetary system and a monetary system. My world is more stable and diverse.
For decades – as the writer sees – successive US governments have made a firm choice to manage their currency according to their national priorities without taking into account external circumstances.
Covid-19 has once again shook the fragile international monetary balances, as massive support plans decided by the Trump administration that Biden called for renewing the dollar depreciates, as financial markets worry about the huge accumulated budget deficit.
To counter this movement, the Chinese government decided to let its currency slip away in order to support its exports, and therefore Europe – which has been severely affected by the epidemic – is witnessing a rise in its currency against the dollar, which threatens its business, which will put pressure on the European Central Bank, even if it officially denies dealing with exchange rates. .
It will take a long time for the implementation of the European desire to strengthen the role of the euro before its real effect appears, and the author asked: Will this result in a multi-currency system that expresses the new balance of power in favor of China and the establishment of a multipolar world?
Although it is impossible to predict what will happen, it is certain that the changes will not be smooth and will not take place without crises and battles. Nevertheless, the European Commission text actually represents a profound development on the road to the end of the monetary system built around the pillars of the dollar and oil, knowing that Trump’s erratic decisions have led To question the supremacy of the American currency.