Terry Su

Opinion | A US gearing up for a fight will need its dollar dominance and allies in Europe

As Brazil and others take steps towards reducing their dollar reliance, Macron’s controversial remarks about Europe staking its own position on Taiwan, independent of the US, may herald a redrawing of the geopolitical fault lines – if the Ukraine war drags on

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Terry Su

Published: 1:00am, 19 Apr 2023Updated: 1:12am, 19 Apr 2023

The buzzword is “acceleration”. No sooner had I made observations in this column late last month about the acceleration of geopolitical developments since the Biden administration came to office than we witnessed an acceleration of the acceleration.

The Beijing-mediated rapprochement between Saudi Arabia and Iran and President Xi Jinping’s visit to Moscow, both of which occurred last month, have set in motion potentially consequential tectonic-plate shifts in global politics.

Two developments are especially noteworthy: recent talk of the ascent of the renminbi and potential de-dollarisation, and the hype over French President Emmanuel Macron’s remarks following his trip to China early this month.

Following its reconciliation with Iran, Saudi Arabia has pledged investments worth US$10 billion in China’s petrochemical industry, raising Chinese hopes that it would soon accept the yuan as payment for oil exports.

For its part, Brazil is already accepting yuan payments in its trade with China. On a trip to China last week, Brazilian President Luiz Inacio Lula da Silva went further and called on the BRICS bloc to settle bilateral trade and investments in their own currencies.

Separately, members of the Association of Southeast Asian Nations are also considering a move to reduce their dependence on the dollar and other major currencies in the settlement of their intra-region trade, specifically suggesting a move away from Visa and MasterCard, the global credit card processing duopoly from the US.