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The city of Yakaterinburg, Russia’s largest east of the Urals, may become known not only as the death place of the tsars but of American hegemony too – and not only where US U-2 pilot Gary Powers was shot down in 1960, but where the US-centered international financial order was brought to ground. Challenging America will be the prime focus of extended meetings in Yekaterinburg, Russia (formerly Sverdlovsk) today and tomorrow (June 15-16) for Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization (SCO). The alliance is comprised of Russia, China, Kazakhstan, Tajikistan, Kyrghyzstan and Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia. It will be joined on Tuesday by Brazil for trade discussions among the BRIC nations (Brazil, Russia, India and China). The attendees have assured American diplomats that dismantling the US financial and military empire is not their aim. They simply want to discuss mutual aid – but in a way that has no role for the United States, NATO or the US dollar as a vehicle for trade. US diplomats may well ask what this really means, if not a move to make US hegemony obsolete.
What may prove to be the last rites of American hegemony began already in April at the G-20 conference, and became even more explicit at the St. Petersburg International Economic Forum on June 5, when Mr. Medvedev called for China, Russia and India to “build an increasingly multipolar world order.” What this means in plain English is: We have reached our limit in subsidizing the United States’ military encirclement of Eurasia while also allowing the US to appropriate our exports, companies, stocks and real estate in exchange for paper money of questionable worth.
For starters, the six SCO countries and BRIC countries intend to trade in their own currencies so as to get the benefit of mutual credit that the United States until now has monopolized for itself. Toward this end, China has struck bilateral deals with Argentina and Brazil to denominate their trade in renminbi rather than the dollar, sterling or euros,3 and two weeks ago China reached an agreement with Malaysia to denominate trade between the two countries in renminbi. Former Prime Minister Tun Dr. Mahathir Mohamad explained to me in January that as a Muslim country, Malaysia wants to avoid doing anything that would facilitate US military action against Islamic countries, including Palestine. The nation has too many dollar assets as it is, his colleagues explained. Central bank governor Zhou Xiaochuan of the People’s Bank of China wrote an official statement on its website that the goal is now to create a reserve currency “that is disconnected from individual nations.”5 This is the aim of the discussions in Yekaterinburg.
If China, Russia and their non-aligned allies have their way, the United States will no longer live off the savings of others (in the form of its own recycled dollars) nor have the money for unlimited military expenditures and adventures. US officials wanted to attend the Yekaterinburg meeting as observers. They were told No. It is a word that Americans will hear much more in the future.
During their summits in the Russian city of Yekaterinburg on Tuesday, SCO and BRIC members urged the creation of a new global financial security system, reiterating their drive to act in concert to weather the economic meltdown. The ongoing global economic slump topped the agenda of the Yekaterinburg summit with SCO leaders also dealing with ways to stave off terrorism and drug trafficking. Pointing to the necessity of updating the existing financial system as soon as possible, SCO nations also called for the creation of a new supranational currency to handle mutual transactions. In Moscow, finance expert Dmitry Smyslov believes that the move reflects the dollar starting to lose its clout as the world’s top reserve currency. Creating a new reserve currency is certainly a huge task, Smyslov admits, slamming Washington’s unwillingness to handle escalating US budget deficits in the past – something that he explains finally led to the global financial crunch. So the time is ripe to try and create a more diversified currency system, Smyslov insists, praising SCO members’ determination to jointly deal with the topic. Our correspondent says that a strong political will is needed to create a new global financial system, which will be crucially resolved by the joint efforts of all SCO nations. Separately, the BRIC summit saw the world’s biggest emerging economies calling for a bigger say in the world financial system, our correspondent goes on to say, adding that plans to build a new global financial architecture are already on the BRIC’s table. Meanwhile, SCO and BRIC members concentrate on finding ways to create a new supranational currency to handle regional transactions with a relevant deal already in the pipeline. The international community is all but sure to thumb up the would-be document, which aims to add to riding out the global economic downturn, our correspondent concludes.