The Saudi decision not to renew the 50-year-old petrodollar system is both a symptom of the gradual erosion of the US-led and US-centred global financial order and indicates the imminent arrival of alternative systems of financial transactions in currencies other than the USD. This is, at one and the same time, both a collapse of the existing world order and the establishment of a new, alternative, multipolar world order. Whereas policymakers in the West appear to have spent too much time denying such possibilities, Riyadh seems to have already begun to adjust itself to new realities, leaving the space open for other countries to follow. Ironically, Washington has only itself to blame for the mess.

Who is the real “pariah” now?

It was the mid-1970s when the US, facing high inflation, an oil crisis, and recovering from a defeat in Vietnam, entered into what came to be known as the petrodollar system – a system that would make the USD the central currency for financial transactions related to the sale of oil. This pact cemented the US-Saudi partnership. Fast-forward to 2019-2020. Joe Biden, a presidential candidate in the US, vows to make Saudi Arabia a “pariah” state due to the Kingdom’s poor record of human rights. In 2022, President Biden discovers the foolishness of his campaign promises and, bowing to reality, flies to Riyadh to make amends. But that appears already too late to change anything. Then came Israel’s war on Gaza, which further caused the US rapprochement with Saudi to collapse, instead accelerating the Saudi drift away........

© New Eastern Outlook