The United States proclaimed the Monroe Doctrine 200 years ago and ever since has arranged Latin American and Caribbean affairs to its advantage. Nevertheless, struggles for national and regional independence did continue, and the poor and marginalised classes did resist. Eventually, there would be indigenous movements, labor mobilisations, and progressive and socialist-inclined governments. Cuba’s revolutionary government, for instance, has endured for 63 years. The US political hold may have weakened, but US control over the region’s economies remains strong; after World War II it extended worldwide. Now, cracks are showing up. In particular, the US dollar’s role as the world economy’s dominant currency may have run its course. In 1944, 44 Allied nations determined that the value of their various currencies would correlate with the value of the US dollar instead of the value of gold. The nations since then have relied on the US dollar for their reserve currencies, foreign trade, and banking transactions. There seemed to be a good reason. The United States was supreme in producing and marketing goods and so, presumably, the dollar’s value would remain stable and predictable.
The United States has benefited. In currency exchanges involving the dollar, US companies and individuals experience only minor add-on costs. US importers know that the more the dollar strengthens in value, the less expensive will be products they buy abroad. US borrowing costs overseas are relatively low because US bonds, and the investments they represent in dollars, are appealing abroad, for a variety of reasons. Dollar dominance has caused pain abroad, however. Exporters to the United States take a hit when the exchange value of the dollar weakens. Importers of US goods are hurt when the dollar strengthens. Most importantly, the US government gains an opening to punish enemy countries through their use of dollars in international transactions. It imposes economic sanctions requiring that dollars not be used in a targeted country’s overseas transactions. The US Treasury Department penalizes foreign banks and companies that disobey. Sanctioned nations have included Cuba, Iran, North Korea, Syria, Venezuela, Nicaragua, and more recently, China and Russia.
Former Brazilian President Dilma Rousseff is the recently named head of the New Development Bank which, headquartered in Shanghai, serves the BRICS nations (Brazil, Russia, India, China, and South Africa). The bank represents an alternative to the US – dominated International Monetary Fund and the World Bank. The shift away from dollar dependency is evident elsewhere. At a Russian-Indian “Strategic Partnership Forum” recently, a Russian official announced that the BRICS states would be creating a new currency and that the formal announcement would be made at the BRICS summit meeting in Durban, South Africa, in August. At their summit in March, Russian and Chinese leaders reiterated their intention to expand bilateral trade and utilise their currencies. China increasingly is using its currency in transactions with Asian, African, and Latin American countries. The yuan “has become the world’s fifth-largest payment currency, third-largest currency in trade settlement and fifth-largest reserve currency,” according to Global Times. Saudi Arabia is on the verge of selling oil and natural gas in currencies other than the dollar, and China occasionally pays Arabian Gulf nations in yuan for those products
