The decline of the US Empire

To the best of your Editor’s knowledge, in modern time, the world has never seen unipolarity until the demise of the Cold War when the Soviet Union due to internal factors was dismembered in 1991, which caught everyone by surprise.
If ever unipolarity existed, it was in ancient times where first the Persian (Achaemenid Empire) became a superpower followed consecutively by the Greek (Macedonian Empire), and the Romans and then the Muslims (Islamic Caliphate).
In modern time, if we go as far back in history to the Ottoman Caliphate before reaching its zenith in the 16^th century where much of Asia and Europe were under its control, the Ottomans then had to contend with its two rivals on its backyard in the form of the Safavid Dynasty in Persia (present day Iran) and the Mughal Empire in India.
Even at the height of the colonial period in the 18^th century where Europe reigned supreme, the power that be, i.e. the British Empire was constrained and balanced by France; and the British and French in turn were constrained and balanced by the Austrian-Hungarian Empire (dismembered in 1918).
By the early 20^th century, one of the reigning superpowers, the British Empire had to face off twice with another superpower, Germany, which led to two world wars – World War I (1914-1918) and World War II (1939-1945).
Out of the ashes of World War II, Pax Americana was born – a term widely used after WWII when the US overcame Nazi forces, ushering in a period of relative peace in the Western world, which coincided with the military and economic dominance of the US.
But this was not unipolarity, as US hegemony then was constrained and balanced by another superpower, the Soviet Union, which later led to the Cold War engagement or détente, thus creating a bipolar world in the true sense of the word.
So it was détente in the context of a bipolar world that had really kept the peace in the world where World War III was kept in check for more than 70 years so far.
Détente (French for relaxation) generally means the relaxation of strained relations, especially political ones, through verbal communication.
This diplomacy term originates from around 1912, when France and Germany tried unsuccessfully to reduce tensions.
However, the term is often used to refer to a period of general easing of the geopolitical tensions between the Soviet Union and the US during the Cold War.
At the core of détente is a related concept of the balance of power.

The balance of power theory in international relations suggests that states may secure their survival by preventing any ONE state from gaining enough military power to dominate all others.
If one state becomes much stronger, the theory predicts it will take advantage of its weaker neighbours, thereby driving them to unite in a defensive coalition.
Some realists maintain that a balance-of-power system is more stable than one with a dominant state (unipolarity), as aggression is unprofitable when there seems to be equilibrium in the balance of power among rival coalitions.
This balance-of-power principle, once formulated, became an axiom of political science. But today this principle is now greatly discredited.
References to it, even by professional historians and international lawyers, commonly imply either that it was a system for war, which repeatedly failed or that it was a system for making war, which often succeeded in its purpose.
But in your Editor’s opinion, the acid test for the usefulness of this principle lies in not so much whether it is a system of war or a system for making war; rather it should be evaluated in term of its utility in preventing the occurrence of a world war, and not just any war.
It took an intervening 21 years for WWII to occur after WWI, but up till today i.e. 78 years after WWII, there’s no WWIII yet.
No doubt this has put us on a nerve as never before because with the existence of nuclear weapons it means the threat of WWIII with its concomitant horrific destruction and annihilation will always be there and seems imminent.
Surely, the principle of balance of power and détente must have played some part in preventing WWIII all these while.
Also, it is a misnomer to call the period after 1945 as Pax (the Latin for peace) Americana. It is Pax Americana only in so far as the US and Europe is concerned where there was relative peace there.
In other parts of the world then, peace has become a rare commodity, beginning with the Arab Israeli conflict in 1948, which is still on going, instigated by the Zionist movement; France and Britain via the Sykes-Picot Agreement and the Balfour Declaration; and later with complicity of the US and the Soviet Union.

The Sykes-Picot Agreement was a 1916 secret treaty between the UK and France, with assent from the Russian Empire and the Kingdom of Italy, to define their mutually agreed spheres of influence and control in an eventual partition of the Ottoman Empire.
While the Balfour Declaration was a public statement issued by the British government in 1917 during WWI announcing its support for the establishment of a “national home for the Jewish people” in Palestine, then an Ottoman region with a small minority of Jewish population.
This was followed by the Korean War in 1950-53 instigated by both the US and China; the overthrow of Iranian Prime Minister Mossadegh in 1953 (instigated by the US); the long and arduous Vietnam War in 1955-75 (instigated by France and later the US and Soviet Union); the invasion of Afghanistan in 1979-89 by the Soviet Union; Iran-Iraq War in 1980-88 (instigated by the US); and the first Gulf War in Iraq in 1990-91 (instigated by the US).
In light of the above, one cannot be blamed for thinking that Pax Americana was a sort of gang-up between the US and Europe to transfer the core geopolitical problems of the European colonial period to primarily Asia and the Middle East via Europe acquiescing to US hegemony in return for relative peace in the US and Europe, despite the bipolar world order of 1945-1990.
What finally killed bipolarity then was not wars, détente or balance of power, but the failure of the Soviet Union to manage its centrally planned economy, as the empire has grown too big for its economy to be manageable, which in the past was the initial faux pas of the decline of all empires.
Thus Mikhail Gorbachev’s earnest effort in introducing both perestroika and glasnost during the late 1980s – the former a political movement for reform within the Soviet Communist Party and the latter, a policy reform of openness – to stem the economic decline, had the opposite effect of speeding it up further, economically and politically which swiftly led to the unexpected fall of the Soviet Union.

We already had an inkling of the emergence of unipolarity with the collapse of the Berlin Wall in 1989, which is a prelude to the total collapse of the bipolar world two years later, when an American neo-con, Francis Fukuyama gleefully wrote that this marked the “end of history”.
Seeing the imminent collapse of the Berlin Wall, he rather prematurely wrote an essay on The End of History that proposed the advent of western liberal democracy as heralding the endpoint of humanity’s sociocultural evolution and the final form of human government.
“What we may be witnessing is not just the end of the Cold War, or the passing of a particular period of post-war history, but the end of history as such: that is, the end point of mankind’s ideological evolution and the universalization of Western liberal democracy as the final form of human government,” said Fukuyama in his 1989 essay.
Oh, how off the mark Fukuyama was, as to this day Western liberal democracy is still not the norm in many parts of the world. It only gave President George W Bush in 2003 an excuse to invade Iraq under the pretext of spreading democracy to the Iraqis, in addition to punishing Saddam Hussain for stockpiling non-existent weapons of mass destruction.
Herein lies the credo of the neo-con – the supremacy of western liberal democracy, with its concomitant regime change via colour revolution also known as meddling in the affairs of other sovereign countries.
And they’re so fixated with it that there’s no reverse gear whenever things went wrong after they had embarked on this journey of regime change.
It is as if these neo-cons are being conned (pun intended) by their own ideology that they become so impervious to all the painful lessons of their failed adventures of the past that have put the US and its empire to what it is now today – declining considerably.
Neo-conservatism (neo-con) is a political movement that began in the US during the 1960s among liberal hawks who became disenchanted with the increasingly pacifist foreign policy of the Democratic Party, and with the growing New Left and counterculture of the 1960s, particularly the Vietnam protests.
Some also began to question their liberal beliefs regarding domestic policies such as the Great Society where its opponent has misleadingly dubbed as welfarism.
Neo-cons typically advocate the promotion of democracy and interventionism in international affairs including peace through strength, and espousing disdain for communism and political radicalism.

Many neo-cons became politically influential during the Republican presidential administrations of the 1970s, 1980s, 1990s and 2000s, peaking in influence during the administration of George W Bush, when they played a major role in promoting and planning the 2002 invasion of Iraq.
While not identifying as neo-cons, senior officials like Vice President Dick Cheney and Secretary of Defense Donald Rumsfeld listened closely to neo-con advisers regarding foreign policy, especially the defence of Israel and the promotion of American influence in the Middle East.
Thus the neo-con’s ascendancy in US politics came at a time when the US by default became the sole superpower in a unipolar world (1991 to the present).
And during its brief tenure as the sole superpower, the US has wreaked havoc in the world through its geo-political adventures of attaining the supremacy of western liberal democracy via colour revolution to seek regime change anywhere in the world.
From the invasion of Afghanistan in 2001, Iraq in 2003, and the Arab Spring in early 2010s (read: the mayhem in Syria and Libya), to the 2014 Maidan revolution in Ukraine, and the recent escalation in Taiwan, just to name a few, the world has not seen protracted peace for far too long at the hands of US hegemony.
And in concert with adopting the economic liberalisation policies generally associated with the neo-liberals including privatisation, deregulation, globalisation, free trade, monetarism, austerity, and reductions in government spending in order to increase the role of the private sector in the economy and society, the damage to the world economy is devastating.
It is important to emphasise that neo-liberalism (neo-lib?) is distinct from liberalism or neo-conservatism (neo-con) insofar as it does not advocate laissez-faire economic policy but instead is highly constructivist and advocates a strong state to bring about market-like reforms in every aspect of society.
According to historian Daniel Stedman Jones, neo-liberalism “is too often used as a catch-all shorthand for the horrors associated with globalisation and recurring financial crises”.
What happened is these economic policies in essence are something neutral but they are being harnessed effectively by the neo-cons in the corridors of power to serve their overarching credo of attaining the supremacy of western liberal democracy, with regime change via colour revolution at its core.
And recently the neo-cons have upped the ante in unravelling the usefulness of all these economic policies by “weaponising” the dollar via a shock and awe sanction on their enemies.
In line with the Newtonian laws of motion that “any action will beget an equal but opposite reaction”, we are seeing the reaction now in term of the boomerang effect of the sanction, and most importantly, the move to a multipolar world with one aspect of multipolarity gaining traction – the dedollarisation attempt of many countries.
This will surely erode the eminent position of the US dollar as the reserve currency of the world in the near future.

Dollarisation (the opposite of dedollarisation) represents US domination in global finances.
It began as far back in the 1920s when the US dollar began to displace the pound sterling as an international reserve currency since the US emerged from WWI relatively unscathed and was a significant recipient of wartime gold inflows.
After the US emerged as an even stronger superpower during WWII, the Bretton Woods Agreement of 1944 established the post-war international monetary system, with the US dollar ascending to become the world’s primary reserve currency for international trade, and the only post-war currency linked to gold at US$35 per troy ounce.
The Bretton Woods system also saw the US dollar being used as the medium for international trade.
The US Treasury exercises considerable oversight over the SWIFT financial transfers network, and consequently has a huge sway on the global financial transactions systems, with the ability to impose sanctions on foreign entities and individuals.
SWIFT stands for the Society for Worldwide Interbank Financial Telecommunications system and it powers most international money and security transfers.
It is a vast messaging network used by financial institutions to quickly, accurately, and securely send and receive information, such as money transfer instructions.
However, rising government spending in the 1960s, led to doubts about the US’ ability to maintain this gold convertibility, and gold stocks dwindled as banks and international investors began to convert dollars to gold, resulting in the decline of the dollar.
Facing an emerging currency crisis and the imminent danger that it would no longer be able to redeem dollars for gold, this convertibility was finally terminated in 1971 by President Richard Nixon, culminating in the “Nixon shock”.
The Nixon shock was a series of economic measures undertaken in 1971, in response to increasing inflation (very familiar now right?), the most significant of which were wage and price freezes, surcharges on imports, and the unilateral cancellation of the direct international convertibility of the US dollar to gold.
Although Nixon’s actions did not formally abolish the existing Bretton Woods system of international financial exchange, the suspension of one of its key components effectively rendered the system inoperative.
While Nixon publicly stated his intention to resume direct convertibility of the dollar to gold after reforms to the Bretton Woods system had been implemented, all attempts at reform proved unsuccessful.

By 1973, the current regime based on the de facto freely floating fiat currencies replaced the Bretton Woods system.
Another related concept to the dollarization is the concept of petrodollar where all international trading in oil must use the US dollar.
Conspiracy theories abound that Saddam and Gaddafi were murdered because they had the temerity to refute the petrodollar, by advocating the dinar as the currency for their oil trading (petrodinar).
Hence Iraq and Libya, on the instigation of the neo-cons were reduced to rubbles via regime change and become failed states to this day.
But when China and Russia dared to refute the petrodollar by using the yuan (petroyuan) and the roubles (petroroubles) in their oil trading, the US is powerless to turn the yuan or roubles into rubbles because it underestimated Russia and lumped it as just another third world country like Iraq and Libya, or in the words of the now dead Senator John McCain, “a gas station masquerading as a country”.
Must be a neo-con then isn’t it, this dead senator for his disdain of communism, forgetting the fact that when he made this statement in 2015 while he was still alive and kicking, Russia was no longer a communist country since 1991!
He will have to ponder on this in his grave… not that he will necessarily change his view of Russia as a gas station even if God were to bring him to life again!
Perhaps on his deathbed while struggling with the Angel of Death, he might have thought that he had deceived God because of his role in producing so many neo-cons still alive to continue the struggle for the cause of neo-conservatism.
The current White House administration has many hard-core neo-cons and the US Congress now is also full of budding neo-cons!
This just goes to show how the neo-cons were often conned (pun intended) by their ideology of neo-conservatism!
Let’s now discuss the pros and cons of dedollarisation/dollarisation. They are two sides of the same coin.
The dollar’s ubiquitous presence in global trade, finance, and investment has endowed it with significant advantages, such as lower transaction costs, reduced exchange rate risk, and the ability to finance deficits at relatively lower costs.
Also, the dollar’s prominence has been underpinned by the size and strength of the US economy, the deep and liquid US financial markets, and the perception of the US as a bastion of stability.
Nonetheless, the US dollar has its own set of drawbacks, as it affords the US the “exorbitant privilege” to maintain large current account deficits and accumulate significant amounts of debt, which can contribute to global imbalances and economic instability.

In other words, this allows the US to spend huge amount of monies like water to become powerful and filthy rich as if there is no tomorrow at the expense of everyone else in the world.
Most of the monies had gone and will continue to go to its industrial military complex and funding regime change adventures.
The reckoning time for US will come when its debt has become so super astronomical that its fate as an economic superpower will be gone soon after.
The dollar’s dominance also renders other economies susceptible to fluctuations in US monetary policy, often leading to spillover effects that may not align with their domestic economic conditions.
Furthermore, countries with substantial dollar-denominated debt may face heightened vulnerability to currency fluctuations and capital flow reversals, exacerbating the risk of financial crises.
As the world becomes more and more interconnected, the need for a stable and equitable financial system is paramount. And with that, the overreliance on the US dollar as a reserve currency has to some extent led to vulnerabilities and imbalances in the global economy.
These factors, combined with the growing economic power of emerging markets and their desire for a more diversified and resilient financial architecture, have spurred many countries’ interest in going ahead with dedollarisation.
In recent years, several countries and regions have embarked on the path towards dedollarisation, driven by a combination of geopolitical, economic, and strategic considerations.
Notable examples include China, Russia, Brazil and the EU, each of which has taken steps to reduce their reliance on the US dollar in international transactions and financial markets.
Some countries, like China and Russia, have sought to diminish the influence of the US dollar as a means of countering American hegemony and mitigating the impact of US sanctions.
Way back in 2020, Russian Foreign Minister Sergey Lavrov explained that Moscow is continuing “its policy aimed at gradual dedollarization” and is looking to make deals in local currencies, where possible.
Lavrov called the rejection of the greenback “an objective response to the unpredictability of US economic policy and the outright abuse by Washington of the dollar’s status as a world reserve currency.”
He was more forthright when in a press conference on April 26, he said the US has proven they were not telling the truth when for many decades after Nixon’s abolishment of the gold standard they claimed: “Well, don’t worry, even without being backed by gold, this isn’t our dollar. This is our shared common global currency that will ensure the functioning of all mechanisms of the global economies.”
Lavrov went on to reiterate the trend of abandoning the use of US dollars for settlement in international trade and switching to domestic currency is irreversible. The divergence against the dollar has already started, not so fast yet but certainly accelerating.

The Americans’ use of the dollar’s dominance to manage international finance and the entire world economy has seriously jeopardised their position, he added.
As emerging economies, oil-producing countries in the Middle East and even Europe try to innovate cross-border payment and settlement mechanisms, sign bilateral currency agreements, and promote the diversification of foreign exchange reserves, the pace of global “de-dollarisation” is accelerating, Lavrov said.
This process of dedollarisation, he added, was actually launched by the US, “even now this process is being analysed with great concern”, in which the “transition to settlements in national currencies, bypassing the dollar, euro and yen, to the development of digital currencies is already unstoppable.”
The Russian diplomat also remarked that there is a “big question” of what will happen with the international financial system, “including the International Monetary Fund (IMF) and the World Bank”.
In late March, Malaysian Prime Minister Anwar Ibrahim has advocated the establishment of an Asian Monetary Fund (AMF) ala the IMF to reduce dependency on the US dollar.
He proposed this at the Boao forum in Hainan, stressing the need to reduce reliance on the dollar or the IMF. The latter, under the influence of the US and EU seems to be preoccupied and too fixated with propping up financially the Kiev regime in order to prolong the Ukraine war.
According to Anwar, China is open to talks with Malaysia on forming an AMF, amid the world’s growing impatience with the dominance of the US dollar.
The Malaysian leader’s comments came just months after former officials in Singapore discussed what economies in the region should be doing to mitigate risks of a still-strong dollar that’s weakened local currencies and become a tool of economic statecraft.
Some analysts are concerned as countries reduce their reliance on the US dollar, adjustments in the composition of global reserve assets may lead to shifts in capital flows and changes in asset prices.
In the absence of adequate policy coordination and risk management, these fluctuations could create financial instability, particularly in emerging markets and countries with substantial dollar-denominated debt.
Consequently, policymakers must be vigilant in monitoring these dynamics and taking appropriate measures to safeguard financial stability.
Hence, these analysts are advocating that several key challenges must be addressed to ensure a smooth and stable transition away from the US dollar-centric system.
This is because while dedollarisation presents opportunities for a more diversified and resilient global financial system, it also poses significant challenges that must be carefully managed to ensure the preservation of global financial stability and sustained economic growth.

And what is the US response to all these?
US Treasury Secretary, Janet Yellen while admitting the role of the US dollar as the world reserve currency could diminish due to Washington using its leverage over the global financial system to pursue its geopolitical goals through sanctions, she however insisted rather smugly there is no obvious candidate to replace it.
Yellen said this when asked during an interview on April 16 by CNN’s Fareed Zakaria about the efficiency of the anti-Russia sanctions and about Washington’s track record of what he described as the “weaponization of the dollar.”
Zakaria cited recent statements by Brazil’s President Lula da Silva and other politicians about the risk of dependency on the US currency and asked whether the present time would be remembered as the moment when “the dollar’s hegemony and its status as a reserve currency began to falter.”
Yellen acknowledged that use of financial sanctions “could undermine the hegemony of the dollar” in the long run, but promised that Washington was using this “important tool” judiciously and with the backing of its allies.
Regardless, she added, the role of the American greenback is explained by factors such as the volume of the US treasuries market, its wide use in international trade, and a “rule of law” in the US that other nations cannot offer.
“We haven’t seen any other country that has this basic infrastructure and institutional infrastructure that would enable its currency to serve the world like this,” she explained.
In this regard, your editor feels she is missing the point because opponents of US domination in global finances are not necessarily advocating replacing the dollar with another currency serving the same role.
Russia for example has prioritised a transition away from the dollar and into regional currencies.
An absence of a single global reserve currency would be a natural element of multipolarity, supporters of such a model say.
The West’s use of unprecedented sanctions against Russia, including bans on trade, seizure of national reserves and denial of financial services to Russian companies, has merely sped up the transition, in their view.
“It’s not a coincidence that the talk about a switch to national currencies have been spurred now,” Lavrov remarked in February during a discussion on Russia-Brazil trade. “Nobody knows who the US president could find unappealing after getting up on the wrong side of the bed.”
Typical of a neo-con, Yellen’s focus in the CNN interview was not on the faltering dollar but regime change in Russia via the Ukraine war.

As Alex Christofou of the Duran, an independent news channel, said rather in jest, “these neo-cons, they live, eat and breathe every single moment of their lives with regime change. They even splattered the menu with very spicey colour revolution.”
And in doing this, they don’t even care that they are dragging their fellow citizens and their country down the drain.
In future editions of Let’s Talk! your Editor will be touching on other aspects of multipolarity that are beginning to take shape which will end the US tragic dominance as the sole superpower in this unipolar world.

Read more on the dedollarisation, neo-conservatism, and the proposed Asian Monetary Fund:

Russia & China speed up de-dollarization process: most trade no longer conducted in greenbacks

US was not telling the truth – Lavrov

Sanctions may backfire on dollar, US Treasury secretary admits

South American nations seek to avoid dollar

Key US ally reduces role of dollar in trade

Dollar being ‘gradually abandoned’ – IMF boss

Asean, Middle East, India hop onboard the ‘De-dollarisation Express’

‘Dedollarisation’ is feasible

Debates around De-dollarisation and Yuan Internationalisation

Need to proceed on dedollarisation with caution

Anwar: Malaysia, China to discuss ‘Asian Monetary Fund’ to cut dollar dependency