France, Germany challenge Trump’s America on Iran and the reign of the dollar

It’s not the first time they kiss politically passionately. From left to right Angela Merkel, German Federal Chancellor and Emmanuel Macron President of France. Copyright: European Union. Event: European Council – June 2018 (Day 2)

Last week, the French President Emmanuel Macron and the German Chancellor Angela Merkel challenged the US President Trump by deciding to create a real European army. This week, the two European leaders said they are seriously working on the project to build a financial/trade-clearing mechanism, meant to override the American sanctions against Iran.

In both cases, the Franco-German axis is sincerely opposing the US negative stance towards Europe. As a matter of fact, these two new European initiatives are not just a superficial show off to be seen on eight o’clock news bulletins. It’s a lot more than that.

Trump’s aggression

The Franco-German reaction comes after systematic aggression from Trump’s White House against the strategic interests of Europe. For almost two years now, Trump questions the future of North Atlantic Treaty Organization and disturbs the Middle East, to mention only what is directly related to Europe’s interests.

Trump has called NATO an obsolete organization thus questioning the fate of this strategic pillar of Europe’s security. In the Middle East, Trump has done what he could to obstruct, even openly contest, Europe’s interests in Iran.

The Middle East question

The US President has also eradicated the joint Western strategy in Palestine. He has one hundred per cent endorsed the extremely aggressive positions of the Israeli Prime Minister Benjamin Netanyahu against the Palestinians. Trump moved the US Embassy from Tel Aviv to Jerusalem, infuriating Europe and the rest of the world. He has practically stamped out any American concerns about the Palestinians, forsaking America’s role there as the impartial mediator.

Coming back to the latest developments in Europe, France and Germany also agreed to create a special fund to support the Eurozone countries when in need. This ‘Eurozone Budget‘ would block the intrusion of the International Monetary Fund, and, through it, of Washington, in the European financial affairs.

It won’t be a financial vehicle to bail out euro area governments in distress. It will rather support the weak Eurozone economies to invest more and increase competitiveness. It’s too early yet to assess the role of this new European financial tool. There is not even agreement on the total amount of its resources. Reportedly, Berlin discusses some tens of billions of euros, while France talks about hundreds.

Business with Iran

Despite their rather quantitative not qualitative differences about what is best for Eurozone, the two European Union powers are quite adamant about confronting Trump’s America. Regarding the European plan to override the US sanctions against Iran, things are much more serious than they seem. Europe plans a tool to outshine the dollar and neutralize the US sanctions against Iran. On top of overriding the US sanctions, the target is to use the euro in pricing and clearing the supplies of Iranian oil sold to Eurozone countries.

To be reminded, the US had obliterated Iraq and Libya, when Saddam Hussein and Muammar Gaddafi started selling their precious crude oil in euros, not dollars. Exactly the same is now happening with Venezuela and her President Nicolas Maduro.

It’s always oil

In detail, the European plans for Iran are centered on the so called Special Purpose Vehicle (SPV). Through it, the oil rich country will sell its crude to the Europeans priced in euros, without the intermediation of a financial entity, like a bank, related even remotely to America. The same tool will be used to clear the transactions for the European exports to that country, again without dollar pricing or the involvement of a bank with exposure to US.

To be noted, the very economic and financial equilibrium, even the military/political might of the United States is for decades now based on the reign of the dollar. The US covers her huge double deficits just by being able to print dollars without risking hyper-inflation.

Why? Because the dollar is the prime foreign currency to be held as reserve, by every country of the world. More so, because most of those freely printed dollars and dollar denominated securities are spread all over the world through all and every international market.

Contesting the dollar’s reign

The US currency constitutes the chief means to settle almost all transactions related to international trade flows. In the oil markets this practice is imperative. In this way, the US avoids hyperinflation, despite printing all the time huge amounts of dollars. So, for very existential reasons, Washington cannot tolerate any transition in the oil market not being settled in dollars. Saudi Arabia is the best ally of America in this game. Otherwise, the US economy will collapse, unable to finance its huge deficits in foreign trade or cover the appalling gaps in the government/military budgets.

Whoever threatens the absolute global domination of the dollar, threatens the well being and the might of US, in every respect, economic, financial, political and military. Understandably, the European plans do not have such radical wide-ranging targets. The EU just struggles to protect its interests with Iran. The aim is to avoid the implication of any economic or financial entity with exposure to the United States, and thus be liable to penal prosecution for breaking the American law imposing sanctions on Iran.

A true European army

On top of that, though, the Franco-German agreement to create a real European army will deprive the US from lucrative armaments contracts in all European Union member states. Expectantly, the real European armed forces will be equipped with European defense systems, not American.

Apart the potential economic American losses in this affair, there is a paramount political aspect in the arms provision. The US may also lose her leverage on many European countries, after they change their source of armaments purchases.

US attacked?

In conclusion, it seems that Paris and Berlin have definitely decided to be quite serious in confronting Trump’s aggressiveness. It’s not a small thing to repel the dollar and immunize the Brussels-Tehran exchanges from Washington’s sanctions.

Add to that the threat to block the US armaments sales to Europe and Trump has a lot to ponder before continuing targeting Europe. It will be interesting though to watch what the American reaction will be. In relation to the reign of the dollar, the internal fight within Saudi Arabia’s ruling elite as depicted in the aftermath of the Khashoggi murder, may not be irrelevant to the American problems. But this is another story, as Rudyard Kipling would have said.

 

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

French full-body veil ban, violated women’s freedom of religion: UN Human Rights Committee

EU budget for 2021-2027: Commission welcomes provisional agreement on Horizon Europe, the future EU research and innovation programme

“America first” policy goes against EU-US partnership, say MEPs

EU-Japan trade agreement enters into force

Re-educating the angry brain amidst COVID-19

‘Complacency’ a factor in stagnating global vaccination rates, warn UN health chiefs

UN rights chief says ‘bar must be set very high’ for investigation of murdered Saudi journalist

‘Critical test’ for North Korea’s Government as civilian suffering remains rife, warns UN rights expert

Empathic AI could be the next stage in human evolution – if we get it right

Roaming market review: use of mobile phones abroad has surged since end of EU roaming charges

Scientists are using machine learning to unlock the mysteries of long-dead languages

UN commemorates International Day of Solidarity with the Palestinian People

EU-UK future relations: “level playing field” crucial to ensure fair competition

What do Europeans believe about the crisis and the possible way out?

Coronavirus: 4 tips for parents who are homeschooling

SMEs are the most valuable partners. Here’s why

Climate Change: a challenge yet to be tackled in medical schools

Women’s empowerment ‘essential to global progress’ says Guterres, marking International Day

Ferry capsizes near Mosul, UN chief offers solidarity, support ‘as needed’

Coronavirus: Commission Statement on consulting Member States on proposal to further expand State aid Temporary Framework to recapitalisation measures

Brexit: political groups discuss options for an orderly withdrawal

M360 Security for 5G: Security for 5G Predictions 2020, in association with The European Sting

Meet Cipta: the comic book hero using her powers to tackle bullying in schools

Help prevent children ‘from becoming victims in the first place’, implores Guterres at campaign launch

Facebook: MEPs demand a full audit by EU bodies to assess data protection

OECD: Mind the financial gap that lies ahead

FIRST PERSON: An artist’s ‘obsession’ with New Orleans tradition

A short history of climate change and the UN Security Council

This entrepreneur is helping farmers get food to consumers during lockdown

Eurozone cannot endure any longer youth marginalisation

Uganda’s Ebola preparedness ‘will go a long way’ says WHO chief

As Marvel’s first comic book fetches $1.26 million, here are five things to know about the superhero business

Autumn 2019 Economic Forecast: A challenging road ahead

External action: more funds for human rights, development and peace

The European Parliament double-checks the EU 2014-2020 budget

We can’t rid Asia of natural disasters. But we can prepare for them

Syria: WHO appeals for funding to sustain critical health care for millions trapped by conflict

EU Summit consumed by the banks

How global tourism can be more sustainable

UN global education envoy urges new funding for ‘lost generation’ of children forced out of classrooms by conflict

Despite funding crisis, Palestine refugee classrooms set to stay open, says UNRWA

China-EU Relations: Broader, Higher and Stronger

St. Vincent and the Grenadines breaks a record, as smallest ever Security Council seat holder

The increasing drug prices in Europe

COVID-19: A time screaming for positivity

Climate change: ‘A moral, ethical and economic imperative’ to slow global warming say UN leaders, calling for more action

Billions for sustainable investments – Germany’s plan for a green recovery

FROM THE FIELD: South Sudan’s green shoots, highlight environmental recovery from war

More hiring freedom can reduce teacher shortages in disadvantaged areas

UN refugee agency presses States to aid 49 refugees stranded on Mediterranean

Quantitative easing: how Mario can tackle low inflation in Eurozone

Commission notifies the Republic of Panama over the need to step up action to fight against illegal fishing

Available mental health services: is it only about professionals or institutions?

Ahead of key UN-backed Marrakech migration conference, youth recount harrowing journeys

Antitrust: Commission fines hotel group Meliá €6.7 million for discriminating between customers

Banks cannot die but can be fined

Paradise islands of Pacific increasingly vulnerable to climate change, as UN boosts resilience

The built environment has a huge role to play in improving health and wellbeing

Caspian Sea deal an invaluable step towards easing regional tensions, says UN Chief

Why the answer to a more sustainable future could lie within the platform economy

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s