“Denazification”, “demilitarization”, “desatanization”, “de-dollarization”. Kremlin propaganda is very fond of de-words and does not shy away from overdoing them. The aim is to suggest that Russian actions are a response to existing threats: there is “Nazism” in Ukraine – Russia “denazifies“, the West “militarizes” Ukraine – Russia “demilitarizes”; the world is ruled by the “satanic” West – Russia will “desatanize” it; the world economy is dominated by the dollar – Russia will “de-dollarize” it.
This is not the debut of “de-dollarization” in Moscow’s propaganda vocabulary – the topic has been used for at least a decade, and especially strongly since 2014, when sanctions were imposed on Russia for its annexation of Crimea.
At the same time the Kremlin actively talks about a “new world order” in politics and economics, in which the US is not the sole “hegemon”. And all this – to circumvent the sanctions imposed by the US and the EU (while claiming that the sanctions are not working).
According to the IMF, by the end of 2022, more than 58% of the world’s foreign exchange reserves is in dollars. One fifth is in euros, nearly 5% in British pounds, and 2.69% in Chinese yuan (renminbi).
The best propaganda is based on the truth
The news about countries and international organizations that want to replace the dollar with their national currencies in trade with each other reflects real processes that have been happening in the world economy for a long time, but so far remained out of the radar of the media agenda (except in specialized publications). Now, however, as a result of Russia’s war against Ukraine, the existing contradictions have intensified and the processes have accelerated – when such a drastic challenge is made to the legal and political international order, the economic one cannot remain unaffected.
But the big player in this case is not Russia, but China. China’s share of the global economy is approaching a fifth, while that of the US is just over 15%. This increased presence and influence gives Beijing the confidence to challenge Washington and now openly talk about “de-dollarization” and “yuanization.”
Russia, in turn, is quite realistically “de-dollarizing”, and this is a rare case of coincidence of propaganda slogans with deeds. But not because she wants to, but because she has to.
“We don’t want to voluntarily abandon the dollar, we are forced to.”
“If you have heard me talk about the dollar and understood that we want to get rid of it as a reserve currency or as a universal means of payment, it is not so. I was talking about something else. I was talking about the fact that the United States uses the dollar, uses its national currency for various types of sanctions.”
The words are those of Russian President Vladimir Putin and they were spoken not long ago – in June 2021. They clearly testify that if there was a way to continue to benefit through the opportunities of world markets while systematically violating international legal norms, Russia would probably not hesitate to do.
What is for sure not a part of reality, however, is the importance of Russia in the world economy and the role that the Kremlin ascribes to itself in the processes. Look again at the graph above – Russia’s share of the world economy is below 3%.
The transition from a post-Cold War unipolar world to a polycentric international system is a process that scholars have observed and debated for years. But in no serious study, whether from a geopolitical or economic perspective, Russia is mentioned among the potential centers of power in the system. In contrast to China, which is considered the real competitor of the USA and around which a center of power can be formed.
As the analyst Vladimir Shopov successfully put it, “Moscow is no longer just a junior partner in these relations, but increasingly a political subcontractor of Beijing.” This situation cannot help but cause frustration in Russia, which believes that it is unfairly deprived of the status of a great power that is rightfully its rightful place.
Therefore, Moscow is looking for roundabout ways to strengthen the impression of its global weight and role, for example along the lines of BRICS (Brazil, Russia, India, China and South Africa). This loose organization, rather a club of emerging markets, was created as an alternative to the Western-dominated world order, according to their own claims. Read more about BRICS in a separate material on Factcheck.bg.
“De-dollarization” in the Bulgarian media
According to data collected through the Sensika media monitoring system, for one year (April 30, 2022 – April 30, 2023), the most publications (110) on the topic of “de-dollarization” are on the site Novini247 – the record holder for coverage of Russian propaganda for the war in Ukraine according to the research team of the Foundation for Social and Humanitarian Studies.
Not in such volume, but at the expense of this with watering materials and “authoritative” analyses, the topic is present in the same group of media that systematically spreads Russian propaganda by publishing articles of the Russian Fund for Strategic Culture.
The site Pogled.info, which Factcheck.bg has already paid attention to as a distributor of Kremlin propaganda, stands out for its persistence in covering the topic.
This time, however, the Kremlin is not alone. Chinese state propaganda is also actively working on the issue, which seeks to exaggerate the degree of “de-dollarization” in the world economy.
The text published in “24 Chasa” (also in Pogled.info, “Blitz”, etc.) is the work of “journalists of the China Media Group”, as explicitly stated at the end, and the source is the website of Radio China in Bulgarian.
We will ignore the argument that “recently, Internet searches for the term “de-dollarization” have been increasing” – including for the writing of this text, the word was searched dozens of times on Google in Bulgarian, English and Russian.
As for the data – the image published in the article clearly shows that, firstly, they are old, and secondly – the scale is deliberately made to look very steep – in fact, it is a decrease of about 4% in the period 2015-2019 Mr.
Here’s how things look on a larger scale and in more recent times:
As the title of the chart suggests, the IMF notes the increased role of “non-traditional” currencies in recent years. The Fund’s 2022 analysis specifically notes that the reduced role of the US dollar has not been matched by increases in the shares of the other traditional reserve currencies: the euro, the renminbi and the British pound sterling. Although there has been some increase in the share of Chinese currency reserves, it accounts for only a quarter of the withdrawal from the dollar (the other three quarters are due to other currencies – the Australian and Canadian dollars, the Swedish krone and the South Korean won). What’s more – by the end of 2021, a single country – Russia – held nearly a third of the world’s Chinese yuan reserves.
Is there “de-dollarization” and what does the word really mean
As Mark Twain would have exclaimed, reports of the dollar’s death have been greatly exaggerated.
Yet, to answer the question, we must use another de-word: deglobalization. With it, some economists describe processes opposite to globalization, which others call “slowbalization” or slowing down the process of globalization or “newbalization” – the idea that the very nature of the globalization process is changing. But after the Great Financial Crisis of 2008, the world is different and paradoxically (or not) increasingly resembles the one before 1989. Leading economists expect two camps to form in the world economy – around the US and around China. Such a geopolitical division will have a negative impact on the global economy in the long term, the IMF believes.
There are different views on the extent to which these processes will affect the US dollar. What seems clear is the willingness of a number of countries to take advantage of the situation to break away from the dollar, as they fear that the dollar could be used against them in the future, according to Adam Pawson, president of the Peterson Institute for International Economics.
And according to Michael Pettis, a professor of finance at Peking University, the discussion about the global dominance of the dollar has been greatly skewed. According to him, there is a presumption that foreigners are the ones who want to limit the use of the dollar, and Americans are fiercely resisting.
According to Pettis, however, the reason for the dominant position of the dollar is not that it puts the US economy in a privileged position, but that it allows the largest economies in the world to take advantage of American consumption to promote their economic growth. One of those countries is China, which claims it very much wants to replace the dollar with the yuan, even though its own economic policies make that impossible, Pettis explains.
According to him, if anyone benefits from the dethronement (another de-word) of the dollar, it is the United States itself:
“The enormous geopolitical power that control of the global financial system gives Washington and Wall Street is costing American manufacturers, farmers and businesses dearly, and as the rest of the world grows relative to the US, that cost can only grow.”
According to Pettis, it is the United States that must take the lead in weaning world trade from excessive dependence on the US dollar.
For now, however, as Adam Pawson succinctly summarizes, “although less secure than before, the dollar is still winning the ‘least obnoxious’ contest between itself and the yuan.”