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The rise of national currencies against dollar hegemony

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Within the political, diplomatic, and ideological change and transformation in the global system, a monetary process is also taking place. For a long time under the US-centered Western hegemony, Western currencies were the most widely used money and reserves in the world. After the Second World War, the US dollar completely dominated the global economic and financial system. While the beginning of dollar hegemony in the world brought incredible privileges for the US, for the non-Western world it was a master-slave relationship. However, with the 2000s, a non-Western change and transformation on all fronts began to manifest itself in the monetary and financial sphere as well. While the dollar accounted for 72% of international reserves before 2000, it fell below 59 percent in 2023. With the Russia-Ukraine war, the rate of decline of the dollar in reserves increased 10 times more. The dollar in world reserves is now at its lowest level in 27 years. Again, while nearly 70 percent of global trade was carried out in dollars in the early 2000s, today it has declined to around 40%. Although the dollar is still the most widely used currency and reserve in the world, today it is in an indisputable decline. With this decline, the US, the only country in the world with the privilege of printing money, is today the most indebted country and nation in the world.

Especially with the Russia-Ukraine war, the dollar hegemony and the financial system built by the US entered a rapid breakdown process. Because the seizure of the currency reserves of non-Western countries by the US and Europe, the seizure of money, houses, cars, ships and airplanes of private enterprise, as well as the seizure of these reserves despite court rulings, created a great shock. At the same time, the exclusion of non-Western countries from the US-centered financial system was one of the developments that frightened the whole world. This is why the dollar and the Western financial system came to be seen as a dangerous and aggressive tool in the non-Western world. In fact, the use of the dollar as a weapon by American power was the most common type of attack on non-Western actors. In other words, this could happen to anyone who disagreed with Western actors. The rules-based liberal international order established by Western actors was, as usual, violated by the West. What happened showed that free capital and free finance, in other words liberal values, were pushed into a corner. This frightening scenario could happen at any time to all non-Western nations and states. As a result of these events, a new process has begun, especially in the non-Western world. It became a trend again for states to trade in their national currencies.

The yuan, the national currency of China, the world’s largest creditor and second largest economy, has taken the lead in this regard. The yuan became the most traded currency in Russia, while the dollar declined. China and Russia have managed to reach 80% of their trade payments in yuan and rubles. Israel, an indispensable ally of the United States, has added the Chinese yuan to its reserves while reducing the US dollar and the European Union euro. France became the first European country to use the yuan in its trade with China. The yuan was also used in trade between China and the United Arab Emirates. Moreover, it is foreseen that payments in the energy exchange between Russia and Pakistan will most likely be paid in yuan. In addition, Brazil and China started to trade in their national currencies. As a global breakthrough, the petroyuan alternative to petrodollars in Saudi Arabia could be activated at any moment. Even petroruble and petrorupee discussions are on the agenda. With this agenda, Saudi Arabia’s first action was to decide to sell oil in local currencies. Thus, Saudi Arabia signed an agreement to sell oil to Kenya in Kenyan shillings instead of dollars.

The Russian currency, the ruble, is now the dominant currency of the Eurasian Economic Union. Turkey, among many other countries, has started to use rubles in its trade. On the contrary, the trend towards the Turkish lira is on the rise on the Moscow stock exchange. It should not be forgotten that Turkey has also started using the yuan in its trade alongside the ruble. The Indian currency, the rupee, is quietly rising. India has signed agreements with 20 countries, including the UK, Germany, Israel, Russia and Singapore, to use rupees in trade. Bangladesh has also decided to use the national currency instead of the dollar with India. Finally, India announced an agreement with the United Arab Emirates to use rupees in trade.

Brazil, the giant power of Latin America, called for a transition to a national and common currency instead of the dollar in Latin America. Brazil and Argentina are working on a common currency. In addition, the Bank of Brazil became the first Latin American bank to join the Chinese payment system CIPS, one of the alternatives to the Western payment system. At the same time, the Brazilian Central Bank announced that the yuan has overtaken the euro to become the country’s second largest international reserve currency. Even Iran and Indonesia agreed to use their national currencies for trade. Let’s not forget that Iran is being paid for oil by India and China in rupees and yuan.

Non-Western global and regional organizations are also making critical moves in this regard. The Association of Southeast Asian Nations (ASEAN) has begun preparations to switch from dollars, euros and sterling to national currencies in financial transactions. Malaysia has also proposed an Asian Monetary Fund. The BRICS organization has also accelerated its efforts for a common currency. The Shanghai Cooperation Organization brought the use of national currencies to the agenda at its last summit. In fact, the total economic size of Asia, Latin America and Africa has surpassed North America and Europe. This has naturally increased interest in the national currencies of the emerging economies of these countries.

As you can see, the process of de-dollarization, or abandoning the dollar, is being followed with interest around the world and is highly accepted. Today, more than 60 countries and nations trade in their national currencies. While there is no doubt that this will increase day by day, it has become clear that we can no longer speak of the hegemony of a single currency. Autarkic and hierarchical American monetary policies have been a burden for non-Western nations and are no longer valid. Instead of a single Western monetary reserve dominating the world, a multi-currency reserve is desired. Therefore, the decline of the dollar hegemony is not only the rise of the yuan, but also the globalization of non-Western currencies, that is, the establishment of a non-Western multi-currency order, is the basic reality of the future. Of course, this process will be long and arduous.

Twitter: @umur_tugay

OPINION

G20 Summit could use a few extra pairs of chopsticks

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Li Yunqi, Journalist
CGTN Radio

“If there’s an extra guest, you have to prepare an extra pair of chopsticks,” – an ancient Chinese wisdom for the upcoming G20 Summit in Rio de Janeiro.

The global economic order is undergoing an obvious shift toward Global South countries, as the International Monetary Fund (IMF) predicts that by 2030, developing economies will account for 60% of global GDP—up from already 50% in 2010. With emerging markets playing an increasingly prominent role at the global “economic table,” the question facing the G20 is clear: Where is the hospitality, and those extra pairs of chopsticks?

Formed in the 1970s, G7, the more “elite” club of G20, was designed to address the economic challenges of its time. At its peak, the G7 nations accounted for 60-70% of global GDP, with the U.S. alone contributing 25%. This dominance made the G7 a natural hub for global economic decision-making.

But as the global economy diversified, so too did the need for governance structures that reflected this reality. By the 1990s, the rapid growth of emerging economies such as China, India, and Brazil reduced the G7’s share of global GDP. Recognizing the limitations of G7 as an exclusive forum, the G20 was established in 1999, incorporating a broader range of voices from across Asia, Africa, and Latin America.

Yet, despite its broader membership, the governance structures of the G20 still tilt heavily toward historically dominant economies, leaving the perspectives of the Global South underrepresented.

In 2023, developing economies attracted about 65% of global foreign direct investment (FDI). Many of these nations boast young populations, in stark contrast to aging demographics in Western countries. For instance, Africa’s median age is 18.8, compared to over 40 in many Western European countries. By 2030, the Asian middle class alone is expected to exceed 3 billion people.

These economic transformations underline the need for more fair and inclusive governance systems. Just as a gracious host ensures there are enough chopsticks for every guest, the G20 must adapt to accommodate the realities of a multipolar economic world.

This is not merely a symbolic gesture. Global South nations have legitimate demands for reforms in international institutions like the United Nations Security Council, the IMF, and the World Bank, all of which remain skewed toward the interests of Western nations. The inclusion of perspectives from emerging economies isn’t just about fairness—it’s about crafting more effective and sustainable solutions to global challenges.

The rise of the BRICS is a case in point. Originally formed as a loose group of emerging economies, BRICS has evolved into a platform for addressing global imbalances, recently expanding to include nations like Argentina, Egypt, and Saudi Arabia. This expansion signals a broader desire among Global South countries for alternative frameworks to the traditional Western-led institutions.

The 2024 G20 Summit in Brazil offers a rare chance to recalibrate global governance. With a host nation that is itself a leader in the Global South, the summit is well-positioned to champion a more balanced approach to decision-making for global affairs.

This does not mean sidelining the priorities of developed nations; rather, it calls for recognizing that the inclusion of diverse perspectives leads to more innovative and equitable solutions. For Western countries, this shift will require letting go of long-held assumptions about leadership and embracing the legitimacy of different economic models and governance approaches.

The Global South’s rise is not about dismantling the established order but about evolving it to reflect the realities of today’s interconnected world. By preparing those extra pairs of chopsticks, the G20 can ensure a more inclusive future—one that respects the voices of all its members, regardless of their economic status.

Not having to share the table may seem convenient, but if we zoom out, we see that many in the world still struggle to secure even the basics, let alone a seat at the global table. Preparing a few extra pairs of chopsticks isn’t just a metaphor, but a call for a more balanced, diverse, and inclusive global order.

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OPINION

Türkiye’s “soft severance of diplomatic relations” with Israel has limited impact on the Middle East

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On November 13th, Turkish President Erdoğan announced that Türkiye has cut off trade and diplomatic relations with Israel. Anadolu Agency reported his statement during his return trip from visits to Saudi Arabia and Azerbaijan. Erdoğan declared, “We currently have no relations with that country,” emphasizing that Türkiye has responded in the strongest terms to “Israel’s atrocities” by taking concrete measures, including halting all trade exchanges. He also stated that the ruling “People’s Alliance” firmly supports this stance.

Observers believe that Erdoğan’s remarks, coming just after the conclusion of the Arab-Islamic Riyadh Summit, aim to enhance Türkiye’s discourse power, express additional sympathy for the suffering of the Palestinian people, maintain sustained anger towards Israel’s belligerence, and exert pressure on Trump, who is about to return to the White House and is highly pro-Israel. This move may also serve to soothe strong anti-Israel public opinion domestically. However, it is conceivable that this posture will not affect the development of the current war situation in the Middle East, let alone change the geopolitical landscape; on the contrary, it may bring pressure on Türkiye from the United States and the European Union.

Erdoğan’s statements further highlight Türkiye’s tough stance and sanctions against Israel over the past year, attempting to demonstrate Türkiye’s political responsibility, humanitarian concern, and religious obligations as a major country in the Middle East, especially an Islamic power. Objectively, this will make the six Arab countries that still maintain policy relations with Israel feel embarrassed and will also enhance Türkiye’s discourse power in Middle East disputes, particularly in promoting the de-escalation process of this round of conflict.

Türkiye is not only a major country in the Middle East and the Islamic world but also a NATO member and EU candidate country, as well as the initiator and leader of the Turkic States Alliance. From the outbreak of the “Arab Spring” in 2011 to the Russia-Ukraine war in 2022, Türkiye has been a very active geopolitical actor and has played an important role in shaping the regional landscape. However, in the grand chessboard of Israel’s “eight-front warfare” triggered by the current Israeli-Palestinian conflict, the space for Türkiye to maneuver is very limited.

Erdoğan’s publicized severance of relations with Israel seems to be a kind of “salami-slicing,” or even a painless “soft severance,” and therefore will not cause significant shockwaves. Tükiye had already recalled its ambassador to Israel in November last year and announced in May this year the suspension of all imports and exports with Israel to punish the latter for exacerbating the humanitarian tragedy of the Palestinian people. In August, Türkiye formally submitted an application to the International Court of Justice to join the lawsuit initiated by South Africa against Israel’s alleged “genocide,” becoming one of the few Third World countries to use international legal means to challenge Israel.

However, Türkiye has not announced the closure of its diplomatic missions in Israel, nor has it punished Israel as severely or even rudely as it did in May 2018. Six years ago, when Trump announced the relocation of the U.S. Embassy in Israel from Tel Aviv to Jerusalem, thereby recognizing the latter as Israel’s capital, the Erdoğan government not only immediately recalled its ambassadors to the United States and Israel but also expelled the Israeli ambassador to Türkiye on the spot. The ambassador was subjected to a full set of humiliating security checks at the airport, including body searches and shoe removal, causing bilateral relations to plunge to a historic low, only beginning to recover slowly two years ago.

Israel has not made any response to Türkiye’s latest declaration of “severing diplomatic relations” and may continue to maintain a low profile or restraint. Perhaps Israel has adapted to Türkiye’s nearly two-decade-long “angry diplomacy,” or perhaps it currently lacks the energy and willingness to provoke Ankara and thereby create new enemies for itself. It is already overwhelmed dealing with the Iran-led “Axis of Resistance” and the United Nations, not to mention the internal frictions and power struggles among its top officials.

Türkiye’s tough stance against Israel is actually facing very similar historical scenarios, making it seem powerless or even counterproductive when playing the Palestinian card. This is because the Arab world does not welcome the successor of the former Ottoman Empire changing the long-standing Western-oriented “Kemalism” to an “eastward and southward” approach. They especially strongly resist Türkiye’s deep involvement in Arab affairs, much like their strong aversion to Iran constructing a “Shia Crescent” in the Arab world. From this perspective, Middle Eastern countries, particularly the Arab world, exhibit an “Arab Monroe Doctrine,” opposing any external interference, even though they are incapable of fairly resolving the Palestinian issue.

Since the Justice and Development Party led by Erdoğan won the general election in 2002, based on the disappointment and dissatisfaction arising from repeated setbacks in pursuing EU membership, as well as a dual return to Neo-Ottomanism and Islamism, Türkiye has significantly elevated the strategic position of the East, especially the Middle East—its traditional sphere of influence—within its foreign policy framework. Ankara began by actively attempting to mediate the Iranian nuclear crisis, suddenly paying high-profile attention to the Palestinian issue, and in 2008, a public dispute erupted between then-Prime Minister Erdoğan and Israeli President Peres at the Davos World Economic Forum.

In May 2010, disregarding Israel’s warnings, Türkiye dispatched the humanitarian aid ship “Mavi Marmara,” attempting to forcibly cross Israel’s naval blockade to dock in the Gaza Strip. This led to Israeli special forces air-dropping onto the ship, resulting in a bloody conflict. Türkiye announced the severance of diplomatic relations with Israel, and it was not until Israel later apologized that bilateral relations were restored. However, due to the indifferent or even critical stance of Egypt, Saudi Arabia, Jordan, and even the PLO towards the Palestinian Islamic Resistance Movement (Hamas), which was fighting Israel alone, Türkiye’s proactive “foreign aid” actions did not receive enthusiastic responses.

After the outbreak of the “Arab Spring” in early 2011, the development model of the Arab world was widely questioned and even lost its future direction. The “Turkish model” received widespread international attention and was even considered a reference or option for Arab countries. Facing an Arab world mired in failure and chaos, the Erdoğan government was highly proactive, even being described as “attempting to act as the leader of the Islamic world.” Driven by such wishful thinking and strategic impulses, Türkiye not only supported Egypt’s “Square Revolution” in a high-profile manner, strongly backed the Muslim Brotherhood entangled in power struggles, sent troops to Syria and Libya, intervened in the Eastern Mediterranean oil and gas disputes, and openly supported Qatar in its rivalry with Saudi Arabia. Ultimately, Türkiye’s relations with Arab countries deteriorated from the idealized “zero problems diplomacy” to a nightmarish “all problems diplomacy.”

It can be said that the decade or so during which the “Arab Spring” evolved into the “Arab Winter” was a period when Türkiye’s realist offensive diplomacy and “eastward and southward” strategy suffered major defeats. Türkiye not only lost its traditional ally Israel and offended more than half of the Arab world, but its relationships with Russia and the United States also faced unprecedented challenges.

The Middle East today has once again plunged into war and turmoil, but the causes, nature, conflicts, and opponents are vastly different from those of the “Arab Spring” or the Arab-Israeli conflicts during the Cold War. Several non-state actors from Arab countries are involved in what some are calling the “Sixth Middle East War.” However, countries that have normalized relations with Israel—such as Egypt, Jordan, the United Arab Emirates, Bahrain, Sudan, Morocco, and even the Palestine Liberation Organization—have no intention of re-entering the historical stream of the Arab-Israeli conflict. On the contrary, Iran and its leadership of the “Shia Crescent” have become the main forces opposing Israel in this new Middle East war. Some non-state actors in Arab countries have formed a new “Axis of Resistance” in alliance with the Shia Crescent. This shift in geopolitical relationships makes the attitudes of Arab nations more nuanced. Yet, in balancing “interests and righteousness,” they still value the hard-won Arab-Israeli peace and the crucial Arab-American relations. Although Arab countries are deeply frustrated by Israel’s refusal to cease fire and feel powerless to change the situation, they are absolutely unwilling to accept Iran and Türkiye taking the lead in Arab affairs.

Therefore, Türkiye’s new round of Middle East diplomacy is bound to fall into an awkward position similar to that after the “Arab Spring.” It is unlikely to receive widespread and positive responses in the Arab world or have any substantive impact on the current “eight-front warfare.” Nonetheless, Ankara’s diplomatic efforts to support the rights of the Palestinian people are commendable, reasonable, and even resonate with mainstream international public opinion.

With the openly pro-Israel Trump team controlling the White House, the State Department, and the Pentagon, and the Republican Party—which has always been more favorable toward Israel—fully controlling the U.S. legislative, executive, and judicial branches, Washington’s Middle East policy will further tilt toward Israel. Even if the new U.S. government does not encourage Israel to escalate and expand the existing conflicts and wars, it will mobilize all resources and employ all means to exert maximum pressure on Israel’s opponents to force them to compromise. At that time, Türkiye’s relations with the United States will experience new friction and uncertainties due to its tough stance against Israel.

Not only will the new U.S. government’s Middle East policy fail to reward Türkiye’s hardline approach toward Israel, but major European powers—which generally support Israel’s security and hold unfavorable views toward Iran and its led “Axis of Resistance”—will also be dissatisfied with Türkiye’s intensified pressure on Israel. This could further affect the smooth development of Türkiye-Europe relations.

Therefore, although Türkiye’s stance toward Israel is tough, the pressure it can exert is nearly exhausted, and Israel has considerable capacity to withstand such pressure, especially from Türkiye’s “soft severance of relations.” Given that Arab countries do not welcome deep Turkish intervention and that the U.S. and Europe oppose Türkiye joining the anti-Israel camp, Türkiye’s role and space for maneuvering in the Middle East are very limited and unlikely to see significant breakthroughs.

Prof. Ma is the Dean of the Institute of Mediterranean Studies (ISMR) at Zhejiang International Studies University in Hangzhou. He specializes in international politics, particularly Islam and Middle Eastern affairs. He previously worked as a senior Xinhua correspondent in Kuwait, Palestine, and Iraq.

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OPINION

Palestinian messages to the Arab-Islamic Summit

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Our people have endured decades of oppression, during which their rights were virtually destroyed and forgotten. In the post-Oslo period, when the Palestinian leadership opted for negotiations, settlement expansion accelerated while the foundations of national independence eroded under partition, isolation and prolonged blockades. Today, the occupation seeks to complete the historic Nakba by exploiting the Palestinian uprising that began on 7 October in response to escalating Zionist extremism, attempts at Judaisation and efforts to marginalise and eradicate the Palestinian entity. This existential challenge, backed by a broad coalition with regional and international dimensions that do not serve the interests of our people, obliges us to unite our efforts around common principles. Despite these barbaric attacks, limited resources and the imbalance of power with the enemy, we stand in solidarity with the resistance and determination of the Palestinian people. If these efforts are coordinated, we can put counter-pressure on the occupation, deepen its political and legal isolation and worsen its economic crisis. This will be an opportunity to force the occupation and its allies to stop the aggression and strengthen the ongoing struggle of our people.

Today, the Palestinian people are facing one of the heaviest Zionist attacks on the Gaza Strip, which reaches the dimensions of genocide and ethnic cleansing. According to unofficial statistics, the number of Palestinian martyrs since the beginning of the war has exceeded 186,000, and the environmental and health destruction caused by the attacks has directly contributed to this number. This scenario could, God forbid, be repeated in the West Bank, with radical settlers attacking Palestinian towns and villages through the occupation army or with the official support of the occupation government.

Historically, the Palestinians have paid the heaviest price for the Western approach to the Eastern question. The consequences of this approach have been disastrous for us: It not only led to the seizure of our land by the Zionist movement, but also paved the way for the establishment of a settler state. In this war, the Arab and Islamic countries acted with great responsibility, rejecting the international categorisation of the resistance as terrorism and insisting on presenting it as a national liberation movement.

Arab and Islamic countries have played a strong role in supporting our cause in international forums, with a growing regional awareness of a common destiny and the need for common security against a common enemy. This solidarity is a very important step in supporting our cause through the work of the Ministerial Committee of the Arab-Islamic Summit convened in Riyadh, which is expected to be an international framework for shaping a solution to the Palestinian issue in accordance with the legitimate rights and aspirations of the Palestinian people.

Internationally, unlike in previous crises, we have seen clear international positions condemning the genocide and crimes against humanity committed against our people, reflected in firm positions at the United Nations. We appreciate these positions of the nations and peoples of the world and see the path to the establishment of a Palestinian state based on international legitimacy as the result of more than a century of Palestinian struggle and the revival of their rights, which have historical and political roots. Since 1922, the foundations of a Palestinian state have been laid, and despite British and Zionist conspiracies, Palestine retains its political primacy on the world map.

Today, more than 150 countries recognise the State of Palestine on the basis of international resolutions such as the General Assembly Settlement Plan (Resolution 181), the Algiers Declaration declaring the State of Palestine in 1988, and Security Council resolutions on the illegality of settlements outside the 1967 borders. The most recent resolution demands that Israel end its ‘illegal presence in the Occupied Palestinian Territory’ within 12 months of the General Assembly’s request to the International Court of Justice for an advisory opinion on the legal consequences of Israel’s policies and practices in Palestine. The resolution was adopted with overwhelming support – 24 votes in favour, 14 against and 43 abstentions – demonstrating the gains made by the Palestinian cause and highlighting the growing political isolation of the occupying state.

Despite the obstacles to sovereignty posed by the occupation, the Palestinian state remains a legal reality. We see current international efforts to revive these historic and entrenched rights, against the post-World War II trend of international powers favouring the establishment of a Zionist political entity at our expense.

These forward-looking initiatives, called the ‘International Alliance for the Realisation of the Two-State Solution’, include direct steps to organise the establishment of a Palestinian state, rather than merely negotiating its right to exist. This is an important step for regional security and international peace, a necessary way to stabilise the global system and prevent the spread of geopolitical conflicts, sometimes with a religious or cultural dimension.

Diplomatic and political efforts to achieve Palestinian statehood must be compatible with efforts to end the war, protect civilians, facilitate humanitarian aid and address the consequences of the aggression through compensation and reconstruction. At the same time, Palestinian efforts to meet the conditions for a sovereign state consistent with the principles of regional security and global peace should be intensified.

In the midst of these efforts, it is clear that the Palestinian forces will respond sincerely to these initiatives and are willing to overcome differences over governance, elections and the so-called ‘day after’ issues. Palestinian behaviour shows that these disputes are now a thing of the past and that focusing on the future enhances the ability to build and govern the Palestinian state on the basis of national spirit and solidarity.

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