Didn't we know this was going to happen? We don't have the power to
stop China from manipulating the change that seems inevitable.

I find the last paragraph to be very interesting...

The demise of the dollar
By Robert Fisk

In a graphic illustration of the new world order, Arab states have
launched secret moves with China, Russia and France to stop using the
US currency for oil trading
In the most profound financial change in recent Middle East history,
Gulf Arabs are planning - along with China, Russia, Japan and France -
to end dollar dealings for oil, moving instead to a basket of
currencies including the Japanese yen and Chinese yuan, the euro, gold
and a new, unified currency planned for nations in the Gulf
Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and
Qatar.

Secret meetings have already been held by finance ministers and
central bank governors in Russia, China, Japan and Brazil to work on
the scheme, which will mean that oil will no longer be priced in
dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese
banking sources in Hong Kong, may help to explain the sudden rise in
gold prices, but it also augurs an extraordinary transition from
dollar markets within nine years.

The Americans, who are aware the meetings have taken place - although
they have not discovered the details - are sure to fight this
international cabal which will include hitherto loyal allies Japan and
the Gulf Arabs. Against the background to these currency meetings, Sun
Bigan, China's former special envoy to the Middle East, has warned
there is a risk of deepening divisions between China and the US over
influence and oil in the Middle East. "Bilateral quarrels and clashes
are unavoidable," he told the Asia and Africa Review. "We cannot lower
vigilance against hostility in the Middle East over energy interests
and security."

This sounds like a dangerous prediction of a future economic war
between the US and China over Middle East oil - yet again turning the
region's conflicts into a battle for great power supremacy. China uses
more oil incrementally than the US because its growth is less energy
efficient. The transitional currency in the move away from dollars,
according to Chinese banking sources, may well be gold. An indication
of the huge amounts involved can be gained from the wealth of Abu
Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated
$2.1 trillion in dollar reserves.

The decline of American economic power linked to the current global
recession was implicitly acknowledged by the World Bank president
Robert Zoellick. "One of the legacies of this crisis may be a
recognition of changed economic power relations," he said in Istanbul
ahead of meetings this week of the IMF and World Bank. But it is
China's extraordinary new financial power - along with past anger
among oil-producing and oil-consuming nations at America's power to
interfere in the international financial system - which has prompted
the latest discussions involving the Gulf states.

Brazil has shown interest in collaborating in non-dollar oil payments,
along with India. Indeed, China appears to be the most enthusiastic of
all the financial powers involved, not least because of its enormous
trade with the Middle East.

China imports 60 per cent of its oil, much of it from the Middle East
and Russia. The Chinese have oil production concessions in Iraq -
blocked by the US until this year - and since 2008 have held an $8bn
agreement with Iran to develop refining capacity and gas resources.
China has oil deals in Sudan (where it has substituted for US
interests) and has been negotiating for oil concessions with Libya,
where all such contracts are joint ventures.

Furthermore, Chinese exports to the region now account for no fewer
than 10 per cent of the imports of every country in the Middle East,
including a huge range of products from cars to weapon systems, food,
clothes, even dolls. In a clear sign of China's growing financial
muscle, the president of the European Central Bank, Jean-Claude
Trichet, yesterday pleaded with Beijing to let the yuan appreciate
against a sliding dollar and, by extension, loosen China's reliance on
US monetary policy, to help rebalance the world economy and ease
upward pressure on the euro.

Ever since the Bretton Woods agreements - the accords after the Second
World War which bequeathed the architecture for the modern
international financial system - America's trading partners have been
left to cope with the impact of Washington's control and, in more
recent years, the hegemony of the dollar as the dominant global
reserve currency.

The Chinese believe, for example, that the Americans persuaded Britain
to stay out of the euro in order to prevent an earlier move away from
the dollar. But Chinese banking sources say their discussions have
gone too far to be blocked now. "The Russians will eventually bring in
the rouble to the basket of currencies," a prominent Hong Kong broker
told The Independent. "The Brits are stuck in the middle and will come
into the euro. They have no choice because they won't be able to use
the US dollar."

Chinese financial sources believe President Barack Obama is too busy
fixing the US economy to concentrate on the extraordinary implications
of the transition from the dollar in nine years' time. The current
deadline for the currency transition is 2018.

The US discussed the trend briefly at the G20 summit in Pittsburgh;
the Chinese Central Bank governor and other officials have been
worrying aloud about the dollar for years. Their problem is that much
of their national wealth is tied up in dollar assets.

"These plans will change the face of international financial
transactions," one Chinese banker said. "America and Britain must be
very worried. You will know how worried by the thunder of denials this
news will generate."

Iran announced late last month that its foreign currency reserves
would henceforth be held in euros rather than dollars. Bankers
remember, of course, what happened to the last Middle East oil
producer to sell its oil in euros rather than dollars. A few months
after Saddam Hussein trumpeted his decision, the Americans and British
invaded Iraq.


http://www.independent.co.uk/news/bu...r-1798175.html