Geopolitics

Are The Dollar's Global Currency Days Numbered?

Many countries agree that the U.S. politicizes the dollar by punishing nations who don't abide by U.S. sanctions. With this American approach comes isolation, and the risk of the dollar being replaced as global currency.

The first steps toward the beginning of the end of the dollar's hegemony could begin at the next G20 summit.
The first steps toward the beginning of the end of the dollar's hegemony could begin at the next G20 summit.
Santiago Villa

-Analysis-

BOGOTA — It's not going to happen tomorrow, in a year or even five years. But it's conceivable, even likely, that within ten years, the U.S. dollar will cease to become the reference currency for international transactions. The reason for this is that the U.S. government and American judges have politicized the dollar to an extreme in a world where the country backing it is no longer as dominant as it once was.

The United States is an arrogant power, which, like many other empires (and people), is witnessing its influence decline. Indeed, it is hastening this degeneration by wasting its political and symbolic capital, expending it as if the country still stood at the zenith of its glory.

Because of France, the first steps toward the beginning of the end of the dollar's hegemony could begin at the next G20 summit. Here's why: On June 30, the U.S. Federal Reserve backed a Justice Department and New York district court decision to punish the French bank BNP Paribas, one of Europe's biggest, for routinely violating U.S. sanctions on Iran, Sudan and Cuba. Besides fining the French bank almost $9 billion, the U.S. also suspended approval of its dollar transactions.

French President Francois Hollande is one of several heads of leading economic powers who believes that the United States has gone too far in politicizing the dollar, and he favors putting the topic on the G20 agenda. To punish those who violate U.S. economic sanctions exploits the fact that the dollar is an inevitable part of international transactions. It is one of the few subjects on which France, Germany and Russia publicly agree.

Taking its ball and going home

The United States is actually shooting itself in the foot and isolating its allies. Ironically, President Barack Obama, who pledged to reconcile the White House with the world, has barely managed to make a dent in the isolation his predecessor George W. Bush created.

The United States developed intelligent sanctions as a means of exerting pressure on foreign countries and institutions without resorting to military force. One maneuver it can use — and has with BNP Paribas — is to forbid banks from approving dollar transactions, which is otherwise just a formality in the normal process of international finances.

U.S. judges and government officials who are using this to punish those who defy their sanctions have a right to do so, of course. But it's a short-sighted tactic. To describe the problem simply, if the rich kid doesn't want his buddies to play with his new football, they will eventually look for another one — perhaps less fancy — and leave the rich kid to nurse his top-of-the-line toy alone.

This will take time, and the trend may revert. It is bold and difficult to prophesy this way. The dollar's options are not clear. And the euro, while it may not be in the abyss, is struggling to emerge from the bog of the European debt crisis. The RMB, or yuan, is subject to the excessive influence of the Chinese state. Some have suggested that the emerging economies could conjure up an alternative currency, especially after announcing they would start a development bank. But this wouldn't be possible because their economies and institutions aren't sufficiently stable.

If the world had to decide tomorrow on a new global currency, the most reasonable option would be the pound sterling, given its stability and the almost religious respect British institutions show it. If the United Kingdom were to seize the opportunity, its currency could supplant the dollar in fairly short order.

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Feed The Future

COP26 Should Mark A Turning Point In Solving The Climate Crisis

Slow Food calls for an action plan to significantly reduce and improve the production and consumption of meat, dairy, and eggs by 2050.

A new dawn?




If, as the saying goes, we are what we eat, the same also goes for the animals that end up on our plate. How we feed our own food can have knock-on effects, not just for our own health but also for the planet. We are now aware of the meat and dairy industry's significant carbon footprint, responsible for more than a third of global anthropogenic greenhouse gas emissions.

Large-scale cattle productions that favor pure profit over more sustainable practices also add to environmental woes through biodiversity loss, deforestation and pesticide use — with some of the world's richest countries contributing disproportionately: The five biggest meat and milk producers emit the same amount of greenhouse gases as the oil giant Exxon.

The good news is that we could meet — if we would — some of these challenges with an array of innovative solutions, as the fields of farming, breeding and nutrition look at ways to shift from centralized intensive agro industry toward a more localized, smaller-scale and more organic approach to production.

Cows fed corn and grain-based diets may grow larger and are ready to be processed at a younger age — but this requires significant energy, as well as land and water resources; in contrast, grass and hay-fed cows support a regenerative farming model in which grazing can contribute to restoring the health of soil through increased microbial diversity. Compared to highly processed GM crops, natural-grass diets with minimal cereals also lead to more nutrient-rich livestock, producing better quality meat, milk and cheese. Farmers have started focusing on breeding native animal species that are best adapted to local environmental contexts.

This new approach to agricultural practices is closely linked to the concept of agroecology, where farming works in tandem with the environment instead of exploiting it. If mowed a few times a year, for instance, natural meadows produce hay that is rich in grasses, legumes and flowers of the sunflower family, like daisies, dandelions, thistles and cornflowers. These biomes become reservoirs of biodiversity for our countryside, hosting countless species of vegetables, insects and birds, many of which are at risk of extinction. Until recently, these were common habitats in meadows that were not plugged or tilled and only required light fertilization. Today, however, they are becoming increasingly threatened: in the plains, where the terrain is used for monocultures like corn; or in hills and mountains, where fields are facing gradual abandonment.

It is worth noting that extensive agriculture, which requires smaller amounts of capital and labor in relation to the size of farmed land, can actually help curb climate change effects through carbon dioxide absorption. Researchers at the University of California, Davis determined that in their state, grasslands and rangelands have actually acted as more resilient carbon sinks than forests in recent years. Through a system of carbon uptake, these lands provide a form of natural compensation, going as far as canceling the farms' impact on the planet, rendering them carbon "creditors."

In the meantime, grasslands and pastures allow animals to live in accordance with their natural behavioral needs, spending most of the year outside being raised by bonafide farmers who care about animal welfare. A recent study by Nature found that allowing cows to graze out of doors has both psychological and physical health benefits, as they seem to enjoy the open space and ability to lie on the soft ground.

Some might worry about the economic losses that come with this slower and smaller business model, but there are also opportunities for creativity in diversifying activities, like agro-tourism and direct sales that can actually increase a farm's profit margin. This form of sustainable production goes hand-in-hand with the Slow Meat campaign, which encourages people to reduce their meat consumption while buying better quality, sustainable meat.

Others may assume that the only environmentally-conscious diet is entirely plant-based. That is indeed a valuable and viable option, but there are also thoughtful ways to consume meat in moderation — and more sustainably. It also should be noted that many fruits and vegetables have surprisingly large carbon footprints: The industrial-scale cultivation of avocados, for example, requires massive amounts of water and causes great hardship to farming communities in Latin America.

But forging a broad shift toward more "biodiversity-friendly" pastoralism requires action by both those producing and eating meat, and those with the legislative power to enact industry-wide change. It is urgent that policies be put into place to support a return to long-established agricultural practices that can sustainably feed future generations. Although no country in the world today has a defined strategy to decrease consumption while transforming production, governments are bound to play a key role in the green transition, present and future.

In Europe, Slow Food recommends that the Fit for 55 package include reducing emissions from agriculture activities by 65% (based on 2005 levels) by 2050. Agriculture-related land use emissions should also reach net-zero by 2040 and become a sink of -150 Mt CO2eq by 2050. But these targets can only be met if the EU farming sector adopts agroecological practices at a regional scale, and if consumers shift to more sustainable diets. If we are indeed what we eat, we should also care deeply about how the choices we make impact the planet that feeds us.

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