In the years 1939-1945. After World War II, the US State Department and the Council on Foreign Relations developed an economic plan to conquer the Western Hemisphere, including the former British Empire, and most of the commercial and industrial center of Europe. The goal was to preserve the indisputable power of the United States in the region with military and economic superiority, while limiting the influence of states that could intervene in such global projects.
World Currency History: The Gold Standard
The implementation of this plan resulted in the creation of a number of supranational political and economic institutions, and the signing of a number of international treaties, including the Bretton Woods Agreement. The dollar has become a world currency, replacing the previously used gold standard with a monetary standard. America has the number one export product: all countries buy dollars to conduct international trade. The Soviet Union did not join the agreement.
The collapse of the Bretton Woods system
In 1970, it became apparent that the experiment to control the global monetary system through the Bretton Woods pseudo-gold standard failed. In August 1971, Nixon announced the withdrawal of America from the 1944 Bretton Woods Agreement.
The US government, Wall Street and the Fed could not afford the possibility of an economic recession. The United States used all its economic and military power to take hold of the world gold standard - and failed. Something urgently needed to be done so that demand for the dollar did not fall.
Neftedollar system
Three years later, the United States signed an agreement with Saudi Arabia, under which the Saudis pledged to sell oil only for dollars and reinvest profits in US Treasury securities. Saudi Arabian oil importing countries must convert the national currency into US dollars to complete the transaction. In exchange for maintaining global demand for its currency, America promised arms deliveries and protection of oil fields from neighboring countries, including Israel.
Since 1975, all OPEC countries have agreed to sell oil under the same conditions. In the history of petrodollar, this was the initial stage.
Definition of petrodollars
Oil dollars of the country are US dollars earned by the sale of oil. The amounts accrued to the countries exporting raw materials depend on its selling price and the volume of sales abroad. The global supply of oil, on the one hand, and global demand, on the other hand, sooner or later determine the real market price for oil, regardless of any controlled pricing system.
The price determined by the OPEC countries can be maintained only as long as there is sufficient demand to absorb the amount of oil supplied to the world market. If it exceeds supply, oil will be sold at a higher price. All the way around, when the market is oversaturated. This is reflected in the price after a certain time period, regardless of the OPEC dictated price.
Oil dollars and their dependence on exchange rates
Oil-dollars profit - dollars earned from the sale of oil in excess of the domestic development needs of the country. The surplus petrodollars accumulated in the process of converting subsoil use into domestic income and fixed capital are related to oil production, which exceeds such needs, but turns into money supply.
Oil dollars are US dollar-denominated revenues from the sale of oil. In reality, they depend on the level of inflation in the USA and the rate of conversion of the dollar into the national currency of the oil exporter. Whenever the US dollar changes, the assets of oil exporting countries change by the same amount. The relationship between the US dollar and petrodollar is a linear direct relationship.
Reinvestment of profit or loss of sovereignty
Countries hosting petrodollars in the United States are politically hostage to capital. In the event of a conflict, the US government has the ability to limit the use of these assets, up to their full confiscation, in order to achieve their political, economic or other goals. This is a direct violation of the sacred principles of capitalism and economic freedoms that America is so fond of declaring. However, the US government resorted to such weapons twice in the eighties against Iranian and Libyan assets.
Governments, placing petrodollars in the USA, risk losing part of their economic and political independence. The more assets are placed in the United States by a particular oil exporting country, the less independent such a nation becomes.
Oilfall and the collapse of the USSR
The Soviet Union began supplying oil to the countries of the socialist bloc in October 1964, and since then the export of hydrocarbons from the country has been steadily growing. After the Arab oil embargo of 1973-1974 from the countries of Western Europe petrodollars began to come to the USSR for oil supplies. This was contrary to the policy of the CPSU, which preferred to conduct trade with other countries in rubles, but the economic situation in the country forced to agree to the terms of buyers.
The dependence of the Soviet economy on oil prices played an important role in the collapse of the USSR. The collapse of commodity prices in the absence of other sufficient sources of financing and dependence on export of consumer goods led the country to an economic collapse.
After the collapse of the USSR, the relay was intercepted by the CIS countries: Russia, Kazakhstan, Azerbaijan. In the Russian economy, petrodollars - revenues from the sale of hydrocarbons - form a significant part of the country's budget.
An oil exporting country can have a surplus of petrodollars only if its absorption capacity is lower than oil revenues for any given time period.
Oil surpluses do not reflect the country's real wealth. If you store dollars, then their purchasing power is gradually eroded by inflation and adverse exchange rates. The "master" of both variables is the United States. Therefore, the purchasing power of petrodollar assets of raw material exporting countries is determined by a complex set of variables whose trends and values are functions of factors not controlled by these countries.
An effective distribution of petrodollars for domestic investment can increase the production potential of the exporting country of “black gold” and work for the country's economy. But dependence on imported consumer goods, including elite and rare collectibles, contributes to the export of limited natural resources that could be used for domestic development.