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Flashmag! Issue 171 April 2026
The Petrodollar Fractures: The Monetary Weapon Erodes
The second key to understanding this crisis is economic— and it is perhaps the most decisive over the long term. Since the end of dollar-gold convertibility in 1971 and the American-Saudi oil agreement of 1974, the dollar has rested not on intrinsic value but on a geopolitical obligation: all global oil is invoiced in dollars. This mechanism— the petrodollar— conferred upon the United States an exorbitant privilege: the ability to finance its deficits cheaply, to impose devastating economic sanctions on any state by cutting it off from the SWIFT network, and to exercise indirect guardianship over the world economy. The dollar is not merely a currency. It is a weapon. Iran has been among its most systematically targeted victims. Tehran’ s exclusion from the SWIFT network in 2012 provoked an immediate contraction of its economy, a 50 percent collapse in the value of the rial, and a severe disruption of its commercial exchanges. But it also produced an effect its architects had not anticipated: it forced Iran to innovate. To develop alternative payment systems with Russia, to trade in national currencies with China and India, to resort to barter and direct compensation to bypass Western financial circuits. What Iran experimented with under duress became a laboratory for the rest of the anti-hegemonic bloc. Today, China— the world’ s largest oil importer— settles a growing portion of its energy purchases in yuan, including with Russia since the 2022 invasion of Ukraine. The BRICS nations, at their Johannesburg summit in 2023, formally launched discussions on a common currency or an alternative settlement system. Saudi Arabia itself is openly discussing non-dollar oil contracts with certain Asian partners. Venezuela and Cuba, sanctioned for decades, have built survival economies entirely unmoored from the Western financial system. The dollar is not dead. Its share of global reserves remains dominant— around 58 percent in 2024. But that figure has fallen from 71 percent in 2001. The direction of travel is unmistakable. And paradoxically, every unilateral American sanction accelerates this de-dollarization, convincing more countries to reduce their dependence on a currency that can be wielded against them as a weapon.
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