‘US hegemony and its perils’ – looting and exploitation

Editor’s Note: This is the third part of the document released last February 20, 2023 by the Ministry of Foreign Affairs of the People’s Republic of China, which is this paper’s way of offering an alternative view of how peoples of the world should view the actions of the United States, especially among Filipinos who continue to be trapped in a neo-colonial mindset that makes it hard for them to see global issues from a nationalist perspective.

While the views express herein are from that of China, the truism the document contains is relevant to any country and race.

The document is divided into 5 categories—Political Hegemony, Military Hegemony, Economic Hegemony, Technological Hegemony and Cultural Hegemony with the Conclusion at the end of the document.

AFTER World War II, the United States led efforts to set up the Bretton Woods System, the International Monetary Fund and the World Bank, which, together with the Marshall Plan, formed the international monetary system centered around the U.S. dollar.

In addition, the United States has also established institutional hegemony in the international economic and financial sector by manipulating the weighted voting systems, rules and arrangements of international organizations including “approval by 85 percent majority,” and its domestic trade laws and regulations.

By taking advantage of the dollar’s status as the major international reserve currency, the United States is basically collecting “seigniorage” (the cost of producing a currency within a given economy or country is lower than the actual exchange value in favor of the government that mints the money, in this case, the United States. The US Federal Reserve said it only costs 17 cents to produce a 100-dollar bank note. See below—Editor) from around the world; and using its control over international organizations, it coerces other countries into serving America’s political and economic strategy.

◆ The United States exploits the world’s wealth with the help of “seigniorage.” It costs only about 17 cents to produce a 100-dollar bill, but other countries had to pony up 100 dollar of actual goods in order to obtain one.

It was pointed out more than half a century ago, that the United States enjoyed exorbitant privilege and deficit without tears created by its dollar, and used the worthless paper note to plunder the resources and factories of other nations.

◆ The hegemony of U.S. dollar is the main source of instability and uncertainty in the world economy. During the COVID-19 pandemic, the United States abused its global financial hegemony and injected trillions of dollars into the global market, leaving other countries, especially emerging economies, to pay the price.

(Another example: While it took China more than 40 years of sacrifice and development to earn a dollar reserve of more than US$ 3 trillion as of 2022, the US, in the guise of ‘quantitative easing,’ printed and flooded the world with the same amount of dollars starting in 2008 until the first year of US President Joe Biden’s administration, mainly to bail out the Wall Street elites that control the US financial system—Editor).

In 2022, the Fed ended its ultra-easy monetary policy and turned to aggressive interest rate hike, causing turmoil in the international financial market and substantial depreciation of other currencies such as the Euro, many of which dropped to a 20-year low.

As a result, large numbers of developing countries were challenged by high inflation, currency depreciation and capital outflows. This was exactly what Nixon’s secretary of the treasury John Connally once remarked, with self-satisfaction yet sharp precision, that “the dollar is our currency, but it is your problem.” (Connally made this sarcastic remark in 1971, after US President Richard Nixon announced on August 15 of that year the US’ withdrawal from the Gold Standard, thereby ushering the era of ‘fiat currency,’ ‘floating currency,’ and devaluation—Editor).

◆ With its control over international economic and financial organizations, the United States imposes additional conditions to their assistance to other countries. In order to reduce obstacles to U.S. capital inflow and speculation, the recipient countries are required to advance financial liberalization and open up financial markets so that their economic policies would fall in line with America’s strategy.

According to the ‘Review of International Political Economy,’ along with the 1,550 debt relief programs extended by the IMF to its 131 member countries from 1985 to 2014, as many as 55,465 additional political conditions had been attached.

The hegemony of U.S. dollar is the main source of instability and uncertainty in the world economy. During the COVID-19 pandemic, the United States abused its global financial hegemony and injected trillions of dollars into the global market, leaving other countries, especially emerging economies, to pay the price.

 

◆ The United States willfully suppresses its opponents with economic coercion. In the 1980s, to eliminate the economic threat posed by Japan, and to control and use the latter in service of America’s strategic goal of confronting the Soviet Union and dominating the world, the United States leveraged its hegemonic financial power against Japan, and concluded the Plaza Accord (signed on September 22, 1985 at the Plaza Hotel, New York between the US, Japan, UK, France and West Germany. The deal allowed for the depreciation of the US dollar while boosting those of its satellite countries, especially Japan, thus making its products and services more expensive—Editor).

As a result, Yen was pushed up, and Japan was pressed to open up its financial market and reform its financial system. The Plaza Accord dealt a heavy blow to the growth momentum of the Japanese economy, leaving Japan to what was later called “three lost decades.”

◆ America’s economic and financial hegemony has become a geopolitical weapon. Doubling down on unilateral sanctions and “long-arm jurisdiction,” the United States has enacted such domestic laws as the International Emergency Economic Powers Act, the Global Magnitsky Human Rights Accountability Act, and the Countering America’s Adversaries Through Sanctions Act, and introduced a series of executive orders to sanction specific countries, organizations, or individuals.

Statistics show that U.S. sanctions against foreign entities increased by 933 percent from 2000 to 2021. The Trump administration alone has imposed more than 3,900 sanctions, which means three sanctions per day.

So far, the United States had or has imposed economic sanctions on nearly 40 countries across the world, including Cuba, China, Russia, the DPRK, Iran and Venezuela, affecting nearly half of the world’s population. “The United States of America” has turned itself into “the United States of Sanctions.”

And “long-arm jurisdiction” has been reduced to nothing but a tool for the United States to use its means of state power to suppress economic competitors and interfere in normal international business.

This is a serious departure from the principles of liberal market economy that the United States has long boasted (end of third part).