In 1944, before the end of the war, representatives from 44 countries met in the United States of America (New Hampshire) to establish a new global financial system to avoid the financial disorders that occurred before and during the Second World War from 1939 to 1945.
As a result, the International Monetary Fund (IMF) was established, and the countries agreed to link their economies to the dollar exchange rate.
From 1945 until 1971, these countries were able to maintain their currencies’ exchange rates against the Dollar, i.e. to link their economies to the Dollar, while the United States pegged the price of its currency to gold and has become the controller of the exchange rate; raising and lowering it according to its balance of payments. Therefore, it controls the world economy as well.
After 1971, Washington decided to stop converting the Dollar and the reserves of other countries of the Dollar to gold, which gave freedom to countries to price their currencies against other currencies.
This freedom was not in favor of weak countries, so the so-called “floating currency” appeared; i.e. the exchange rate fluctuates up and down. To prevent this, many countries abandoned gold reserves and resorted to buying the Dollar and storing it as a “safe” currency (the hard currency); as the Dollar is the first currency that controls the import and export market.
Countries with strong economies, such as China and Germany, began to ease their dependence on the Dollar in export and import; making their economies stable.The stability of a small or mid-power country’s economy and its currency has become linked to its hard currency holdings. Syria, for example, has 1 Trillion SYP, i.e. (1000 Billion).
In order to maintain the exchange rate of 50 Syrian pounds to the US Dollar, Syria must have 20 Billion US Dollars in its treasury, and this was before 2011.Connecting the currency exchange rate of a country suffering from war with dollar may be imaginary or not officially issued by the government.
However, the dollar control over the world market through business transactions makes this connection real. The imposed sanctions as well as the government’s expenditure of hard currencies on war effort affect the exchange rate until the treasury becomes empty.
Here the game of merchants and wealthy in cooperation with officials becomes clear in dominating the exchange rate according to their requirements and ambitions.
Thus, the dollar exchange rate often increases with some immediate decreases so that all goods’ prices are connected to this increase even the homemade ones; we see for example the vegetable prices increase and the reason is “dollar increasing”! All of this is an imaginary connection in the brain of all even the “parsley” seller.
Consequently, the prices rise and the citizen suffers while the treasuries of currency traders are full. One the economic occupation ways is when the major countries paly the “policeman” role in order to protect the subordinate countries against external, internal, real or different risks; this is obvious in the Arab Gulf States.
These countries have great natural resources, but they are weak and unable to protect themselves. The solution is that American forces establish military bases in order to secure gas and oil wells as well as their companies, and to prevent any threat may affect the supply.
Governments in return have to pay the protection price of that policeman “royalty”, and this is what Trump frankly said “when the wells dry, there will not be any American soldier there; let these countries with their rulers and peoples go to hell.”
Dr. Jamil M. Shaheen (Firil Center for Studies FCFS Berlin)