Sam's Exchange -
by Sam Barden:
When we hear the word Apartheid, most of us think of South Africa. Apartheid was applied in South Africa from 1948 until 1994, until Nelson Mandela was elected president in what is now the Republic of South Africa (RSA), in their first free and fair elections. Apartheid is a system of racial segregation and oppression of one group against another. This analogy can be perfectly applied to today’s so-called global financial system, where global financial apartheid is alive and well today.
The global financial system is actually an American and Western European financial system, which through the use of the USD is able to extend its reach all over the world. The USD is kept in place by the U.S. military. That is to say that anyone who decides that they no longer want to use the USD for trade, particularly if you are an oil exporter, like Libya or Iraq, then the U.S. military will intervene with deadly force to ensure the USD remains in place. Similarly, if a country has trading partners whom the U.S. financial system deems a threat or do not want as part of their system, then the U.S. financial system applies pressure on the country with a choice of “it is them or us!”
The current sanctions against Iran are Financial Apartheid. The effect is segregation and oppression. If you consider a country a race, then it is a textbook definition. The sanctions on Iran are a result of Iran’s nuclear ambitions. This of course is not the real reason for the sanctions. The real reason is that the U.S. financial system needs to oppress Iran in order to limit Iran’s influence regionally. This has been going on since 1953 when the CIA ousted the popularly elected and secular Mossadegh government in Iran and replaced it with the Shah of Iran. Iran ended up as a police state under the Shah until the 1979 revolution. That the Mullahs came to power in 1979 was not necessarily by design of the Iranian people, but more the filling of a power vacuum after the Shah was deposed.
In 1951, Mossadegh nationalized Iran’s oil industry, which had since 1913 been controlled by the British via the Anglo Persian oil company, today known as BP. As we know, the USD remains the world’s reserve currency not because it has any intrinsic value, but because oil is priced and traded in dollars. To maintain the oil dollar price link, you must control enough of both the oil and dollars, which the U.S. banking system does. However, since Iran has been in control of its own oil industry since the 1979 ouster of the Shah, which saw religious Mullahs of Iran take power largely by default. The only way to control Iran and its regional influence is to control to whom Iran sells its oil. And this is where the Apartheid becomes global.
Iran sells its oil and oil products to many countries, and the U.S. and Western European financial system, which we know to be in terminal decline, has since July 1 tightened sanctions on Iran’s trading partners. These partners include China, Greece, Portugal, Spain, Italy, South Korea, India, and South Africa to name a few. What the sanctions mean is that none of these countries are free to trade as they wish with Iran if they want to remain part of the “global financial system” which really means to continue using the terminal U.S./Western European banking system.
For countries like India, whose thirst for energy is only growing, limiting its energy supply means limiting its potential economic growth. This means daily electricity shortages for some, which lead to low productivity, and higher food prices for all, which lead to social and political instability. For countries like South Africa that have traditionally had close ties with Iran, it also means higher food prices. However, where South Africa via its National oil company Petro SA supplies other African countries with oil and refined products, it means that parts of the African continent are being oppressed by the U.S. and European Banking sanctions on Iran.
From the most economically challenged parts of Western Europe to the most fragile parts of Africa and to the most vibrant and fastest growing parts of Asia, the terminal U.S./European banking system is applying Global Financial Apartheid in a vain attempt to keep a terminal system alive: the debt-based monetary system.
The likelihood that the growing Asian countries, the fragile African countries and the economically challenged European countries look outside the current system for a solution is high. While any single country by itself might be reticent to challenge the current system, together they might be able to act in unison to create new, more open and multi-lateral unions.
Perhaps the best place to look for an emerging replacement to the banking is the system of mobile phone payments (using your mobile to transfer funds), which is spreading virally at a phenomenal rate. Indeed not many people realize that a common currency exists among two billion of the most disadvantaged people in the world. This is talk time, in the form of pre-paid mobile credit, which has nothing to do with banks. Who knows what other forms of value transfer are possible?
Current markets are anything but global or integrated. What if we had a paradigm shift in the way we think and transact when doing business with each other? Balanced global trade can only occur if we have transparent, accessible and efficient markets. We are on the cusp of achieving this, although most people cannot see it. Sam’s Exchange aims to give its readers a clearer view and a platform for discussion. Markets, trade and economics are in fact nothing more than the result of our thoughts and actions expressed in numbers, not the reverse.
Sam Barden is founding Partner of SBI Markets DMCC, a Dubai-registered commodities trading and advisory company. Barden has worked in the global financial markets for more than 17 years in Europe, Russia and the Middle East. He has advised and executed strategic transactions for both the government and private sector, in particular in energy and commodity markets, advising various energy producing nations on their strategic market developments and interaction. He holds a degree in economics and finance from Victoria University, Melbourne, Australia.
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