High stakes in petrodollar 2.0 deal proposal

AS A short opinion piece on the Nasdaq website noted, the 50-year-old petrodollar agreement between the United States and Saudi Arabia expired on Jun 9 without lament. For reasons best known to themselves, US mainstream news media have chosen to remain silent about the event. Some US commentators have even gone so far as to claim that there was no such agreement and that this is just another conspiracy theory. The blogosphere, however, has been abuzz with dire predictions on the fate of the US dollar as the world’s reserve currency.

So, was there really a pact between the Nixon administration and the House of Saud? On Jun 8, 1974, the voice of US establishment, The New York Times, reported on its front page: “Secretary of State Kissinger and Prince Fahd Ibn Abdel Aziz, Second Deputy Premier of Saudi Arabia and a half-brother of King Faisal, signed the six-page agreement at Blair House across the street from the White House this morning.”

The deal was about economic cooperation and supplying Saudi Arabia’s military needs, the paper went on to say. The text of the pact has never been made public but it became clear subsequently that with the agreement, President Richard Nixon had found a way to arrest the sharp decline of the US currency.