Saudi Arabia Threatens to Dump French Debt

Following its recent integration into the BRICS bloc, Saudi Arabia flexes its muscles by threatening to sell European debt in case of the seizure of Russian reserves.

Europe’s Debt Default

Bloomberg reports that Saudi Arabia threatens to stop placing its reserves in European debt if the G7 decides to seize Russian reserves (about 255 billion euros).

The reason being that Russian reserves consist mainly of euros invested in the debts of France, Italy, etc. In contrast, the United States has only seized five small billion dollars and therefore does not risk much in case of seizure.

The Saudi threat was conveyed by the Saudi Ministry of Finance shortly after the G7 decided to use Russian reserves for the benefit of Ukraine. The debt of France is particularly in Riyadh’s sights according to Bloomberg.

These warnings date back to April and were accompanied by those from China and Indonesia. Despite these warnings, the G7 ultimately crossed the Rubicon in recent weeks.

Meeting in Italy from June 13 to 15, the conclave decided to grant Ukraine a loan of 50 billion dollars guaranteed by the interests generated by Russian assets. Hence the recent surge in the price of insurance against a French default (CDS).

France’s signature will be worth little when Ukraine decides not to repay these fifty billion and the interest generated by Russian assets will have to be seized for good.
The European Commission speaks of interest representing around 3 billion euros per year. At this rate, Russian reserves will have to remain frozen for 16 years…

The Council on Foreign Relations speaks of 5 billion euros, or even 9 billion dollars depending on rate developments and how reserves are reinvested when bonds mature.

The Revenge of MBS

The amount of European debt held by Saudi Arabia is unclear. However, we know that the reserves of its central bank are equivalent to 445 billion dollars, of which 135 billion dollars are in US Treasury bonds.

The kingdom will not hesitate to use its economic weight to help Russia. This loyalty stems from the fact that Vladimir Putin rescued Crown Prince Mohammed bin Salman in 2020. At that time, US President Joe Biden had promised to make Saudi Arabia a “pariah” following the elimination of columnist Jamal Khashoggi.

Mr. Putin took the opportunity to woo Saudi Arabia with a view to reconciling it with its Iranian neighbor. The two regional powers have since lanced the boil and joined together the BRICS, an organization that openly calls for getting rid of the dollar.

Like other Gulf states, Saudi Arabia sells its oil exclusively in dollars. This is the famous petrodollar system. This system allows the United States to enjoy a strong dollar despite a chronically deficit trade balance.

But times are changing. In January 2023, Saudi Arabia declared itself ready to accept other currencies such as the euro and the yuan. China is ready. It has been several years since it has invited Gulf countries to sell some of their oil on the Shanghai markets, in yuan (convertible into gold).

However, Arab countries are wary of Western sanctions. This is why Saudi Arabia is getting rid of US debt and closely monitoring new international payment network projects (mBridge) that could offer an alternative in case of disconnection from the SWIFT network.

Peace or Chaos?

We will see the result of the US election (November). Knowing that Joe Biden once again made belligerent remarks during the last NATO summit:

JUST IN: 🇺🇸 🇷🇺 US President Joe Biden officially threatens Russia at NATO Summit.

"Ukraine can and will stop Putin" with the full support of NATO. pic.twitter.com/DJaPNg4bXN

— BRICS News (@BRICSinfo) July 9, 2024

Fortunately, Hungarian Prime Minister Viktor Orban keeps hope for a cessation of hostilities. He recently visited Kiev, Beijing, Moscow, Washington, and Mar-A-Lago…. Here is an excerpt from his statements during his press conference with Vladimir Putin:

“Peace is what Europe needs most. We consider the fight for peace as the main task of the next six months of our presidency of the European Council. […] It has now been two and a half years living in the shadow of war. […] This war is already affecting our economic growth and our competitiveness. Generally speaking, as I told Mr. President [Putin], Europe needs peace.”

To which the Russian president replied:

“Russia is in favor of a complete and definitive end to the conflict. As I have already said, the conditions for this end are set out in my speech given at the Ministry of Foreign Affairs. One of the conditions is the complete withdrawal of all Ukrainian troops from the Donetsk and Luhansk People’s Republics and the Zaporozhye and Kherson regions.”

L'une des conditions russes pour mettre fin à la guerre est le retrait des troupes ukrainiennes de ces quatre régions : pic.twitter.com/ZmIiNCIguN

— Nicolas Teterel (@NTeterel) July 10, 2024

Faced with these gestures of goodwill, even though the conditions are harsh for Ukrainians, the United States responded with escalation. Secretary of State Anthony Blinken announced this Wednesday that F-16 fighters were on their way to the front.

British Prime Minister Keir Starmer has given the authorization to fire his missiles deep into Russian territory. At the same time, Zelensky and Polish Prime Minister Donald Tusk announced that Poland would intercept Russian missiles directly from Polish territory.

Polish General Wieslaw Kukula stated that “the Polish army must prepare for a large-scale conflict”…

“The greatest risk would be for Russia to win in Ukraine; we cannot allow it”, declared the NATO secretary this Wednesday.

Let’s hope the old continent regains its senses soon.

From Petrodollar to Bitcoin

It is important to understand that the wars in Ukraine and Palestine are not just territorial conflicts. They are only the military part of a larger struggle. Russia, provoked by the Maidan coup and the promise to bring Ukraine into NATO, seized the opportunity to sound the BRICS’ revolt against US imperialism.

The strategic objective is now to hit where it hurts, that is, by getting rid of the dollar. The United States may need to accept abandoning their “exorbitant privilege” for lasting peace to return.

The fact that Donald Trump rejects the unipolar world order and the globalist projects is a reason for optimism. A multipolar world is exactly what Russia and China are demanding.

This is where Bitcoin comes into play. It offers a solution so that all nations can trade on equal terms. Bitcoin could be the pivot/standard currency in which all countries settle their exchanges. Trade surpluses would then be placed in Bitcoin.

In this regard, Donald Trump‘s change of heart is a good omen. Here’s what he said this week:

“They hate Bitcoin because they can’t control it. I’m a big fan of Bitcoin. I will support the US dollar with Bitcoin.”

The world wants a stateless reserve currency as well as a payment system from which no one can be expelled. This is what Bitcoin represents, which also has the advantage of being an absolute store of value (21M).