Episode Transcript
[00:00:00] Speaker A: I'm Afshin Ratansi and this is New Order broadcasting globally including to nearly one and a half billion on RT India. That's India where today in 1920, one of the greatest mathematicians in history Ramanujan died at the age of 32 in Tamil Nadu. On this program we examine how India and the wider global south are calculating on a world of competing financial and geopolitical systems. Are we witnessing a genuine shift toward a multipolar order or a recalibration of existing power?
Tehran continues to be the epicenter for the current geopolitical earthquake. The Trump, Netanyahu wars on Iran and Lebanon that have killed wounded or displaced millions of civilians. At the same time, India's strategic positioning is unfolding across multiple fronts. Defense Minister Singh arrived in the economic basket case Germany for a three day visit. The aim was to deepen war cooperation with the Indian navy potentially spending $12 billion submarines that critics question in the age of underwater drone warfare. This is mutual cooperation. Agreements were compounded between India and China at Delhi. Shanghai Cooperation Organization meetings with Russia. India continued to negotiate S400 missile deliveries and new Pantsir anti drone defense systems. And all that comes after ratification of a military deal between Moscow and Delhi for Arctic access. But as well as the millions killed, wounded or displaced by Trump's war, billions have been pushed into hardship by higher energy prices. The UN Claim that reported war on Iran funding could have saved 87 million lives if allocated to helping people instead of killing them. It added that In India alone, 354 million may be pushed into poverty that Trump and Netanyahu stop bombing instead of the 351 million today.
Later in the program, New Order's Zahra Khan will bring us your questions and we'll answer as many as we can. Right now I'm joined by bestselling author and former financial war games advisor to the Pentagon, Jim Rickards. He's the author of Currency wars, the Death of the Road to the New Great Depression, Sold out and moneygpt and he's in New Hampshire. Jim, welcome to New Order. So clear that Iran aren't going anywhere. They defeated U. S backed Iraq, Saddam Hussein, their Soleimani defeated U. S backed ISIS and Al Qaeda. Are there grave dangers though that the global south now face regardless of how the Trump war ends?
[00:02:36] Speaker B: Well, there are a number of dangers. Ashman, great to be with you and your audience. The biggest danger and it's front and center. It's happening now is the Strait of Hormuz is closed now.
When you do intelligence analysis, I always
[00:02:50] Speaker A: Say it's open to some vessels that pay the toll.
[00:02:54] Speaker B: Well, that's not clear.
The Iranians have let certain vessels go through. You signal the Iranians, you tell them who you are, they put you on a list, they approve you, you pay a toll and you allowed through. But no sooner do you get through than a day or two later you're turned around or seized by the U.S. navy, either Marine, U.S. marine seizures, or in some cases, they're actually targeting the vessels and hitting them with missiles. So you're right, a very small number of vessels have got through the Iranian chokehold, but then they encountered the US Navy and maybe one or two got through. That's certainly possible.
[00:03:31] Speaker A: But there are official figures that it's scores of ships are getting through. I mean, Iran have announced with great fanfare the amount of money coming through to them. And some people have been talking about how you can hug the coast from the Strait of Hormuz around Pakistan to Mumbai from Kashmir.
[00:03:46] Speaker B: Yeah, smuggling is as old as civilization. I don't doubt that a couple get through, but you're talking about a conduit that usually does 120 vessels per day.
So if you say 10 got through, that's fine, that's possible. But the U.S. navy's waiting for you when you get into the Arabian Sea.
But my point is this is not. I don't see anything changing this in the short run. So everything else is noise. So J.D. vance going to Islamabad, that's noise.
Iranians boycotting the peace talks, that's noise. The ceasefire is noise.
Iranian threats of retaliation if the US resumes bombing, it's all noise. I'm not saying it's not important if you happen to be on the wrong end of the bomb, but it's all noise, the signal. Because you're separating noise and signal. The signal that counts is the Strait of Hormuz is closed. It's been closed for 56 days.
I don't see what's going to open it for the foreseeable future. At some point, sure, things will change, but not for the foreseeable future. 20% of the world's oil energy, a high percentage of the world's. Well, 20% of the world's liquid natural gas, it's not going anywhere.
Only certain vessels can get past the Iranians, and those that do cannot get past the US Navy. Again, maybe a few exceptions, but basically. And you say, well, why hasn't kind of the world come to an end? Why haven't industrial economy shut down already if this has been going on for going on eight, nine weeks, which it is, which it has.
The answer is there were a lot of vessels outside the Persian Gulf when the war started on February 28. So I call it a floating pipeline. There were oil tankers headed for South Korea, Japan, Australia, New Zealand, Malaysia and others, and India.
And they've been unloading. Well, the last ones have now unloaded. It takes two to three weeks to get from the Persian Gulf to South Korea. So for a while you had new arrivals and they were filling up storage tanks, et cetera. But that has now dried up. That floating pipeline has gone to zero.
There's nothing more on the way.
And now it's really just now, nine weeks into this, where we're going to start to see refineries shut down, industrial plants shut down. New Zealand has no natural resources, at least no oil or natural gas. They're 100% dependent on imports, and the pipeline has dried up. So we're going to start to see the impact beginning about now.
[00:06:00] Speaker A: That's throughout the world, let alone just the Global South.
[00:06:04] Speaker B: Well, that's correct. As for the Global south, they have that problem which we just described, which is energy inputs, but also they're very dependent on when nitrates come from the Persian Gulf and they're used for fertilizer. Basically, this is the planting season in a lot of the world. And if you can't get those nitrates and you can't fertilize the field, you can't plant your crops, you're looking at potential mass starvation on top of the industrial impact in terms of shutting down refineries and industrial plants. And by the way, when I say shut down, this is not like throwing a switch where you can turn it back on again. If you shut down a refinery because you don't have inputs, you don't have the oil to create the refined product, it takes weeks or months to gear it back up again. As I say, you can't just throw a switch. You've got temperatures and pressures and a lot of fine tuning that has to go on. So even if the Persian Gulf opened tomorrow, which it will not, but if it did, it could take weeks or months to get, as I say, refineries going again. But if this blockage continues, which I expect it will, then that situation will get much worse.
[00:07:10] Speaker A: The reason I was offering some skepticism as regards the number of ships that can get through and bypass the US Navy. The US Navy, after all, officially lost its boss last week when Trump fired him, is perhaps because you'd expect then, given what you just said that India and China, for instance, so reliant on supplies, would have been much more assertive on the world stage if the situation was as desperate as you made out.
That's why I was still, I was showing some skepticism there because if it was that desperate, they'd be saying a lot more than they are. Are they not getting the secret stuff out, bypassing the U.S. navy blockade?
[00:07:53] Speaker B: No, they're getting some from Russia that has been in the works actually since 2022, the beginning of the war in Ukraine, when the West, NATO and the US Put sanctions on Russian exports. Russia just pivoted and said, okay, if we can't sell it to Germany, we'll sell it to China. And so that relationship expanded, but it's not big enough yet to replace what we're talking about, which is basically the oil tankers and the seaborne cargoes.
China is in a very vulnerable position. Again, part of the reason you haven't heard more and it's a good question is what we just talked about, which is there have been deliveries since the end of February, but those deliveries right now are just starting to dry up again. One tanker is not going to power China for more than a day or a few hours at the most. They do have a pretty robust coal, coal generated power system. And they have a lot of coal. That's one thing they do have. And they're relying on that to some extent. But the problem is China is even more vulnerable than the Persian Gulf because the United States just struck a very high level military alliance with Indonesia, which controls the Strait of Malacca. And there's more Suan cargo going to China that goes through the Strait of Malacca than comes out of the Persian Gulf.
[00:09:07] Speaker A: Your understanding that's just a rumor that spread like wildfire when supposedly President Supianto from Indonesia was going to charge a toll on the Strait of Malacca.
[00:09:19] Speaker B: Well, he's, he's not, he's not charging at all. And I don't, I actually hadn't heard that. I'll add that to my rumor list. No, he's not charging at all. I'm saying he struck an alliance with the US and they can sit tight. But at this point, I mean, what you have to ask yourself is does Trump may want the Straits of Hormuz closed? He may want that, in other words. And actually the United States has said that even if Iran woke up tomorrow and said, hey, it's all good, you know, free, free commerce, anyone can go through, the US Navy is still sitting there and they' we're going to interdict Iranian vessels, vessels leaving Iranian ports, ghost vessels, so called shadow fleet, et cetera. If we think it's coming from Iran, we're going to interdict it whether the Iranians ease up or not. But the reason for that is what's going on. If you look at the bigger picture, Ashman, I think this is the key. So the United States has taken over Venezuelan oil by extension. We've got Guyana oil, we're opening up Alaska, we're giving drilling oil, natural gas drilling permits as fast as we can. We have the Gulf of America. The UN has taken control of the Panama Canal from China.
The Straits of Hormuz are closed. This is what J.D. rockefeller did. J.D. rockefeller was not a great oil explorer. What he did, he controlled transportation and he put his competitors out of business.
So what's happening is that the US and Russia are creating a global duopoly and cutting off the Persian Gulf supply. So if you don't have oil from the Persian Gulf, you can pretty much only get it from the US and Russia.
[00:10:46] Speaker A: Although of course, technically Russia has been supplying military equipment to Iran to force its ability to bypass the blockade. So you don't think that one byproduct is really the end of the petrodollar. It's working against them despite their supposed strategy of trying to control the strait. Actually, it's the end of the petrodollar because it's being bypassed as we speak.
[00:11:15] Speaker B: It's small amounts. It's really loose change. I mean, the petrodollar is actually getting stronger. I call it Petrodollar 2.0. By the way, I was in the White House working with Henry Kissinger's deputy when we set up Petrodollar 1.0 in 1974, was working on plans to invade Saudi Arabia, which was the. That was the stick. We had a carrot and stick. So Secretary William Simon and Jerry Parski had the carrot, which is, hey, Arabs, you charge, sell oil in dollars. And since everyone needs oil, that means everyone needs dollars. And that established the dollars, the global reserve currency after the end of the gold standard. This is Petrodollar 2.0, which is the only people who have oil are the United States and Russia. That can get out if you block the Persian Gulf. But this is my point. Trump wants the Persian Gulf closed so he can increase the power of U.S. exports. And that actually reinforces the role of the dollar.
[00:12:09] Speaker A: So from what you're saying there, I don't know what those people around the table would say today.
Some of them obviously no longer with us. When you were at that meeting for the petrodollar, how important is it then for Iran to react and Saudi Arabia GCT countries against this Trump policy?
I'm not sure whether you believe it's a conscious policy or it's a byproduct of a byproduct of Israeli policy.
How important is it now for GCC countries and China and India and the new order to react very assertively?
[00:12:47] Speaker B: Well, it's very important, except China is, well, I would say South Korea, Japan, Australia, New Zealand and China are in the most vulnerable position. So it's one thing to say how would they react is a very good question. But how do you react when you don't have the power. Now, the GCC does have the power of oil exports, but that's been choked off by first, you have to go through two toll booths. First toll booth is Iran. Second toll booth is the U.S. navy. The U.S. navy will let the GCC oil out, but Iran will not because it's heading to Western Europe.
[00:13:20] Speaker A: Tolls presumably.
[00:13:22] Speaker B: Well, no, it's a two factor test. One is do we let you out at all?
And then secondly, then pay the toll. You're right. You have to do both things.
But if that oil is going to, you know, to Germany or Rotterdam or, or Australia for that matter, will the Iranians let that car go out toll or no toll? Because they support the west, they support the United States. So that's the problem. And then again beyond that, the U.S.
yeah.
If an Abu Dhabi oil tanker got through the Strait of Hormuz, the US Navy is going to let that go unless perhaps if it's heading to China, we'll have to see. But again, this is, this appears to be intentional on the part of the United States that Trump is in no hurry to reopen the Strait of Hormuz because it strengthens the US Position and by extension, Russia. Russia is a big winner out of all this because the US has suspended certain sanctions on Russian oil exports. Those sanctions have been in place since 2022. Now, you're right, the Russians got around them pretty easily, but they're still in place. They still have some impact. They increase the expenses and the Secretary of the treasury has issued orders to suspend the sanctions, which lets Russia back into the game, at least as far as Europe and the west is concerned. So it looks like the only people with oil these days are Russia and the United States.
[00:14:48] Speaker A: Jim. We'll continue after the break. Keep watching. New Order.
You're watching New Order. Jim Rickards, you Were talking about how it could be intentional to close the Strait of Hormuz on Washington's part. I don't know whether you picked up on the fact that India previously pushed back against paying for Russian oil in Yuan.
It said no way are we paying in yuan for it. This again harks a little back to my skepticism about how much oil is actually getting through. And then the other day Sujata Sharma at India's energy ministry said to NDTV meeting our domestic need is the important thing for us.
State energy companies are operating within the rules.
India was fine importing Russian oil despite Washington and NATO nations telling them they couldn't. There seems to be a reticence about the fact that they may be paying for oil in yuan that as we were talking about in part one, it's difficult to ascertain how much is coming through.
[00:16:00] Speaker B: Well, that's right, but you can always just pay in dollars. The Russians will take them. They have their channels and the Indians have access to dollars without too much difficulty. India is really.
The Indian political class are really masters at diplomacy. I wish we had more diplomats in the us we seem to have a lot of warmongers. But India has for 75 years has done a very good job of balancing Russia and the United States. They've never been enemies with either. They've been closer to Russia for a long period of time, warmed up to the United States in Now there's a bit of a tariff fight going on. But Russia, or sorry India, has done a very good job of maintaining relations with both superpowers. So that's a credit to them. But yeah, they've bought Russian weapon systems and it sounds like they're in the market for anti aircraft systems but they'll also be able to pay for oil and dollars. The thing about paying in yuan, where is India going to get the yuan?
You can buy it on the markets I guess, but it's not that liquid and they don't export that much to China.
Yeah, exact where they would get paid in yuan, they don't want to anyway.
It's still a dollar based world ashram. I mean the yuan, Chinese yuan as a percentage of global transactions is about 3%.
The U.S. dollars in terms of reserve currency denomination, U.S. dollars about 60.
The euro is about 26, 27%. So the dollar and the euro together, 87%. Everyone else, yeah.
[00:17:32] Speaker A: I mean the show's called New.
There's that infamous graph of removal of US treasury bills from China's sovereign wealth funds as it were.
They've been reducing their amount of U.S. treasury bills. And I suppose we're all seeing this war in terms of how does it proceed. Are we getting intimations of the future from the Strait of Hormuz toll, as it were, Whether it be crypto, whether it be the dollar, whether it be the yuan.
[00:18:02] Speaker B: Yeah, you're getting informations, but the question is, what does it mean? So you're right. The Chinese holdings of U.S. treasury securities, that information is publicly available. We all have access to it. The United States treasury produces a monthly report and spreadsheet form and you can look at country and security and so forth and see what's going down. It has been going down a little, not massively, but yes, they have been selling Treasuries. But the narrative around that is this is de dollarization. This is the debasement trade. Get out of Treasuries, get out of the dollars, the end of the dollar, et cetera. That narrative is non.
They are selling them, but here's why. They're desperate for dollars. People talk about the dollar as a reserve currency. There are no reserve currencies. There are reserve assets denominated in a currency. The reserve assets are U.S. treasury securities. And yes, they're denominated in dollars, but they're not dollars. If you want dollars, you have to sell the Treasuries and get the dollars, get the cash. And then they're using the cash to prop up their own currency and to prop up their banks which have dollar loans which are going into default. So when you see China selling Treasuries, it doesn't mean they're dumping.
What it means is that they're short of cash. There's a global dollar shortage going on.
[00:19:10] Speaker A: Well, China doesn't say it once more, in fairness. And we don't know what the dollars are being spent on, presumably on their own infrastructure spending or around the world.
[00:19:21] Speaker B: Well, no, not really.
They don't need dollars for their internal infrastructure. They just pay everyone you want.
No, they're using the dollars to prop up their own currency on foreign exchange markets because they don't want it to go down too much and also to bail out their banks. So they do want dollars, but this is not dumping Treasuries. This is converting assets as securities into cash because they're desperate for the cash.
[00:19:48] Speaker A: Okay, so all of this perspective, by
[00:19:50] Speaker B: the way, so is the rest of
[00:19:51] Speaker A: it, all this perspective you're offering doesn't look very hopeful regarding any talk of a BRICS currency at the Delhi BRICS Summit later this year.
[00:20:02] Speaker B: There is BRICS currency. The BRICS have. The brics have a currency, it's called gold.
In other words, the idea of the brics launching a separate currency, they have the institutions.
They basically replicated the Bretton woods institutions on their own terms, most of them based in Shanghai. So they have the new Development bank, which is the equivalent of the World Bank. They have a contingent reserve fund which is the equivalent of the imf. They build their own payment channels, secure, which. It's all a bit slow.
[00:20:31] Speaker A: Is it? Do you think it's a bit slow to. Jim?
[00:20:34] Speaker B: I think they've come a long way in just five years. I mean these things.
Let's just say that you wanted the yuan to be the global reserve currency. You want that? Well, it has nothing to do with the currency. It has everything to do with the bond market. Show me the Chinese bond market. It scarcely exists. And even if you have it, do you have repurchase agreements, do you have futures, do you have forwards, do you have one issue trading, do you have primary dealers, do you have settlement and clearance? And do you have a rule of law? The answer to all those questions is no. So the key to being so called reserve currency is not printing money money, it's having securities that people want to invest in. And the Chinese don't have that. They're not even close. Could they do it in 10 years? I doubt it. 15 years maybe.
[00:21:13] Speaker A: Well, I mean in fairness, India, for instance, the big member in brics which is holding the presidency of brics, doesn't want Chinese Yuan as the new BRICS currency. Clearly it probably wants a new one which is gold.
But then perhaps other members of BRICS wouldn't want that given that India supposedly has the highest reserves of gold in the world, according to private holdings.
[00:21:37] Speaker B: Well, if you include private holdings, they have the most gold. I think that's correct. But officially it's a large amount, but it's relatively modest compared to the United States, Russia and China.
The big winner in gold is Russia and that's one of the ways they got through the whole Ukraine war, sanctions. Amira Nebulina, who's the head of the Central bank of Russia, we say she's the only central banker in the world who actually understands her job. She put 25% of Russia's reserves in physical gold bullion in safe storage. Russia. So it couldn't be basically seized by the United States. So that number at the beginning of the war In Ukraine in 2022, Russia had about $600 billion in reserves. 150 billion of that was in physical gold bullion and that has helped Russia weather the storm. Now US and EU and NATO seized about $200 billion of Russian treasury securities, Russian reserve assets and foreign treasury securities on in custody in Sedal and Brussels. I think that was completely illegal but they did it, it was frozen and that hurt Russia to some extent. But ironically this caused a run to the gold market. This is where the beginning of gold projectly tripling from about $2,000 an ounce up to 5,500 at the top.
[00:22:57] Speaker A: Now we're running out of time alas Jim, just finally on that point.
Surely inflation rises because of the war in Iran though mean that it's. I mean it'll be good if you're having a wedding in India because gold prices will go down. Will gold prices go down now as interest rates go up in response to the higher inflation caused by the war in Iran?
[00:23:20] Speaker B: The answer is no, because for a couple of reasons gold got smashed. It was 5,400, went down to about 4,600. It's made its way back to about 4,800 but it's on its way back up again. And that was because it was the same thing with China and the treasury securities. People were selling gold to get cash because they were desperate for cash to meet margin calls because they were losing money in other markets. That's over. Gold is on its way back up again as far as inflation is concerned. We're going to have inflation, there's no question about it. But it's not demand driven inflation. It's coming from the supply side.
[00:23:52] Speaker A: Yeah, but the central banks don't listen to that argument, do they? They just raise the interest rate.
[00:23:58] Speaker B: Well, they'll probably just hold them steady. They won't cut them. You're right about that. But the central banks are kind of impotent. They only affect the very short end of the market. So a one month bill, a three month bill maybe would be a little higher than it would be otherwise. The five year note, 10 year note, 30 year bond, German bonds, Japanese government bonds, those are affected by the market, not by the central banks and interest rates are going to come down a lot because this, this inflation driven by the supply disruption is going to cause a global recession.
You're going to watch unemployment is going to spike, factories are going to be shut down, output's going to be shut down, transportation is going to be affected negatively. That's what's going to happen. If we can't reopen the straight up and move it, I don't see that. I don't see the strait opening anytime soon.
[00:24:44] Speaker A: Thank you, Jim Rickards. We'll be sure to have you on as the war progresses.
[00:24:48] Speaker B: Thanks.
[00:24:54] Speaker A: Now I'm joined by Zahra Khan to answer some of your questions. Amazing to hear from Jim Rickards, the man who was in the room when Petrodollar 1.0 was invented, although he didn't believe that there's much oil being smuggled through.
[00:25:07] Speaker C: And so many of those questions have already been answered for our audience, but they have some more for you which you've not even heard before.
[00:25:12] Speaker A: No, I haven't heard them.
[00:25:13] Speaker C: The first one is from June RTCB who's asking, is Trump trying to break up bricks? The war seems to indicate that.
[00:25:20] Speaker A: Clearly Donald Trump wants to break up bricks. He said so on Truth Social. Before he had tariffs on BRICS countries, then he didn't. But the fact is Trump is visiting Xi Jinping. So how can he break up brics and still smile along with the head of the Chinese Communist Party? This isn't just a war in Iran. This is a war on brics.
[00:25:38] Speaker C: And Sourafi has asked, let's say BRICS succeeds in building alternative systems, will it affect how ordinary people save, spend or invest their money?
[00:25:47] Speaker A: That's a good question. I mean, Jim Rickards was talking about the fact that everything goes down to gold, which of course is great for India because as he said, no central bank has the reserve reserves of gold that Indian families do private in their home.
Surely they'll still be buying gold rather than any particular BRICS currency. But then again, the BRICS currency could somehow be tied to gold in a way that NATO nation currencies aren't. They're just political instruments which are wielded through sanctions and through other methods.
[00:26:21] Speaker C: So basically you're saying we should invest in more gold? Gold.
[00:26:25] Speaker A: I'm not going to give investment advice. It's dangerous, isn't it, that gold went down a little anyway during the latter stages of the war, the medium stages of the war. We don't know where the Iran war is at now.
[00:26:36] Speaker C: And finally, somebody who's asked questions before as well, Christopher Dobby. Why is the world, those not subject to American domination, so quiet about the state of things?
[00:26:46] Speaker A: Yeah.
Which parts of the world aren't subjected to American domination? That's what I want to ask Mr.
Dobby. I suppose there are some places, places in the middle of the rainforest. Oh, no. There are huge American conglomerates that own parts of that which is chopping down the rainforest. There is nowhere on earth that hasn't been touched by American capitalism. And this war and the way the United States have waged it has created a situation where there is no living thing on earth that is not affected by Trump and Netanyahu to their detriment, but hopefully in the future to some sort of positive outlook.
[00:27:23] Speaker C: Thank you for your answers, Afshin. I mean, these questions just keep coming in every week. So we'll continue this next time.
[00:27:28] Speaker A: Sarkhan, thank you. And that's it from me. Afshin Ratansi on New Order. Remember to follow us on social media. And here's a question for you. Will the US War on Iran be the beginning of the end of the petrodollar? Send us your answer on Xeworder tv. Join us every Sunday as we continue to track shifting global power and where India sits in this New Order.
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