By F. William Engdahl 4 October 2010
The embattled Euro has gotten a surprise boost from an unexpected quarter―China. The country with the world’s largest foreign exchange currency reserves, China, has pledged to support Greek debt as well as the Euro in what is clearly a geopolitical decision. In doing so, China has signaled it seeks to prevent the US financial warfare attack on Europe and to play the EU off against the USA in a geopolitical chess game of a fascinating dimension.
Chinese Prime Minister, Wen Jiabao, on an unusual visit to tiny Greece, a country which normally would never warrant such a high-level visit from the world’s fastest growing economic giant, has pledged support for Greece and for the Euro. According to the official Chinese Xinhua News Agency (and China Daily), “China supports Greece in firmly carrying out structural reforms and cutting its fiscal deficits to improve competitiveness. China welcomes the EU and the IMF's rescue package for Greece and stands ready to help Greece out of recession.”
What it means concretely was made clear by Wen Jiabao at a press conference in Athens when he stated, “‘China is holding Greek bonds and will keep buying bonds that Greece issues. We will undertake to support eurozone countries and Greece to overcome the crisis.” The last statement is far the most significant. It indicates that China has made a strategic decision to counter any future attempt by US-based hedge funds and banks to attack the weak countries of the Eurozone, including Ireland, Spain, Portugal or Greece. Early this year, as we noted at the time, Wall Street banks such as Goldman Sachs, working in tandem with the US-based credit rating agencies, Standard & Poors and Moodys and Fitch, exploded the Greece financial crisis at the precise time China and other major investors were beginning to have serious doubts about the fiscal stability of the United States and of the dollar.
Let me be clear. The Euro as it stands, the supranational European Central Bank and the EU approach to international financial stability is not merely a flawed construct. It is inherently programmed to crises. It was born as the product of flawed rotten political compromises in te 1990’s through the Treaty of Maastricht as an attempt by France and Italy and Britain to control an emerging German economic colossus after German unification.
However, the concerted attack by a group of New York hedge funds such as George Soros’ and Paulson’s earlier this year and the precisely timed credit downgrade of Greece to “junk” status were part of a concerted US strategy of financial warfare against that Eurozone, the only potential alternative to the dollar as world reserve currency. Should the US dollar lose its status as the world leading reserve currency―today it still counts for some 65% of central bank currency reserves―the United States would be ultimately doomed as world sole Superpower.
Now the surprise announcement by China of plans to support Greece and the euro give an unexpected boost to the embattled country and to the euro and expose the dollar even more to possible selloff.
Greece desperately needs foreign investment to help it meet terms of a €110 billion bailout from eurozone members and the international monetary Fund that saved it this spring from state debt default.”I am convinced that with my visit to Greece our bilateral relations and cooperation in all spheres will be further developed,” Wen said on his way to Brussels for an EU-China Summit.
Like most things that China does these days, it is part of a shrewd political calculation. Greece has agreed to support EU recognition of full market economy status for China within the EU, while China agrees to back Greece’s call for UN mediation over Cyprus. The two countries will cooperate on development as well of Piraeus Pier, upgrading it to a distributing and transfer center for Asian exports to Europe, the Mediterranean, and the Black Sea.