For decades, the people of the Soviet Union craved the dollar, a sign of stability and the prosperity they dreamed of in the West. Now the dollar is on the outs in most former Soviet states. It's just the latest sign of the dollar's creeping decline as currency numero uno, a leading economist has told the Informant. Russia, with the globe's third largest currency reserves at $443.7 billion, is already moving away from the dollar to a wider basket of currencies. Not coincidentally, Russia along with China have been leading the charge for a new world currency.
In announcing the results from its poll, the Gallup polling agency said "the dollar is not king in most former Soviet nations."
It found in 12 of 15 countries, people polled would rather hold their wealth in their own local currencies or the euro.
The people of Turkmenistan, a Central Asian tyranny bubbling with natural gas and oil, are quite satisfied with their currency, with a poll high of 79 percent voicing allegiance to the manat.
The dollar? For Turkmen, only 12 percent said they prefer to hold their money in dollars. The euro, at least in Turkmenistan, did even worse, with only 3 percent favoring it.
Others faithful to their own moolah, are the Azerbaijanis at 69 percent, Armenians at 53 percent, and Kazakhs at 41 percent.
Those who hold their nose to their own money are led by the people of Belarus and Estonia.
EU-member Estonia, not surprising, has a high of 47 percent who choose the euro. That jives with the other Baltic EU members, Latvia at 53 percent and Lithuania at a high of 56 percent.
It's not all doom and gloom for the dollar.
It's still quite popular, according to Gallup, in Uzbekistan and Belarus, two of Eurasia's more democracy-challenged regimes that you'll find.
The dip in popularity in the former Soviet space is not surprising at all to Julian Mayo, of London's Charlemagne Capital.
In exclusive comments to the Informant, Mayo said, "This is all symptomatic of the decline of the dollar as by far the dominant currency."
Some proof? On December 31, 1999, the International Monetary Fund estimated the share of dollar-based assets held by governments, excluding the United States and China, was 74.9 percent. However, on September 30, 2009, it dipped to 70.2 percent.
Mayo puts blame for most of the dollar's current woes on the Obama administration's decision to flood the market with greenbacks in hopes of spurring consumer spending, the Alpha and Omega of the U.S. economy.
"The US wants to engineer a renewed consumer cycle, which means more dollars. The Eurozone is taking a more cautious stance, thereby preserving to a greater extent the value of the Euro," said Mayo.
"Some CIS countries – notably Russia – also have very low debt levels and high FX reserves, so it’s not surprising that Russians prefer their own currency to the US dollar," adds Mayo. "I would also expect currencies like the Brazilian Real or the Chinese RMB to be strong in the long term, therefore popular."
Mayo said the dollar's demise will be gradual, like boiling a frog in a pan.
"This high-stakes game has to be played out gradually – a dollar rout would undermine countries’ FX reserves (most of which are still in dollars) – as well as the willingness of those nations to continue to finance the US savings shortfall," Mayo explains.
Russia is already taking steps to mix up its bag of national loot.
In a shocker, the Vedmosti newspaper reported in May that Russia's had effectively dumped the dollar as its reserve currency.
It said the country's Central Bank had upped its euro holdings to 47. 5 percent, while U.S. dollar assets amounted to 41.5 percent.
The report also noted a fact many Americans are probably unaware of: the feared Russians are more and more footing the bill for U.S. profligacy.
Russia increased its investments in the debt securities of the US Treasury from $32.7 billion as of December 2007 to $116.4 billion as of December 2008.
Russia is now literally scowering the globe, sniffing for currencies with some financial backbone.
And they're looking at the dollar. But not the one with Washington's mug, but a potrait of an Australian aboriginal writer, and the Canadian looney.
Not surprisingly, Russian President Dmitry Medvedev has been out and about campaigning for a new currency, or the little understood, special drawing rights, at least to us laymen.
At a G8 summit back in July, Medvedev pulled out of his pocket a sample coin of a "united future world currency."
You can watch him display it here.
Might sound pie-in-the-sky now, but as the dollar continues its downward spiral it could become reality, and sooner than we think.