Backlash against Weaponized Dollar Is Growing across The World
The comments below are an edited and abridged synopsis of an article by The Business Standard
Around the world, a backlash is brewing against the hegemony of the US dollar.
Brazil and China have struck a deal to settle trade in their local currencies, seeking to bypass the dollar. India and Malaysia are ramping up usage of the rupee in cross-border business; the Association of Southeast Asian Nations and BRICS too. Even US ally France is starting to complete transactions in yuan.
Currency experts don’t want to sound like they are predicting the dollar’s demise, and yet in observing this sudden wave of agreements aimed at sidestepping the dollar, they detect the sort of action, however gradual, that was typically missed in the past.
For many global leaders, their rationales for taking these measures are similar. The dollar, they say, is being weaponized, used to push America’s foreign-policy priorities—and punish those that oppose them.
Nowhere has that been more evident than in Russia. The Biden administration has imposed sanctions, frozen hundreds of billions of dollars of Moscow’s foreign reserves, and all but ousted the country from the global banking system. For much of the world, it’s a stark reminder of their own dependency on the dollar.
This is the dilemma Washington officials face: By increasingly relying on the dollar to fight their geopolitical battles, not only do they risk denting the dollar’s place in world markets, but they could undermine their ability to exert influence globally. To ensure long-term efficacy, sanctions are often better left as a threat.
