Sanctions and the crime of the dollar hegemony.

The USA has been on a sanctions spree, so to speak, targeting regimes ranging from the hermit kingdom of North Korea to the superpower Russia,and for reasons from political differences to as flimsy a cause as a country buying military weapons from Russia.The sanctions strength is that countries need the dollar for international trade,and so iunder Trump,the contemporary view is that the dollar has been weaponised.For every action,though,is a reaction,and the sanctions policy of Donald Trump’s USA has led to a global shift in the use of the dollar. For a perspective,Russia’s trade with China is only 46 percent dollar deneominated,the rest happening in national currencies or using the euro.India is entering into agreements with countries to trade in national currencies,.the share of the euro as a world reserve currency has risen from 20 percent of all currency reserves to now be in the region of 30 percent.China is increasing the use of it’s national currency,the yuan,even now with a digitial yuan,the first major currency to go digital.All this extra trade in alternative currencies,which include bitcoin,is at the expense of the dollar,and one major reason for this shift is that governmennts are afraid of us sanctions policy of the USA, which has leaned on the indiscrimainate,so that any country or multinational corporation can be a target. There is a wave of backlash against dollar hegemony,which has made it a crime that is currently being prosecuted in the courts of economic functioning,. Recently,the French multinational total had to abandon lucrative oil contracts in Iran because the USA threatened to sanction any foreign company doing business with Iran after withdrawing from the JCPO Act.This means companies are being forced to forego profits for fear of sanctions.Europe on the other hand has proved incapable of fighting to protect her companies from USA sanctions.Against USA sanctions,Europe has proven to be spineless.This has created an environment of terror in the economic sphere.The reasons the sanctions are so effective is the dominant role of the dollar in world economy,where for every dollar denominated transaction,it has to be cleared by a USA bank at some point,giving the USA government immense leverage to decide which transactions to approve and which not to.This would offcourse not be the case if the word didn’t have to use the dollar,which is what the rise of alternative currencies is attempting to achieve. An interesting development is that countries around the world are getting resistant to sanctions pressure,blunting their effect,in part because of development of alternative partnerships.The sanctions are aimed at cutting the economic lifeline of the target country,usually by curtailing investment by western governments and corporations, and stopping technology transfers from the west which can cripple certain industries.So targeted countries have adapted by finding alternative sources of investment to western ones,and developing their own technology to replace what they are losing from the west.Because of the existing geopolitical rivalries,China is increasingly playing the spoiler for the USA sanctions regime,supporting targeted countries with financial investments,negating the effect of the sanctions.This has especially been successful with Russia,where Chinese investments have made up for the shortfall in western investment.Similarly,cooperation on the technology front have blossomed,with the two countries even naming 2020 and 2021 the year of technological innovation in both countries.Huawei is rolling out it’s 5G in Russia,among other aspects of technological cooperation,and there are partnerships for artificial intelligence development between the two countries.Iran is in the process of signing a 25 year deal with China,an oil for investments deal,which would make USA sanctions against her useless.But china has also suffered under USA sanctions,being sanctioned for purchasing su35 jetfighters and the s400 air defense system from Russia.They have had little effect.Sanctions threat has also not prevented Egypt from going ahead with the purchase of su 35’s from Russia,or turkey and India buying the s400 air defense system.It is a paradox,where the sanctions are economically crippling when applied but more and more countries are willing to rebuff them.This behavior is fueled by sovereignty concerns and issues of national pride and independence. Without a doubt,the strength of the us dollar as a reserve currency is under question,and how long the dollar hegemony,the crime of the world economy,can last is a matter of debate.This has in large part been caused by the sanctions policy regime of the USA,where the world has been forced to seek economic alternatives to a us dominated system.Some have even argued that this has led to a peaceful rise of China,a change of guard as the us empire gives way to the new hegemony.This is however the story of another post.

  Author:Lion mambo.