US sanctions on Russia could mark demise of dollar: Ron Paul

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US sanctions on Russia could mark demise of dollar: Ron Paul

Former US congressman Ron Paul

US sanctions against Russia could force the international financial system to reduce its “exposure” to the dollar, setting the stage for its “eventual demise,” says former congressman Ron Paul.

The United States has imposed several rounds of sanctions on Russia to force President Vladimir Putin to end his support for pro-Russian forces in eastern Ukraine.

In addition, Washington has mounted pressure on the European Union to help implement US sanctions against Russia and also impose sanctions of its own.

“The US government’s decision to apply more sanctions on Russia is a grave mistake and will only escalate an already tense situation, ultimately harming the US economy itself,” Dr. Paul writes in an article published on The Ron Paul Institute for Peace & Prosperity.

“While the effect of sanctions on the dollar may not be appreciated in the short term, in the long run these sanctions are just another step toward the dollar’s eventual demise as the world’s reserve currency,” he argues.

Dr. Paul explains that “given the amount of business that European banks do with Russia, European sanctions could hurt Europe at least as much as Russia.”

The former US presidential candidate says the European financial system is becoming increasingly “fed up” with Washington for prosecuting European banks and “fining them billions of dollars for violating existing US sanctions.”

“As the burdens the US government places on European banks grow heavier, it should be expected that more and more European banks will reduce their exposure to the United States and to the dollar, eventually leaving the US isolated,” Paul argues.

“Attempting to isolate Russia, the US actually isolates itself,” he adds.

In addition, Paul suggests that Western sanctions will drive Russia ever closer to the BRICS bloc (Brazil, Russia, India, China and South Africa) whose combined economic output is almost equal to the US and EU.

“Russia is one of the world’s largest oil producers and supplies Europe with a large percent of its natural gas. Brazil has the second-largest industrial sector in the Americas and is the world’s largest exporter of ethanol. China is rich in mineral resources and is the world’s largest food producer,” he notes.

“Already Russia and China are signing agreements to conduct their bilateral trade with their own national currencies rather than with the dollar, a trend which, if it spreads, will continue to erode the dollar’s position in international trade,” Paul says.

“Perhaps more importantly,” he adds, “China, Russia, and South Africa together produce nearly 40 percent of the world’s gold, which could play a role if the BRICS countries decide to establish a gold-backed currency to challenge the dollar.”

The former congressman further criticizes US policymakers for failing to understand that their heavy-handed approach of “stick and no carrot” will only lead to more countries “shunning the dollar and accelerating the dollar’s slide into irrelevance.”

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