Weaponizing the US Dollar Is Accelerating Global De-Dollarization

FEDERICO PIERACCINI

Weaponizing the US Dollar Is Accelerating Global De-Dollarization

Donald Trump has in just over two years abandoned the Trans-Pacific Partnership (TPP), ditched the Transatlantic Trade and Investment Partnership (TTIP), withdrawn the US from the Paris climate agreement, and unilaterally removed American participation in the Iranian nuclear agreement known as the Joint Comprehensive Plan of Action (JCPOA).

Some of these decisions have undoubtedly received popular support from far beyond America’s shores. Washington’s withdrawal from the TPP was welcomed by the People’s Republic of China. During the Obama presidency, Xi Jinping strongly protested the exclusion of Beijing from the TPP. In the case of the TTIP, European allies for the most part were strongly opposed to the treaty because European multinationals would be subjected to sanctions and fines from American authorities.

The climate agreement, placing important limits on CO₂ emissions as well as imposing regulations governing pollution, has been strongly resisted by US energy oligarchs. The withdrawal from the Paris accord has satisfied a substantial proportion of Trump’s donors linked to the hydrocarbon industry and beyond. Finally, the abandonment of the JCPOA was praised by Riyadh and Tel Aviv, two essential partners in Trump’s domestic and foreign strategies.

Observing the consequences of these political choices in the months since, it is easy to see how the world has reacted in a more or less similar fashion, which has been by ignoring the United States and emphasizing cooperation amongst themselves. The TPP, with its agreements between 11 countries, has remained in place without Washington. The development of relations between ASEAN and China continues on without Washington’s participation. While the TTIP has been halted, the Comprehensive Economic and Trade Agreement (CETA), is in its final approval stage, an agreement between Canada and the EU that bypasses the American-inspired TTIP. The Iran deal remains in force despite Washington’s cowardly withdrawal, and the five countries remaining in the Iranian nuclear agreement have every intention of respecting the JCPOA, which had been negotiated over a number of years.

In addition to withdrawing from the above treaties, Washington has started a serious trade war and is imposing tariffs on allies and enemies alike. From Russia to the EU, as well as China, South Korea, Japan and Turkey, everyone is facing the unprecedented decision to apply tariffs on trade. In Trump’s mind, this is the only way to balance a trade deficit that has now reached more than 500 billion dollars.

In addition to the dismantled treaties and imposition of tariffs, Trump strongly criticized some pillars of the post-World War II liberal order, such as NATO and America’s European allies themselves. The suggestion that NATO may be obsolete has shaken the European capitals to their core, even as the Russian Federation may see it as signalling the prospect of positive relations with the United States. Later it was understood that Trump’s strategy was to present himself before his electors with tangible achievements, in this case a substantial increase in military spending by NATO countries in Europe. Trump wants a commitment of 2% of GDP to be spent on defense, and NATO’s leaders are now agreeing on the need to invest more money.

Finally, the devastating blow came with the abandonment of the Iranian nuclear agreement, creating significant tensions with European allies. Washington has decided to impose sanctions on companies that do business with Tehran from November 2018. The EU immediately passed a law to shield EU companies from American fines, but many French and German companies appear to have already abandoned their projects in Iran, fearing Washington’s retribution.

Trump even began directly targeting historical allies, first strongly criticizing May in the UK over the slowness of Brexit, then Erdogan’s Turkey for the purchase of the S-400 system as well as the detention of an American pastor (accused of having participated in the attempted coup of 2016), and giving the green light to Saudi Arabia for its commercial and political war with Qatar, a close ally of Turkey…….more here

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