The basic assumption of economic & political forecasting is that every country will act in its own self-interest. Such reasoning is of no help in today’s world.
For more than a generation the most prominent U.S. diplomats have warned about what they thought would represent the ultimate external threat: an alliance of Russia and China dominating Eurasia. America’s economic sanctions and military confrontation have driven these two countries together, and are driving other countries into their emerging Eurasian orbit.
Although American economic and financial power was expected to avert this fate, U.S. diplomats themselves have chosen to end international dollarization.
- The recent escalation of U.S. sanctions blocking Europe, Asia and other countries from trade and investment with Russia, Iran and China has imposed enormous opportunity costs on U.S. allies.
- The recent confiscation of the gold and foreign reserves of Venezuela, Afghanistan and now Russia, along with the targeted grabbing of bank accounts of wealthy foreigners, has ended the idea that dollar holdings are a safe investment haven when world economic conditions become shaky.
- U.S. officials are forcing Russia, China and other nations not locked into the U.S. orbit to see the writing on the wall and overcome whatever hesitancy they had to de-dollarize.
Nobody thought that the postwar 1945-2020 world order would give way this fast. A truly new international economic order is emerging, although it is not yet clear just what form it will take. The confrontations resulting from “prodding the Bear” with the U.S./NATO aggression against Russia has passed critical-mass level. It no longer is just about Ukraine. That is merely the trigger, a catalyst for driving much of the world away from the US/NATO orbit.
These consequences cannot really be deemed “unintended.” The consequences were anticipated. The neocons in control of U.S. foreign policy simply didn’t care. American politicians are forcing foreign countries to replace the IMF, World Bank & the other strongarms of U.S. diplomacy.
The energy and food price squeeze is hitting Global South countries especially hard, coinciding with their own Covid-19 problems & the looming dollarized debt service coming due. Something must give.
