Opinion by Mathew Carr
I’m liking this debate on X comparing the deployment of US dollar policy to the behavior of an abusive husband.
The key example cited by Kathleen Tyson is Iraq, where after invasion the US apparently required the Asian nation to send money from its oil sales to an “frozen” account at the New York Fed, where the US could deliberately “choke” money flow … if Iraq “got out of line”.
The cradle put it like this a year ago: https://new.thecradle.co/articles-id/1570
“In an effort to combat rampant corruption in Iraq, the US has implemented several strict measures, including sanctions on Iraqi banks and the rationing of dollars. Rather than dissuade smuggling and fraud, the measures are only exacerbating Iraq’s economic crisis.”
At the COP28 climate meetings last month, Iraq spoke out about unfair focus on fossil-fuel emissions and criticized developed countries: see the IISD document below: “IRAQ called for developed countries to keep to their commitments considering equity and their historic emissions, and underscored reservations with regard to the focus on fossil fuels as sources of emissions.”
Tyson’s Iraq example is cool because it shows how the US uses oil and the dollar to further its geopolitical and financial interests: in this case Iraq but it’s also relevant in the current Gaza violence by Israel, which is creating regional instability and boosting the oil price …Remember the US is the world’s largest oil producer by far and has massively boosted output since signing onto the 2015 Paris climate deal.
To encourage global collaboration on climate, the US needs to stop abusing its position as holder and creator of the dominant currency.
I include these snips, some of which my software made blurry:
In case you missed this last year like I did:
The US can afford to live beyond what its national GDP permits because of the dollar’s supremacy. However, this can give rise to global economic imbalances and vulnerabilities for countries that persistently run trade surpluses, including being trapped in exporting the international supply chain’s commodities or low-end products. Huge and persistent trade surpluses mean excessive domestic savings or suppression of consumption, resulting in less productive domestic investment and increasing foreign-exchange reserves in safe assets that are largely in dollars.
To borrow money cheaply in global markets and create it inexpensively domestically, then recycle dollars at higher returns, is one privilege granted to the US by its dollar. However, dollar privileges go beyond this.
The imposition of sanctions on Russia has triggered the fear of Washington using the dollar’s global dominance as a vehicle for its foreign-policy aims. Currently, the US has sanctioned approximately 40 countries. Some de-dollarization actions are in response to concerns over which country or enterprise will be the next sanctions target.
— Read on internationalbanker.com/finance/the-dollar-still-dominates-but-de-dollarization-is-unstoppable/
IISD