US weaponizing dollar through sanction impositions: US economist
3 Min Read
Economist Jeffrey Sachs describes US sanctions as "absolutely incorrect" and a violation of international law.
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Economist Jeffrey Sachs speaks at the 2018 Global Citizen Festival in Central Park on Saturday, September 29, 2018, in New York. (AP)
The United States has weaponized the dollar rather than use it as an exchange medium or a "store of value", Jeffrey Sachs, a public policy analyst and award-winning economist, said.
Sachs made his remarks via video-link during a BRICS meeting of finance ministers and central bank governors held in Moscow to discuss the development of the global monetary and financial system, where he said that the US is weaponizing the dollar by seizing Russian assets, as well as freezing Iranian, Venezuelan, Afghan, and other state funds.
According to Sachs, the dollar cannot be utilized for payments when a president can unilaterally sign orders and essentially take billions in Russian assets, thereby turning the currency into a tool for a more aggressive form of policy.
"I’ve said to my own government for the last 15 years ‘Stop doing it, this is crazy, it will destroy trust in the dollar.’ You can’t go on with the system like this, it’s not just Russia," he remarked.
He further noted that China aims for normal trade without the risk of US sanctions. However, even though Chinese banks are part of the SWIFT system, they must comply due to the fear of being excluded from the international financial network.
Sachs then asserted that alternatives are needed, suggesting that "countries need non-dollar payment mechanisms. We are going to need some quick, special-vehicle entities that are not also engaged in the dollar payment systems... entities that cannot be directly sanctioned..."
"The best alternative would be if the US recovers sense, decency, and legality and stops imposing unilateral sanctions," he also stated, emphasizing that US sanctions are not only incorrect, but also violate international law and the UN Charter.
Sanctioned countries rid dependence on dollar
The United States has long been notorious for abusing its sanctioning power. However, sanctioned states have recently shifted from enduring financial and economic punishment to adopting financial systems that are independent of the US dollar.
Most recently, Iran revealed that it is working to establish independent payment systems with Muslim countries to bypass US sanctions that hinder international and regional trade.
At a summit of the Organization of Islamic Cooperation (OIC) in Istanbul, Iran’s central bank governor, Mohammad Reza Farzin, discussed creating bilateral and multilateral payment systems with other OIC member nations.
"This issue has never been raised at a multilateral level ... we are seeking to have it implemented with member countries of the OIC," said Farzin.
The goal is to facilitate trade using national currencies and reduce reliance on US dollar-based systems, which are affected by sanctions.
Iran has already implemented similar systems with members of the BRICS group, such as Russia, to mitigate the effects of sanctions on its economy.
Read more: Maduro says fresh US sanctions on Venezuela 'grave mistake'
