US economy 'too strong' for sanctions to undermine dollar: Treasury

By Al Mayadeen English
Source: Agencies
23 Feb 2024 22:54

US Deputy Treasury Secretary Wally Adeyemo said that the strength of the US economy ultimately determines the role of the dollar in the global economy.

Deputy Treasury Secretary Wally Adeyemo speaks alongside from left, Brian C. Turner, FBI associate deputy director, Deputy Attorney General Lisa Monaco, during a news conference at the Justice Department, Jan. 18, 2023, in Washington (AP)

During a panel discussion with the Council on Foreign Relations on Friday, US Deputy Treasury Secretary Wally Adeyemo stated that the strength of the US economy prevents it from being undermined by the implementation of sanctions.

"My view about this question of whether the use of sanctions is going to lead to some challenges to the dollar is that the thing that's going to matter to the dollar's role in the global economy is the strength of our economy ultimately ... I feel good about the fact that the dollar, America's financial system, is going to remain dominant in the world, and we're going to make sure that we take sanctions as a tool to be used in a way that is targeted and multilateral in order to make sure that they are effective," the Treasury official said.

This comes shortly after the US announced 500 new sanctions targeting individuals and entities allegedly affiliated with Russia over the war in Ukraine. They were introduced as a result of Russian opposition politician Alexei Navalny who died last week.

The US blamed Russia for Navalny's death despite the fact that no evidence pointed to it. On the day of his death, US officials announced they would discuss a possible response with their allies, leading many to believe that Washington was possibly behind Navalny's death.

This also comes in the context of Russia's latest victory in the battle of Avdiivka. The recent fall of the Ukrainian city, coupled with Russia's economic resilience, has indeed driven Western leaders crazy. Even more concerning is the reality that Russia has emerged as an example for other nations in how to resist US sanctions.

Global Shift Away from Dollar Dominance

The war in Ukraine, now entering its second year, has brought to light the inadequacy of Western sanctions against Russia and has exacerbated an energy crisis in Europe. Beyond its immediate impact, the conflict has catalyzed broader global shifts, including trends of de-dollarization and a departure from neoliberal economic policies.

While the war itself is not solely responsible for these trends, it has accelerated processes of multipolarization and de-globalization, particularly in response to China's growing influence and shifts in US policies, such as the "pivot to Asia" strategy and protectionist measures that were implemented under the Trump administration.

This shift away from neoliberalism reflects a recognition of their limitations, especially in light of China's economic success and the failure of Western sanctions to achieve desired outcomes.

The war has also exposed Europe's vulnerability to disruptions in energy supply, noting that efforts to break free from dependency to Russian gas have proven inefficient.

Russia's resilience against sanctions and its strategic position in Eurasia suggest that a transition to a multipolar world is being expedited, especially considering that the BRICS organization has expanded with new members, including a key US ally, Saudi Arabia.

As de-dollarization gains momentum, questions arise about the future of US economic hegemony and its implications for global economic dynamics. It is worth noting that during an interview with Tucker Carlson earlier this month, Russian President Vladimir Putin criticized the weaponization of the US dollar, labeling it as one of the most significant strategic blunders made by US leadership. Putin highlighted that even American allies are reducing their US dollar reserves, opting instead for national currencies in bilateral trade.