Geostrategic Media Political Commentary, Analysis, Security, Defense
Samar Sami
The U.S.’s weaponization of the dollar is proving to be a double-edged sword, as BRICS nations and the broader developing world accelerate their move away from dollar-based trade and reserves.
Economic sanctions often carry unintended consequences, and the U.S.’s use of the dollar as a weapon against Russia may be the most striking example. What was meant to punish has instead ignited a global movement toward de-dollarization, directly countering the strategic aims of Washington.
Yet, this historic miscalculation hasn’t deterred U.S. lawmakers. Florida Senator Marco Rubio recently introduced a bill in Congress aimed at punishing countries that actively move away from the dollar. His legislation, ominously titled the Sanctions Evasion Prevention and Mitigation Act, would require the U.S. president to impose sanctions on financial institutions that utilize China’s CIPS payment system, Russia’s SPFS, or any alternatives to the dollar-centric SWIFT system.
Rubio isn’t alone. Economic advisors to presidential candidate Donald Trump are also brainstorming ways to penalize nations shifting away from the dollar. The Trump camp has suggested imposing export restrictions, tariffs, and even “currency manipulation charges” on countries that engage in bilateral trade using non-dollar currencies.
The BRICS Awakening
Initially, U.S. policymakers and financial media pundits dismissed the notion of de-dollarization, pointing out that the dollar accounts for approximately 80% of global financial transactions. But the economic sanctions levied against Russia following its 2022 military operation in Ukraine marked a turning point. The drive to de-dollarize gained rapid momentum and has arguably become an irreversible trend.
In May of this year, the Association of Southeast Asian Nations (ASEAN) announced plans to conduct cross-border trade using local currencies rather than the dollar. Although this announcement flew under the global media radar, it was a significant move by a massive trading bloc comprising ten nations and a combined population of 600 million people.
Other countries are also exploring ways to bypass the dollar system, including through barter deals. For instance, Iran and Thailand have initiated trade exchanges involving food for oil, while Pakistan has authorized barter trade with Iran, Afghanistan, and Russia. China, meanwhile, is constructing a state-of-the-art airport in Iran, to be paid for in oil.
Cryptocurrencies are also becoming a tool to sidestep the dollar, enabling individuals and entities to transfer funds anonymously and avoid the prying eyes of American regulators. Bitcoin and other cryptos facilitate transactions outside the traditional banking system, making them attractive for countries looking to bypass U.S. sanctions.
De-dollarization is now high on the agenda of BRICS, the economic bloc that is quickly emerging as a counterweight to the G7. Until 2022, BRICS had few clearly defined objectives beyond providing a platform for the Global South. However, the weaponization of the dollar and the freezing of $300 billion in Russian reserves held in Western banks have given BRICS a sharp new focus.
What began as an unlikely coalition—with members spanning three continents, distinct cultures, political structures, and economic systems—has evolved into a group with a shared goal: creating a multipolar world.
China, as the largest trading partner for most countries globally, is the economic linchpin of BRICS. As China continues its move away from the dollar, its trading partners are likely to follow suit.
The Petrodollar’s Diminishing Grip
The U.S.’s grip on the global financial system can be traced back to 1974, when it convinced Saudi Arabia to sell oil exclusively in dollars, securing continued global demand for the greenback. This agreement was a lifeline after President Richard Nixon severed the dollar’s tie to gold in 1971, opting instead for a petrodollar system that ensured countries would maintain dollar reserves to purchase oil.
However, U.S. control over the global reserve currency has not been without costs. While the petrodollar system allowed the U.S. to finance its debts and engage in profligate spending, it has also led to an unsustainable national debt. As of 2024, the U.S. national debt has ballooned to over $35 trillion, representing 120% of GDP.
Interest payments on this debt are expected to exceed $850 billion this year, making it the largest item in the national budget. This debt crisis underscores growing U.S. concerns about de-dollarization. As more countries move toward multicurrency trade, the demand for dollars declines, which, in turn, reduces the pool of potential buyers of U.S. debt.
Gold vs. Bitcoin
Economists and politicians have proposed various measures to bring the U.S. debt to a sustainable level, but the required spending cuts and tax hikes are politically infeasible. As a result, some have turned to alternative assets like Bitcoin as a potential solution.
The U.S. government already owns over 200,000 Bitcoins from various seizures and bankruptcy cases. Presidential candidate Donald Trump has promised to keep Bitcoin on the U.S. government’s balance sheet, while Robert F. Kennedy Jr. has proposed that the government purchase Bitcoin to match the value of its gold reserves.
Kennedy’s plan would involve backing the dollar with a combination of assets like gold, silver, platinum, and Bitcoin. Such a move would create a new class of U.S. bonds backed by these hard assets.
Ironically, Bitcoin, designed to circumvent the fiat money system, could play a role in shoring up the dollar. However, unlike gold, Bitcoin is still denominated in dollars, meaning its value is directly tied to the very currency it was created to challenge.
The Last Reserve Currency
Kennedy Jr. is likely correct in assuming that the dollar will need to be backed by hard assets to survive. Without this backing, the dollar risks going the way of the Argentine peso or the Zimbabwean dollar, both of which were debased to near worthlessness.
De-dollarization marks the first significant challenge to the dollar since the 1944 Bretton Woods Agreement made the dollar the world’s reserve currency. However, given the growing geopolitical tensions between BRICS and G7 nations, a Bretton Woods II is highly unlikely. Instead, the global financial system is likely to fragment into three parts: the dollar-led fiat system, multicurrency agreements, and a BRICS-led trading currency.
While the dollar will likely remain in circulation, it may very well be the world’s last reserve currency—a relic of the colonial era. The shift toward a multicurrency system offers countries the opportunity to reclaim their monetary and fiscal autonomy, paving the way for a more balanced and equitable global financial landscape.
