Monday, May 20, 2024

US says sanctions threaten dollar’s dominance as Iran, Russia seek out alternatives

The United States Treasury Secretary Janet Yellen has warned that economic sanctions imposed on other countries like Iran and Russia threaten the dominance of the dollar in the global economic market.

“There is a risk when we use financial sanctions that are linked to the role of the dollar that over time it could undermine the hegemony of the dollar,” Yellen said on CNN on Sunday.

“Of course, it does create a desire on the part of China, of Russia, of Iran to find an alternative,” she told the network’s Fareed Zakaria in an interview.

She, however, claimed that the dollar is used as a global currency for reasons that are not easy for other countries to find an alternative with the same properties.

Yellen alleged that sanctions are an “extremely important tool,” all the more so when used by the United States and its allies as “a coalition of partners acting together to impose these sanctions.”

The global trend of substituting the US dollar with local currencies in the trade of goods and transactions has been on the rise in recent years, with countries hoping to reduce their dependence on Washington and prevent it from further weaponizing its global dollar dominance.

Observers cite China, Iran, Russia, and Venezuela as cases in point when it comes to conducting one’s economic affairs and important transactions independent of the greenback.

They say powerful countries such as China, Russia and the European Union are major players in the de-dollarization process today.

These countries not only can avoid being subject to US jurisdiction and sanctions in many cases, but also weaken Washington’s ability to remain the most dominant global power.

Earlier this month, Iran’s top security official stated that the move to reduce the use of dollar in regional and international transactions, joined by several countries, would minimize the West’s dominance over the global economy.

Secretary of Iran’s Supreme National Security Council (SNSC) Ali Shamkhani cited the initiatives that have been finalized between Iran and Russia in the financial sector and banking exchanges to fund joint projects as an “effective” paradigm for neutralizing the West’s unlawful sanctions against the two countries.

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