The United States is an arrogant power, which, like many other empires (and people), is witnessing its influence decline. Indeed, it is hastening this degeneration by wasting its political and symbolic capital, expending it as if the country still stood at the zenith of its glory.
Because of France, the first steps toward the beginning of the end of the dollar's hegemony could begin at the next G20 summit. Here's why: On June 30, the U.S. Federal Reserve backed a Justice Department and New York district court decision to punish the French bank BNP Paribas, one of Europe's biggest, for routinely violating U.S. sanctions on Iran, Sudan and Cuba. Besides fining the French bank almost $9 billion, the U.S. also suspended approval of its dollar transactions.
French President Francois Hollande is one of several heads of leading economic powers who believes that the United States has gone too far in politicizing the dollar, and he favors putting the topic on the G20 agenda. To punish those who violate U.S. economic sanctions exploits the fact that the dollar is an inevitable part of international transactions. It is one of the few subjects on which France, Germany and Russia publicly agree.
Taking its ball and going home
The United States is actually shooting itself in the foot and isolating its allies. Ironically, President Barack Obama, who pledged to reconcile the White House with the world, has barely managed to make a dent in the isolation his predecessor George W. Bush created.
The United States developed intelligent sanctions as a means of exerting pressure on foreign countries and institutions without resorting to military force. One maneuver it can use — and has with BNP Paribas — is to forbid banks from approving dollar transactions, which is otherwise just a formality in the normal process of international finances.
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