US weaponizing dollar – Jeffrey Sachs

The US government has weaponized the dollar rather than having it serve as a medium of exchange or a store of value, award-winning American economist and public-policy analyst Jeffrey Sachs has said.

Sachs made the remark on Thursday in his address via video link to a meeting of BRICS ministers of finance and central bank governors. The officials were meeting in Moscow to discuss the improvement of the international monetary and financial system, ahead of the BRICS 2024 summit in Kazan later this month.

According to the economist, the weaponization of the dollar was obviously happening through the seizure of frozen Russian assets. He also mentioned the freezing by the US government of Iranian, Venezuelan, Afghan and other state funds.

The US and its allies have frozen around $300 billion in Russian central bank assets, around $5 billion of which is sitting in American banks, as part of its Ukraine-related campaign of sanctions. In April, President Joe Biden signed a bill allowing the seizure of Russian funds held in the US and their transfer to a Ukraine reconstruction fund.

“You can’t use the dollar as a payments mechanism,” Sachs said, when a president alone can sign orders and seize essentially billions of dollars in Russian assets. The US currency has become “an instrument of aggressive form of policy,” he concluded.

“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 pointed out that China wants to have normal trade without threats of US sanctions but, although Chinese banks are part of the SWIFT system, they have to abide out of a fear of being cut off the international financial network.

“So, the point is we need alternatives, this is clear,” Sachs stated. “Of course, 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 economist stressed that “the best alternative would be if the US recovers sense, decency and legality and stops imposing unilateral sanctions.” 

US actions are “absolutely incorrect” and illegal by the standards of international law and the UN Charter, said Sachs, who is also president of the UN Sustainable Development Solutions Network.

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