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Has Russia's invasion of Ukraine doomed the dollar?

Section: Daily Dispatches

By Robert G. Rabil
The National Interest, Washington
Friday, December 23, 2022

Russia's invasion of Ukraine has undoubtedly ended the post-Cold War era. Although many countries have condemned Russia's invasion, the majority of them have not sanctioned Russia. 

In contrast to the Western depiction of the Ukraine crisis as a confrontation between democracy and authoritarianism, these countries believe that the crisis goes well beyond the democracy-authoritarianism binary, potentially affecting their national security as well as global sustainability and peace. 

Food insecurity, internal displacement and refugees, threat of a spillover of war, and the use of unconventional weapons endanger the most vulnerable of these countries. Yet the crisis has reshaped the international order and global realignments by offering states the opportunity to pursue their own self-interest without aligning themselves with a political camp.

... Dispatch continues below ...


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Broadly speaking, the crisis has divided the world into three camps: One led by the United States and NATO, one led by Russia and China, and wedged between these two camps is one in which most countries adopted neutrality.

These "neutral" countries act as political variables guided by their own self-interest. Many of them are friends or allies of the United States. But they are neither enemies nor adversaries of Russia and China on account of the Ukraine crisis or their authoritarian political systems. 

They are cognizant that at a time of global competition over scarce resources they can neither sanction nor go against Russia, the largest country in the world with the largest amount of resources, and China, the country with the second-largest economy and largest holder of foreign reserves in the world. 

Yet equally, they cannot damage their relationship with the United States, the most powerful country with the largest economy. 
Consequently, their policies are dictated by their own self-interest free of the ideological binary of the Cold War. In other words, their policies do not and will not necessarily overlap with those of the United States. 

What else explains the refusal of Saudi Arabia, the United Arab Emirates, Egypt, India, Brazil, South Africa, Argentina, and Indonesia, among other states, to tow the American line and sanction Russia into submission?

Significantly, many of these countries have seen the end of the post-Cold war era ushering in a new period characterized by multipolarity and multilateralism. They have been uneasy about America's unipolar power since its unilateral invasion of Iraq in 2003. 

The Ukraine crisis and its ensuing ramifications for dividing the world, coupled with the virtual universal perception that American power is in decline following its debacles in Iraq and Afghanistan, only sharpened these countries' determination to try to curb American global power by supporting multipolarity and multilateralism. 

In this respect, China is leading the way by supporting international organizations such as Shanghai Cooperation Organization—the world's largest regional political, economic, and security organization -- and BRICS as a counterbalance to Western economic, political, and security might.

Indeed, while the SCO looks to advance a new "democratic, fair, and rational international political and economic order," BRICS -- an acronym for five leading emerging economies: Brazil, Russia, India, China, and South Africa -- promotes a transition to a multipolar world. They seek to provide alternatives to the Western-dominated International Monetary Fund and World Bank through institutions like the New Development Bank. 

Significantly, these organizations' influence is being enhanced by the admission of new countries; For example, Algeria, Egypt, Turkey, Saudi Arabia, Argentina, and Iran have either submitted formal applications or expressed their willingness to join BRICS.

Central to these developments is the attempt to weaken the American dollar as a prelude to weakening the overall global position of the United States. Fundamentally, the dollar is the underbelly of the United States. By examining economic patterns and trends, it is clear that many countries, some of which are led or egged on by China (and Russia), are reconsidering the use of the dollar as their major trading currency. ...

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