Paper Soldiers: How the Weaponization of the Dollar Changed the World Order

Many analysts fear that the U.S. Treasury’s use of financial sanctions against Russia for its 2022 invasion of Ukraine—a specific instance of the general practice sometimes referred to as the “weaponization” of the dollar—could cause central banks and governments to look to alternative currencies, eroding the greenback’s global preeminence. Mohsin’s briskly written book charts the rise of the dollar as a global currency from the Bretton Woods conference in 1944 through U.S. Treasury Secretary Robert Rubin’s “strong dollar” mantra in the 1990s. Strong-dollar rhetoric bolstered confidence in the greenback but also hurt U.S. manufacturing (since the dollar was so highly valued), heightening the shock caused by an influx of Chinese imports from the 1990s onward and ultimately fomenting a backlash against the openness of the international economic system. Yet central banks and governments continue to rely on the dollar simply because there is no viable alternative. Mohsin concludes that if the dollar loses its global dominance and hence its geostrategic utility, this will not be because Washington has wielded financial sanctions indiscriminately but because of self-inflicted economic policy wounds and domestic political gridlock.