Will the Seizure of Russian Assets Kill the Dollar?

• America, Western bankers risk war with Putin rather than see Russia and China challenge the global supremacy of the U.S. dollar.

By Former Rep. Ron Paul —

In mid-December, while much of the world focused on whether the Federal Reserve was going to raise interest rates or whether the Greek debt negotiations would bring Europe to a crisis, the Permanent Court of Arbitration in The Hague awarded a $50 billion judgment to shareholders of the former oil company Yukos in their case against the Russian government. The governments of Belgium and France moved immediately to freeze Russian state assets in their countries, naturally provoking the anger of the Russian government.

The timing of these actions is quite curious, coming as the Greek crisis in the European Union (EU) seems to be reaching a tipping point, and Greece, having perhaps abandoned the possibility of rapprochement with Europe, has been making overtures to Russia to help bail it out of its mess.

And with the International Monetary Fund (IMF)’s recent statement pledging its full and unconditional support to Ukraine, it has become even more clear that the IMF and other major multilateral institutions are not blindly technical organizations, but rather are totally subservient lackeys to the foreign policy agenda emanating from Washington. Toe the D.C. party line and the internationalists will bail you out regardless of how badly you mess up, but if you even think about talking to Russia you will face serious consequences.

The United States government is desperately trying to cling to the notion of a unipolar world, with the U.S. at its center dictating foreign affairs and monetary policy while its client states dutifully carry out instructions. But the world order is not unipolar, and the existence of Russia and China is a stark reminder of that.

For decades, the U.S. has benefited as the creator and defender of the world’s reserve currency, the dollar. This has enabled Americans to live beyond their means as foreign goods are imported to the U.S. while increasingly worthless dollars are sent abroad. But is it any wonder after 70-plus years of a depreciating dollar that the rest of the world is rebelling against this massive transfer of wealth?

The Europeans tried to form their own competitor to the dollar, and the resulting euro is collapsing around them as you read this. But the EU was never considered much of a threat by the U.S., existing as it does within Washington’s orbit.

Russia and China, on the other hand, pose a far more credible threat to the dollar, as they have both the means and the motivation to form a gold-backed alternative monetary system to compete against the dollar. That is what the U.S. government fears, and that is why President Barack Hussein Obama and his Western allies are risking a cataclysmic war by goading Russia with these politically motivated asset seizures. Having run out of carrots, the U.S. is resorting to the stick.

The U.S. government knows that Russia will not blithely accept Washington’s dictates, yet it still reacts like a petulant child flying into a tantrum whenever Russia dares to exert its sovereignty. The existence of a country that won’t kowtow to Washington’s demands is an unforgivable sin to be punished with economic sanctions. That is why Washington and its allies are attempting to freeze Russia out of world financial markets, throwing around veiled threats to strip Russia’s hosting of the 2018 World Cup and now seizing Russian state assets.

Thus far the Russian response has been incredibly restrained, but that may not last forever. Continued economic pressure from the West may very well necessitate a Sino-Russian monetary arrangement that will eventually dethrone the dollar.

The end result of this needless bullying by the U.S. will hasten the one thing Washington fears the most: a world monetary system in which the U.S. has no say and the dollar is relegated to playing second fiddle.

Ron Paul, a former U.S. representative from Texas and medical doctor, continues to write his column “Texas Straight Talk” for the Foundation for Rational Economics and Education.