The seizure of Russian assets escalates the US economic war with the Global South

A new phase is entering economic war being waged against Russia provided that confiscation of Russian assets is complete held in Western banks – this is expected to accelerate his plans Global South for de-dollarization of the world economys as foreign exchange reserves have now turned into a geopolitical weapon.
On Saturday, April 20, 2024 US House of Representatives eapproved the legislative act REPOwhich would allow US President Joe Biden to confiscate approx 6 billion dollars in frozen Russian assets located in US banks and make them available to Ukraine.
The layout is part of a bill package that also includes more than $95 billion in aid to Ukraine, Israel and the Indo-Pacific, as well as a possible ban on TikTok.
The bill is expected to pass the Senate and then be immediately signed by US President Joe Biden.
While the 6 billion dollars represent only a fraction of the more than $300 billion on Russian assets seized by its countries G7 in 2022, vola more of this money is in the Europe and US lawmakers hope to persuade Europeans to do the same.
“We are making progress on how to access these funds on an agreed basis that I think we can take forward to the G7”the UK foreign secretary told reporters David Cameron, whose government has already expressed support for seizing Russian assets. earlier this month.

De-dollarization

The decision for Mrseizing Russian assets and providing them to Ukraine represents a major escalation in economic warfare through Western sanctions against Russia.
However move is short-sighted on the part of the US, because it will accelerate global de-dollarization, which will remove one of the most powerful tools the US has for exercising economic and geopolitical power.
“It reinforces the need for de-dollarization on the part of any third country.
Whether it’s Russia, or China—or any other state, including every country in the G-7 group that can be marginally at odds with the United States.
This is financial extortion pure and simple.”Paul Goncharoff, head of the consulting firm Goncharoff LLC, told Sputnik.
“Now they wonder: Will I place assets in a currency that is expected to be seized or frozen?
Therefore, lack of control by owners over assets is not a good basis for any currency”.
“So it just accelerates the de-dollarization.
And that’s not a positive thing, especially when you have an America that’s used to living with more and more debt that’s being accumulated by people giving the trust and buying bonds and notes,” Goncharoff added.

Inflationary pressures

The position of the dollar oof the largest reserve currency adjit behooves the US to avoid inflationary effects due to its fiscal spending, especially military spending.
In 1984, as the The US increased its military spending under former Ronald Reagan the economists I studiedn the inflationary effects of military spending examining the military spending of four countries over its decades 1950s and 1960s, specifying that theMilitary spending increases inflation unless it is offset by monetary easing in the domestic economy or, for nations with a global reserve currency, the easing of the global economy.
“The US has used the dollar’s core currency privilege to export its inflation by presenting [ένα] balance of payments deficits in the 1950s and 1960s“, they wrote.
“Although the US they had by far the highest defense spending as a percentage of GDP of all the countries under study, the special position of the dollar may have allowed the US not only to use easing in its own economy to absorb potential inflationary effects of defense spending, but to use monetary easing in the global economy as well.”
Two other countries in the study, West Germany and France, experienced high inflation, while the United Kingdom, whose pound sterling was still widely used as a reserve currency at the time, also did not experience high inflation.

Trust deficit

Writing in an opinion piece for the New York Times, columnist Christopher Caldwell agreed. “If Russia, China and other diplomatic adversaries decided that their dollar assets were vulnerable and that they could no longer trust the dollar as a medium of exchange, we would feel the… pain of that $34 trillion in debt [των ΗΠΑ]. as is not the case now.”
The decision “seriously undermines the image and credibility of the West”, he told Sputnik Lev Sokolshchikassociate professor of the School of International Regional Studies and researcher of the Center for Comprehensive European and International Studies at the Higher School of Economics.
“If, for example, a country followsin an independent policy from the US, therefore, its assets may be at risk: they may be frozen and eventually confiscated.”
Sokolshchik noted that the Saudi Arabia, which is partly responsible for the global dominance of the dollar due to the creation of the petrodollar, it is increasing its cooperation with China, Russia and other BRICS nations.
As early as 2022, Saudi Arabia and China have been in talks to settle oil sales to China in Chinese yuan instead of US dollars.

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