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To End Forever War, End the Dollar’s Global Dominance

In its laser focus on military restraint, the present debate about endless war overlooks the financial architecture of U.S. empire.

An Iraqi man changes U.S. dollars for Iranian rials in Basra in 2018. (Haidar Mohammed Ali/AFP/Getty Images)

Two days after a U.S. drone assassinated Iranian Maj. Gen. Qassem Soleimani outside the Baghdad International Airport, the Iraqi parliament approved a nonbinding resolution to expel the American military from its country. It was not Iraq’s first effort at eviction: Several times in the past few years, the Baghdad government has requested that U.S. forces leave. The State Department, though, refused to accept the parliament’s decision, and President Trump threatened to sanction Iraq over the vote. “We have a very extraordinarily expensive air base that’s there,” Trump told reporters on Air Force One, traveling back to Washington from his Mar-a-Lago estate. “It cost billions of dollars to build. We’re not leaving unless they pay us back for it.”

This was a Trumpian tack, to be sure, but also a consummately American one. To keep Iraq amenable to a U.S. presence, the State Department turned to the United States’ “dollar power”—its vast control over the supply and distribution of the dollar, the global reserve currency—and threatened to cut off Iraq’s access to its Federal Reserve account, which would effectively paralyze the government’s ability to provide basic services. Faced with this threat, which according to one Baghdad official “would mean collapse for Iraq,” Iraqis have backed away from their call to banish U.S. troops. The American military looks set to remain in the country indefinitely.

Ending the U.S.’s “endless wars” has become common sense within the Democratic Party. From activists on the street to presidential candidates on the debate stage, a new consensus has emerged that the nation must shrink its military budget and restrain the executive branch’s power to launch unwinnable foreign conflicts. In an essay for The Atlantic on Monday, in which she promised to seek congressional authorization for the use force if she becomes president, Senator Elizabeth Warren wrote that “having a strong military means using it with the utmost responsibility,” adding that “we must reassess our global posture to ensure that U.S. forces are engaged in realistic missions, and that the risks and costs of military deployments must be appropriately limited.”

But in its laser focus on military restraint, the present debate about endless war largely overlooks the financial architecture of U.S. empire. As the Iraq case illustrates, the dollar is a linchpin of U.S. military dominance, motivating and enabling its expansion around the world. To curb America’s imperial adventurism—and the president’s personal ability to engage in it unilaterally—it is essential not only to draw down the nation’s enormous global military presence but to reduce the dollar’s centrality to international trade and finance.


The United States has a long tradition of leveraging its economic power to advance its foreign policy agenda. In the early twentieth century, U.S.-imposed “dollar diplomacy” traded Latin American sovereignty for American capital and control over local customs houses. President William Howard Taft, who initiated dollar diplomacy, claimed that his strategy “substitut[ed] dollars for bullets.” According to Taft, this substitution would both advance American interests and reduce violent conflict the world over.

In actuality, dollars and bullets proved complementary: The supremacy of the dollar sustained America’s imperial adventures, while the military was often deployed to protect dollar supremacy. When Nicaragua’s Liberal Party threatened U.S. control over that country’s economy, Taft dispatched 2,500 Marines to ensure that American banks continued to service Nicaraguan debt. In the decades since, the connections between dollars and imperialism have only grown tighter. As historian Stuart Schrader has persuasively argued, the “empire of bases” that the U.S. constructed after World War II “exists to protect the dollar’s exorbitant privilege.”

In the military conflicts of the new millennium, the question of the dollar’s “exorbitant privilege” is never far from view. In October 2000, Saddam Hussein moved to switch Iraq’s oil trade from the dollar, which he termed the currency of the “enemy state,” to the euro. But the U.S. invasion of 2003 set the country’s oil industry safely back into dollar denomination, and soon after the invasion, U.S. decision-makers created a Federal Reserve account for Iraq—the very same account Trump now threatens. (“We’re an oil-producing country,” one Iraqi official remarked after Trump made his ultimatum. “Those accounts are in dollars. Cutting off access means totally turning off the tap.”)

The U.S. relationship to Iran is similarly laced with monetary tension. Back in 2007, Iranian President Mahmoud Ahmadinejad called on OPEC to pursue a “credible and good currency to take over the U.S. dollar’s role” and went so far as to establish the Iranian Oil Bourse to allow for resource exchanges in nondollar denominations. In this way, Iran challenged the dollar as a key source of U.S. power. As Ahmadinejad’s OPEC ally, Venezuelan President Hugo Chávez, said in 2007, “The fall of the dollar is not the fall of the dollar—it’s the fall of the American empire.”

In the short term, the U.S. can still deploy its dollar power to bully adversaries and allies alike. Few foreign leaders, for instance, agreed with Trump’s decision to withdraw from the nuclear deal with Tehran and impose fresh sanctions on Iran’s economy. Yet even sympathetic countries with strong currencies, like those in the European Union, have been forced to play along with Trump’s counterproductive policies for fear of losing access to U.S. dollars.

But the aggressive use of dollar power has begun to engender a significant backlash. China and Russia are currently working to diversify their currency reserves and expand their bilateral trade in nondollar currencies. Russian President Vladimir Putin has even trolled the U.S. for “shooting itself not in the foot but a bit higher” with Trump-era dollar diplomacy. “We aren’t ditching the dollar,” Putin has noted. “The dollar is ditching us.” And China is attempting to replace the “petrodollar,” the dominant currency of the oil trade, with the “petroyuan.”

U.S. adversaries aren’t the only ones driving de-dollarization; even some EU leaders have started to chafe at the fact that the dollar limits their freedom of action. “It is absurd that European companies buy European planes in dollars instead of euros,” outgoing European Commission President Jean-Claude Juncker declared in his 2018 state of the union address. “We must do more to allow our single currency to play its full role on the international scene.”

If a progressive president skeptical of U.S. imperialism enters the White House in 2021, they will confront a profound dilemma: Should they use America’s dollar power to pursue goals like curbing illicit finance and ending tax evasion, or should they relinquish dollar power in order to weaken the U.S. empire? The answer is that they should do both. On one hand, a progressive administration should deploy its existing dollar power to crack down on the system of illicit finance that has engendered enormous global inequalities. On the other hand, this administration should simultaneously lead a transition toward a more equitable international monetary system. Only monetary multilateralism can ensure that all nations have the ability to exert their right to self-determination, and only monetary multilateralism will prevent the U.S. from pursuing its often destructive global plans.

Defenders of the so-called “liberal international order” are likely to recoil at the decline of dollar supremacy, much as they worry that U.S. military restraint augurs the end of a “Pax Americana” that wasn’t particularly peaceful. But monetary diversity, like military restraint, is a necessary step toward a more just and peaceful world. The myth of a “capitalist peace,” in which economic integration undergirded by U.S. economic hegemony engenders mutual goodwill, remains far too common in America. The Trump administration’s deployment of dollar power should prove to all observers that there is a dark side to economic integration. The dollar may bind the United States to the rest of the world, but it does so as a means of domination.