The war is barely ten days old, and it remains to be seen what Putin will do if and when sanctions stoke greater public discontent in Russia. But these punitive sanctions may also backfire in another way. Biden’s flexing of American economic muscle will only embolden Russia and other U.S. rivals, notably China, to deprive the United States of the very power that makes sanctions so devastating. Russia and China will expedite initiatives to “de-dollarize” their economies, building alternative financial institutions and structures that both protect themselves from sanctions and threaten the U.S. dollar’s status as the world’s dominant currency. Without concerted action, the United States will struggle to reverse this movement and see the weakening of its global standing.
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