In an effort to bend the Iranian regime to its will, the Trump administration has fundamentally undermined one of America's primary sources of global power and influence. With the United States no longer trusted to oversee global financial flows, new networks are emerging to offer countries alternatives to the dollar.
WASHINGTON, DC – In today’s world, access to global networks is a critical source of power, but the resulting interdependence can also generate vulnerability. The power flows from centrality: being a hub that connects all (or most) other nodes. The threat of denying access to such hubs can be a powerful sanction against bad actors. But if that power is abused – if asymmetrical interdependence is weaponized – participants in a network may decide to create alternative networks of their own.
That is the risk the United States is currently running. It holds the world’s principal reserve currency and enjoys a central role in global financial networks. But it is using that position to pursue foreign-policy goals that are likely to weaken its centrality, and thus its leverage over the long term.
A prime example is the mounting crisis with Iran, which started in May 2018, when the US unilaterally withdrew from the 2015 nuclear deal, known officially as the Joint Comprehensive Plan of Action (JCPOA). Worse, the US has since imposed its decision on the other signatories – Britain, France, Russia, China, Germany, and the European Union – by threatening secondary sanctions against third parties honoring the JCPOA.