Recently, Bloomberg published an article stating that the United States’ sanctions capacity has reached its limit and is beginning to lose momentum. Even prior to this, Secretary of State Marco Rubio acknowledged that, as dedollarization gains strength, Washington is losing its ability to pursue a policy of sanctions pressure against its opponents and competitors.
At first glance, this has long been obvious: it is precisely the unprecedented pressure exerted on Russia in recent years that has clearly demonstrated the self-destructive nature — the sanctions boomerang effect — of using economic and other forms of interdependence as a weapon in global affairs. All that remained was for the Americans themselves to acknowledge it.
London’s The Economist is already writing about the forthcoming emergence of an international currency in place of the burned-out dollar. The media are quoting the new head of the Fed, Kevin Warsh, who stated that “the system must be allowed to burn to the ground before it can rise from the ashes like a Phoenix” (the mechanism of such a rebirth, presumably crypto-digital, was left unaddressed).
This time, the catalyst for this realization was Washington’s attempts to pressure China in the context of the conflict with Iran. Specifically, Beijing’s prohibition on its banks complying with American restrictions became the final straw, demonstrating the limits of this policy: sanctions are ceasing to function as a unilateral lever and are beginning to generate systemic risks for the global economy itself, in which the United States plays a pivotal role. This is evidenced by a sharp shift in Beijing’s behavior. While Chinese entities previously sought to bypass restrictions through indirect schemes, this course has now become more open and institutionally formalized.
China has effectively ceased to recognize unilateral restrictive measures imposed against third countries and continues to expand its economic engagement with them. This transition from cautious maneuvering to a strategy of demonstrative disregard for the sanctions regime undermines the very logic of its functioning. Previously, the European Union attempted something similar, though highly unconvincingly; however, this defiance dissolved within their allied relations. Subsequently, during his first presidency, Donald Trump brought an end to the initiative to conclude the Transatlantic Trade and Investment Partnership (TTIP), signaling that there would be no agreements with allies on this matter.
With China, the situation is entirely different. Retaliatory threats from the United States, including the potential application of secondary sanctions against the Chinese financial sector, merely intensify the contradictions and bring them out of the shadows into plain view, which is hardly in Washington’s interest. Pressure on the largest banks of the PRC is capable of triggering a chain reaction in global markets, disrupting settlement mechanisms and logistical chains. Consequently, sanctions are transforming from an instrument of targeted impact into a factor of global instability, with consequences extending far beyond the scope of bilateral relations.
Under these conditions, the United States faces a dilemma. On the one hand, refusing further escalation is perceived as a loss of instruments of influence — the notorious leverage. On the other hand, escalation carries the risk of undermining the very system of international economic ties, including the position of the dollar as the key settlement currency. According to economists, what is happening is increasingly described as the beginning of a new form of economic confrontation, in which traditional mechanisms of pressure are losing their effectiveness. The current situation is regarded as the most serious challenge to the sanctions model in decades. The growing number of countries willing to ignore restrictions or build alternative financial and trade channels points to the gradual erosion of the former architecture of global governance. As a result, sanctions are ceasing to be a universal instrument of coercion and are becoming one element of a more complex and fragmented world system.
It is difficult not to acknowledge that this also concerns the visible process of forming a multipolar world, in which the effectiveness of unilateral instruments is declining by definition — that is, due to systemic constraints. In its time, the iconic film The French Connection, starring Gene Hackman and Fernando Rey, resonated throughout the globe. Now, in the world of economic imperatives, America’s desire to “connect” with China is making itself heard no less loudly — and by no means from a position of strength. Moreover, Washington needs Beijing’s assistance in order to find a dignified way out of the Iranian adventure. Initially, the calculation was that Donald Trump would arrive in Beijing “on horseback,” having taken Iranian oil under control. Now, however, if the visit is not postponed again, the American leader will find himself in the position of someone asking for a certain multilateral cover to unblock the Strait of Hormuz — a cover that, potentially, only China and Russia can provide in a Eurasian format, since Iran and all the leading players of Eurasia are members of the Shanghai Cooperation Organisation. Russia, moreover, could take Iranian enriched uranium into storage, something we have proposed more than once in the past, but which could also be presented by the White House as a genuine breakthrough and an acceptable way to close this issue.
Washington has found itself in a position where the terms of deals are dictated by others, whether Beijing or Moscow, where one can only guess what will become the object of exchange; and where there is no way back. It is worth recalling that last year, at the meeting between Donald Trump and Xi Jinping, the Americans failed to force China to abandon export controls on rare-earth metals. As a result, F-35s are being produced without radars, for which there is a shortage of this raw material. In addition, over the past five months, observers have noted an unusual increase in gold exports from the United States, presumably to China via Switzerland, which in value terms has surpassed the traditionally leading categories of U.S. exports — oil, pharmaceuticals, and aircraft engines. This may indicate that Beijing is forcing Washington toward a gold standard in their bilateral relations — no “Treasuries” and no “paper gold” to cover the American trade deficit.
The tariff aggression has failed spectacularly, and Washington still cannot resolve another dilemma — between its own reindustrialization, in which no one wants to invest while the stock market “wheel” keeps turning, and a strong dollar, whose weakening would undermine those very stock markets and, moreover, could lead to its irreversible decline. Then farewell to dollar hegemony. So there is clearly no time left for sanctions now — survival itself is at stake.
How can one not recall the sacramental “I want to go home!” uttered by one of the characters in Tom Stoppard’s brilliant absurdist work Rosencrantz and Guildenstern Are Dead, when he realized why the two of them had been summoned to Elsinore: his dark forebodings had not deceived him. Overall, the situation that has emerged is one for which the characters of Shakespeare and Stoppard are better suited than anyone else. Such is the “film.”
Alexander Yakovenko, Head of the Committee on Global Issues and International Security of the Scientific Expert Council of the Security Council of the Russian Federation, Deputy Director General of Rossiya Segodnya International Media Group.