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Why the dollar's dominance is declining in the Middle East | DW News |

The experts that DW spoke with all agreed there are likely two major reasons for Middle Easterners' threats to use other currencies.

Firstly, they said, it has to do with Russia's war in Ukraine.

Motivated by war in Ukraine

Sanctions are a very significant part of the debate, McDowell thinks. His new book, "Bucking the Buck: US Financial Sanctions and the International Backlash Against the Dollar," says as much, arguing "that the more the US wields the dollar as a weapon of foreign policy, the more its adversaries will move their international economic activities into other currencies." 

"Currently, there's a lot of Russian money going through countries in the Middle East and Asia," Alhasan explained. "Essentially those are countries that have chosen not to comply with, or not to enforce, American or European sanctions." 

But should sanctions on Russia be toughened further, turning them into what are known as secondary sanctions, then those countries would have a much harder time avoiding them. Secondary sanctions also punish third parties -- countries or businesses -- that work with the sanctioned entity. Anybody who wants to do business with the US or European Union will find it hard to get around secondary sanctions.

"So governments concerned about US sanctions are increasingly thinking about how they might get ahead of the curve, even if they are not yet ready or interested in making a radical shift away from the dollar," McDowell reasoned.

'Sapere aude'
by Oui (Oui) on Sun May 21st, 2023 at 08:16:08 AM EST

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