7 Items

Dollar bills

AP Photo/Mark Lennihan

Analysis & Opinions - Belfer Center for Science and International Affairs

The Consequences of Weaponizing the U.S. Dollar

| July 22, 2019

Should INSTEX itself be sanctioned, it would be a powerful signal to the rest of the world. In this scenario, critical dollar-denominated trade not currently facing sanctions, but at potential risk of being sanctioned in the future, could migrate to third party currencies, transferred through sanctions-resistant entities to an INSTEX-like body.

President Donald Trump, left, poses for a photo with Chinese President Xi Jinping.

AP Photo/Susan Walsh

Analysis & Opinions - Belfer Center for Science and International Affairs, Harvard Kennedy School

A Financial Statecraft Strategy for the United States to Address the Rise of China

| July 01, 2019

Washington should adjust its coercive economic strategy to reflect a broader use of tools beyond sanctions. Given the degree of political interference in China’s banking system via formal state ownership and the indirect influence of opaque party committees, penalties imposed against the country’s banks are unlikely to produce a meaningful change in behavior.

An investor monitors stock prices in Beijing after U.S. President Donald Trump re-imposes sanctions on Iran, May 19, 2018.

Ng Han Guan (AP)

Analysis & Opinions - The Diplomat

To Manage Great Power Competition, America Needs a New Economic Patriot Act

| Apr. 17, 2019

Shifts in the global economy have altered Washington’s sanctions calculus. In today’s era of great power competition, priority threats are no longer rogue states with little economic clout but nations with systemically important financial institutions and economic linkages. Russia and China top the list.

America’s sanctions strategy, however, hasn’t evolved to meet this challenge. Section 311 of the Patriot Act remains a powerful tool, but its collateral costs are too high to confront banks that are too big to fail. It’s time for a new Economic Patriot Act that can provide the scalpel-like instruments Washington needs to thwart our adversaries with speed and precision.

The European Central Bank by the river Main in Frankfurt, Germany.

AP Photo/Michael Probst

Analysis & Opinions - Belfer Center for Science and International Affairs, Harvard Kennedy School

Too Big to Evade: The Costs of Europe Sticking with Iran

| Feb. 20, 2019

In spite of initial hopefulness, the Europeans will eventually face a reckoning with the facts: Washington’s financial leverage over Brussels has, arguably, never been greater since the establishment of the euro in 1999. The power of the U.S. Dollar and weaponization of the U.S. financial system cannot be challenged successfully by Europe at this moment.

 

A worker holds a sign promoting a sale for Huawei 5G internet services at a mobile phones retail shop in Shenzhen in south China's Guangdong province, Tuesday, Dec. 18, 2018. The chairman of Huawei challenged the United States and other governments to provide evidence for claims the Chinese tech giant is a security risk as the company launched a public relations effort Tuesday to defuse fears that threaten its role in next-generation communications.

(AP Photo/Andy Wong)

Analysis & Opinions - Belfer Center for Science and International Affairs, Harvard Kennedy School

The Future Financial War with China

| Jan. 02, 2019

The detention of Huawei Chief Financial Officer Meng Wangzhou last month has electrified Sino-American tensions, making 2019 a portentous year for debt markets. Her employer, Huawei, has been the target of China hawks’ ire dating back to the early 2010s, amid scandals tied to sanctions evasion in Iran and possible concerns about espionage. Yet in the buzz about its ties to the People’s Liberation Army, the company’s deep and extensive dollar exposures have received little coverage.