Beyond Missiles and Sanctions: The Currency War Behind the Iran Assault
As tensions escalate in the Middle East following Israel's recent actions, the underlying struggle for the US dollar's dominance in global trade becomes increasingly apparent.
Image: IOL / Ron AI
By Masibongwe Sihlahla
As the world grapples with renewed conflict in the Middle East after Israel's cowardly and unprovoked attack on Friday 13 June last week, the framing of recent escalations with Iran as a nuclear non-proliferation issue is be missing the big picture. Beneath the diplomatic soundbites and military maneuvers lies a quieter but more existential struggle: the fight to preserve the US dollar's supremacy in global trade and contain China.
For decades, the dollar has enjoyed near-monopoly status as the global reserve currency, granting the United States what French President Valéry Giscard d'Estaing once called an "exorbitant privilege".
This privilege enables the US to borrow at lower interest rates, print money to finance deficits, and weaponise the global financial system through sanctions and trade controls.
This economic order faces its greatest threat yet and that is the rise of BRICS and the mounting wave of dedollarisation.
Iran and the Strategic Pivot
Iran, a long-standing critic of US foreign policy, has deepened trade relations with BRICS members, particularly China and Russia. By pricing its oil in yuan and diversifying its currency reserves, Tehran is actively undercutting the petrodollar framework that has undergirded American economic influence since the 1970s. Iran has also a few weeks back received the first direct train from China which can deliver goods from Iran especially oil in 18 days instead of 36 days via ship going through the heavily patrolled (by America's Seventh Fleet) Strait of Malacca.
It goes without saying that saving 50%-60% transport time also translates into huge cost savings. It facilitates faster delivery of Chinese goods to Iran and onward to Europe, boosting trade efficiency and regional connectivity — this is where the rub lies as it bypasses any attempt by the USA Seventh or Fifth fleet for that matter to intimidate China and thus BRICS.
So an attack on Iran by Israel must not be seen in isolation but with a geopolitical eye on the attempt to contain China.
The potential consequences are monumental. If oil can be bought and sold in non-dollar denominations, a cornerstone of global dollar demand weakens. With less demand for U.S. Treasury securities, Washington could face higher borrowing costs and diminished leverage in international institutions like the World Trade Organization and the International Monetary Fund.
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The Realignment Accelerates
The war in Ukraine backfired on America and entrenched Russia further into the BRICS orbit, bolstered by China's growing clout and Brazil's pragmatic economic diplomacy. Western sanctions may have isolated Russia from some markets, but they also catalysed alternative systems—cross-border payment platforms, bilateral trade in national currencies, and talk of a BRICS common settlement unit.
Iran's alignment with this axis isn't just a matter of political solidarity; it represents a pivot away from dollar-dependence. From India's use of rupees in oil trades to South Africa's backing of a multipolar financial system, the shift is gaining traction across the Global South. The last thing Biden did before exiting in December 2024 was to launch the Lobido Corridor as a countermeasure to the Chinese Belt and Road Initiative.
The Lobito Corridor is part of a broader Western-backed counter-BRICS initiative, including a $1.3 billion US-Angola infrastructure deal, to strengthen infrastructure and private investment in Africa, supported through programs like the Partnership for Global Infrastructure and Investment (PGII).
The aim was to undermine Chinese dominance of the critical metals supply chain such as Copper, Cobalt, Lithium, Tantalum(Coltan) especially as the highest priority. With the increased use of eDrones Americas military need a secure source of these minerals. Some of these minerals reach China via the railway corridor from Iran and thus it is essential that those those infrastructure benefitting China be destroyed, hence it is in this light that the devious attack on Iran by American proxy Israel can be explained.
This infrastructure push by America aims to provide alternatives to China-led projects and the Belt and Road Initiative (BRI), countering China's growing influence through BRICS and related economic corridors.
South Africa, as a founding BRICS member and a key regional power, is a crucial leverage point for expanding BRICS influence into Africa. The Lobito Corridor and related infrastructure projects signal efforts by the US and allies to offer competing development models and maintain influence in the region and it is clear the current Angola government has been bought lock, stock and barrel by the Americans and its allies.
The recent diplomatic tensions and perceived 'insult' to South African President Cyril Ramaphosa in the White House can be seen as part of this broader geopolitical contest, reflecting friction over South Africa's leading role in BRICS and its strategic positioning between Western and Chinese spheres of influence.
America's Geoeconomic Dilemma
The US faces a dilemma: preserve dollar dominance through diplomatic engagement, or use hard power—military or financial—to deter alternatives. History suggests Washington is willing to project power to defend its economic architecture. But as dedollarisation efforts become decentralized and digitally nimble, the old levers lose some of their effectiveness.Attacking Iran, whether militarily or economically, may not just be about regime machinations but is intended to be a strategic strike on a key pillar of the dedollarisation front.
A Global Rebalance in MotionWe are living through the slow dismantling of a unipolar order and as Prof Richard Wolff describes the decline of American Empire. The question is not whether dedollarisation will happen, but how—and at what cost to the current architects of global trade.
For BRICS and its partners, this is a path toward sovereignty and away from American hegemony
For Washington, it's the potential unraveling of its financial superpower status. And for the rest of the world, it could mean a future where no single currency holds the world hostage.
* Masibongwe Sihlahla, Independent Writer, Political Commentator and Social Justice Activist.
** The views expressed do not necessarily reflect the views of IOL or Independent Media.
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