Late last month, the European Union and China announced that they intended to set up a special global payments system to allow companies to continue to trade with Iran despite U.S. sanctions. Some of the sanctions are already in place, but the bulk will to go into effect in November, thanks to the U.S. withdrawal from the Iran nuclear deal earlier this year.
The announcement marks a small but notable step toward the fragmentation of the global economic order. Friends and foes of the United States were already seeking paths away from the traditional, dollar-dominated financial system. The Trump administration’s policy on Iran provided additional incentive to those who strive to undermine U.S. economic primacy and the effectiveness of U.S. economic statecraft. Washington should take note of the danger.
THE EU’S PLANS
In May, U.S. President Donald Trump delivered on his promise to leave the Iran deal,
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