The Future of the Dollar
U.S. Financial Power Depends on Washington, Not Beijing
The United States has used economic sanctions to address a wide range of undesirable activities, from Russian aggression in Ukraine, to human rights abuses in Syria, to cyberattacks from China and North Korea. Recently, U.S. President Barack Obama is employing sanctions for a new purpose: to deter international aggression and uphold international norms. Such sanctions allow Obama to take nonmilitary action in cases where the costs of using force are too high but a strong response is required. Yet while these tools may deter aggressive actions in certain circumstances, they may actually encourage bad behavior by signaling to international aggressors that the United States is unwilling to use military force to prevent those countries from threatening U.S. interests.
The practice of using sanctions to disrupt malicious financial activity and target illicit actors goes back to U.S. President George W. Bush, who used key regulatory tools to cut