Abuse of economic power

The US is using its sanctions regime as a powerful whip against countries which it views as hostile.

President Donald Trump has used this weapon against Iran with considerable success by forcing the effective devaluation of its currency and bringing the country to its knees. Several Iranian cities have witnessed lately demonstrations against the dire economic conditions in the country. Tehran has since signalled that it wants to talk with Washington about its differences with it on several fronts. Iran is no longer defiant as it once was.

A similar threat hangs ominously over Turkey for the arrest of a US pastor and other major policy differences, with the mere thought of applying US sanctions against Ankara has caused the Turkish lira to drop to unprecedented low levels. The Turkish economy is undermined already and risks losing steam.

Of course, Washington applied its sanctions weapon against Russia, causing it to think twice before escalating the tension between the two countries. The US also used such an economic and fiscal tool against other nations across the globe with considerable success, including North Korea, Syria and even China.

Imposing higher tariffs by the US against EU nations, Canada and Mexico is causing uproar in these countries and forcing them to reciprocate the punitive US tariffs by imposing their own on US exports.

What all of this means is that mighty nations need not use guns anymore to fight their enemies. In a world dominated by economic and fiscal considerations, all that giant nations need to do is making economic and fiscal threats against unfriendly nations to prosecute certain policies.

The overriding policy issue for the international community is whether to allow the use of economic or fiscal threats as lawful and, therefore, tolerated. With all fairness it should not. The US and its various specialised agencies must get their act together and adopt a position against such an abuse of economic and fiscal power. A special resolution to that effect is therefore much needed.