(Financial Times Europe, Daniel Davies, April 9, 2026).
The threat to limit access to the global dollar system, one of America’s most powerful geopolitical tools, proved to be a weakened stick during the clash in the Strait of Hormuz, as sanctions against Iran did not prevent the country from selling oil, collecting tolls or ransoms from ships, nor from requesting payments in cryptocurrencies for the passage of tankers.
Already in 2022, sanctions against Russian banks and their exclusion from the Swift system proved more of an inconvenience than an economic death sentence, while Iran, one of the most sanctioned countries in the world, continues to operate thanks to renminbi payments with China, shadow banking networks, and parallel cryptocurrency channels that evade US control.
The dollar weapon is effective mainly against open economies integrated into global supply chains, but these are rarely the ones worth threatening, while sanctioned states quickly adapt to working with alternatives, making the global financial system a force multiplier for America’s enemies rather than a reliable geopolitical weapon.
The central banker’s maxim.
“There is an old maxim among central bankers that seems widely applicable to today’s geopolitical situation. As David Kynaston recounted in his history of the Bank of England: ‘Swing the big stick if you want, but never use it; it might break in your hand. Better yet, try moving the finger.’”
The dollar as a weakened stick.
“Among the many consequences of the clash in the Strait of Hormuz, it seems we may remember this week as the one in which one of America’s most powerful geopolitical tools was shown to be a weakened stick. Threatening to limit access to the global dollar system now seems less fearsome.”
The Russian experience of 2022.
“We saw the first signs that this was the case already in 2022, when Russian banks were sanctioned and disconnected from the Swift messaging system for global bank payments. Even then it was understood that it would be more of an inconvenience than an economic death sentence, but the extent to which Russia continued to conduct war and sell oil to finance itself must have disappointed sanction supporters.”
Ineffectiveness against Iran.
“The ineffectiveness of the armed dollar in the Gulf was equally telling. Iran is one of the most sanctioned places in the world; it is one of the few cases where US Treasury sanctions cover an entire country rather than entities or individuals. Not only does this not seem to have prevented it from selling oil while at war with the United States, but it also does not appear to have stopped it from demanding ransom fees from international ships trying to pass through the Strait of Hormuz.”
Alternatives that make the dollar less fearsome.
“Part of the problem is that being cut off from the dominant global payment system is a threat only because the dollar economy is so convenient and profitable to use. This means the weapon is more effective against open economies integrated into global supply chains. But these are rarely the ones worth threatening. Sanctioned states, on the other hand, tend to get used to managing and finding people willing to deal with them. Iran is able to sell at least part of its oil in exchange for renminbi largely because most of its imports come from China. There is also a network of shadow banks and financial companies willing to risk US extraterritorial enforcement and to launder dollar payments.”
