The international order that emerged after World War II was built on a structural fusion between American military supremacy and the global dominance of the US dollar. Through the Bretton Woods system, Washington institutionalized its monetary centrality, tying global trade, energy pricing, and reserve accumulation to the dollar. Military power underwrote monetary power, and monetary power in turn financed global military reach. This dual architecture allowed the United States to sustain persistent fiscal deficits while preserving international confidence in its leadership.
That equilibrium is now under visible strain.
As of 2025, US federal debt exceeds $38 trillion. A significant portion of that debt is held by foreign governments and institutions, including Japan, China, and major oil-exporting states. The global demand for US Treasury securities enables Washington to finance structural deficits at manageable costs and, crucially, to externalize part of its inflationary pressures. When the Federal Reserve expands liquidity or raises interest rates to manage domestic cycles, the global reserve status of the dollar distributes the consequences outward. In practical terms, the world absorbs part of America’s monetary volatility.
This system functions only as long as three pillars remain intact: confidence in US institutional stability, credibility of American military supremacy, and the perceived neutrality of the dollar system. When sanctions become systemic instruments rather than narrowly targeted tools, and when financial access is politicized, the perception of neutrality weakens. States begin recalculating exposure risk.
The shift toward diversification is no longer limited to sanctioned countries such as Iran, Russia, or Venezuela. What is more structurally significant is hedging behavior among non-sanctioned states. The expansion of BRICS, increased use of local currencies in bilateral trade, central bank gold accumulation, and energy transactions increasingly denominated outside the dollar reflect precaution rather than rebellion. Diversification becomes rational when reliance carries geopolitical vulnerability.
At the same time, American strategic messaging has grown more explicitly transactional. Renewed rhetoric surrounding Greenland, pressure framed around NATO burden-sharing, warnings to Gulf states that US disengagement would expose them to regional threats, and confrontational language toward European partners all reinforce a broader perception: security dependence remains indispensable, and instability follows withdrawal.
Security architecture and monetary architecture are inseparable. States that rely on American security guarantees tend to anchor reserves and trade in dollars. When security assurances are framed as conditional, financial alignment often follows the same logic. Dependency in one sphere reinforces dependency in the other.
From Tehran’s perspective, this dynamic is interpreted as a transition from rule-based leadership to coercive preservation. Mohsen Rezaei, an Iranian politician and current member of Iran’s Expediency Discernment Council who also serves as an adviser to the Supreme Leader, has argued publicly that the United States is entering a new phase in which it relies increasingly on pressure, deterrent signaling, and strategic intimidation to sustain its global position. Given Rezaei’s institutional role, this assessment reflects more than an individual opinion; it signals a broader strand of thinking within parts of Iran’s political establishment that Washington is seeking to defend dollar centrality and geopolitical dominance through heightened leverage rather than consensual multilateralism.
This interpretation carries strategic consequences. If US power is increasingly perceived as coercive rather than stabilizing, countries facing pressure may conclude that engagement with Washington is not a matter of existential dependence but one option among several. In this framework, negotiations whether over nuclear issues, sanctions relief, or regional security—are not viewed as life-or-death necessities, but as tactical components within a wider multipolar transition. Strategic patience becomes plausible when alternatives appear viable.
The structural paradox facing Washington is evident. The more extensively sanctions are deployed and the more security leverage is emphasized, the stronger the incentives for diversification become. Dollar hegemony cannot be maintained by force alone; it rests on sustained confidence in systemic predictability. If military supremacy remains uncontested, coercive tools may reinforce short-term financial centrality. But if military credibility erodes while financial pressure continues, the mechanisms that allow the United States to export inflation and finance debt expansion become more fragile.
Recent energy realignments underscore the interconnectedness of these dynamics. Europe’s reduced reliance on Russian pipeline gas has increased dependence on liquefied natural gas markets that remain largely dollar-denominated. Meanwhile, approximately 80 percent of Gulf energy exports flow to Asian economies such as China, India, Japan, and South Korea economies whose industrial output is deeply embedded in European supply chains. Instability in strategic chokepoints like the Strait of Hormuz, through which roughly one-fifth of global oil supply transits, would not produce regional disruption alone; it would transmit inflationary shock across continents. Short-term crises may temporarily strengthen safe-haven demand for dollars, but sustained geopolitical volatility simultaneously accelerates structural hedging.
The central question is not whether the dollar will collapse. It is whether the conditions that once guaranteed its uncontested dominance are gradually evolving. If the United States continues to rely on strategic coercion while other powers diversify defensively, the transition toward a more fragmented and multipolar financial order may not occur abruptly—but it may become irreversible.
American primacy after 1945 rested on aligning power with predictability. If predictability weakens while debt burdens expand and geopolitical pressure intensifies, power alone may not suffice to preserve monetary supremacy. The world may not be witnessing the end of American influence. But it may be witnessing the slow transformation of the system that once made that influence structurally unchallengeable.
By Peiman Salehi
Political Analyst & Writer
Tehran, Iran
muckrack.com/peimansalehi_
