US 'Weaponizing' Dollar And Turkey Will Not Be Last to Be Targeted - Economist

© REUTERS / Umit BektasA businessman holding U.S. dollars poses for his friend in front of a currency exchange office in response to the call of Turkish President Tayyip Erdogan on Turks to sell their dollar and euro savings to support the lira, in Ankara, Turkey August 14, 2018
A businessman holding U.S. dollars poses for his friend in front of a currency exchange office in response to the call of Turkish President Tayyip Erdogan on Turks to sell their dollar and euro savings to support the lira, in Ankara, Turkey August 14, 2018 - Sputnik International
Turkey's President Erdogan has hit back at the White House for using the dollar against the Turkish currency and urged countries of the world to challenge the dollar's global dominance in trade. Sputnik spoke to political and economic analyst Aly-Khan Satchu, who says the US has been "weaponizing" the dollar.

On Sunday, President Recep Tayyip Erdogan described the US as behaving like "wild wolves" and said Ankara would pursue non-dollar trade transactions with Russia and other countries in a bid to bypass the dollar's global dominance.

The lira has plunged after the US targeted the Turkish currency as part of a row over a US pastor, Andrew Brunson, who was arrested in October 2016 over aiding an organization led by Islamic preacher Fethullah Gulen, who Ankara believes was behind the attempted coup in July that year. Gulen is living in exile in the US.

According to Nairobi-based political and economic analyst Aly-Khan Satchu,the Trump administration is being increasingly belligerent in its foreign policy.

"The dollar is a weapon and Trump is relishing his financial warfare strategies," Mr. Satchu told Sputnik. 

'Golden Flood of Dollar Liquidity' Is Over

"We have exited a period 'when the living was easy' and the world was awash with a golden flood of dollar liquidity. Many policy-makers imbibed the 'Kool-Aid' and believed in this 'new normal'," Mr. Satchu told Sputnik.

"Now we are reverting back to the status quo ante, the tide has now reversed. Oresident Erdogan's voodoo economics worked in the time of the golden flood of liquidity but under today's less benign conditions no-one except die-hard Erdogan-supporting Turkish nationalists is prepared to throw good money after money gone bad on the basis of Erdogan's hocus pocus monetary policy," Mr. Satchu told Sputnik.

"I am not sure if the weaponization was by design or by accident but what is crystal clear is currencies like Turkish lira — which has fallen 42.5 percent year to date are the equivalent of offering you an opportunity to pick up pennies in front of a freight train (the dollar)," Mr. Satchu told Sputnik. 

"I have listened to so many folks rail against the dollar's hegemony and for eternity. Gaddafi and Saddam spring to mind and both ended up dead. It is not possible for Erdogan to bend the arc of monetary policy making to his will and if he continues down this path, the Turkish economy will continue to crater and we can see very clearly where cratering economies end like Venezuela and Argentina," Mr. Satchu told Sputnik.

"Erdogan is a mercurial politician but he reminds me of a man walking around a tinderbox with a match in his hand. He is endangering himself and his legacy is in peril," Mr. Satchu told Sputnik.

He said Donald Trump may be universally unpopular but his foreign policy was a success for US interests.

'Trump's Aggressive Foreign Policy…Working A Treat'

"Trump's aggressive foreign economic policy is the signature success of this administration. It is highly effective — look at Venezuela to see its most extreme output. Iran is in a similar bind. China is in retreat notwithstanding some bravura talk. Trump can keep it up. It's working a treat," Mr. Satchu told Sputnik. 

Mr. Satchu said the only politician who had managed to stave off a currency attack from the dollar was Malaysia's Mahathir Mohammed in 1998.

The dollar has been the world's dominant currency ever since the 1944 Bretton Woods agreement, when it replaced the gold standard, and Mr. Satchu said it would remain all-powerful for a long time.

"For the foreseeable future, I do not see gold, the (Chinese) RMB, or crypto replacing the dollar. It's not going to happen in our lifetimes," Mr. Satchu told Sputnik.

So who could be the next target for the US's ire?

South Africa, Beware!

Mr. Satchu said if politicians around the world are not wary of upsetting the US now then they are "asleep at the wheel".

"South Africa strikes me as an example of a country that should be worried, very worried," said Mr. Satchu, hinting at Trump's recent tweets in which he has come out in support of white farmers who he claimed have had their farms seized and been subjected to "mass killings".

Ironically in 1986 the US Congress passed legislation proposing economic sanctions against apartheid-era South Africa, but it was vetoed by the Republican President Ronald Reagan. In the end Republican senators voted to override the veto and the sanctions helped bring the collapse of the apartheid regime.

The views and opiniones expressed in this article are solely those of the speaker and do not necessarily reflect Sputnik's position.

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