The West Is Dismantling the Global Economic System It Built
The rules-based international economic order — the system of institutions, norms, and agreements that governs global trade, finance, and investment — was built largely by the United States and its allies after 1945. The IMF, World Bank, WTO, SWIFT, and the dollar reserve system are all Western creations, encoding Western preferences and serving Western interests, but also providing genuine global public goods: a framework for resolving disputes, a mechanism for financial stability, and a shared infrastructure for cross-border commerce. The striking development of the 2020s is that this system is being dismantled not primarily by its critics — China, Russia, the BRICS bloc — but by the Western powers that built it.
- → The West is weaponising its own institutions: using SWIFT as a sanctions tool, seizing sovereign assets, and imposing extraterritorial regulations — actions that undermine the neutrality that made these institutions globally accepted
- → The Russia sanctions precedent: freezing $300bn of Russian central bank reserves in 2022 sent a clear signal to every country holding dollar assets that geopolitical alignment is now a condition of financial security
- → The WTO is effectively paralysed: the US has blocked appointments to the WTO Appellate Body since 2019, preventing it from resolving trade disputes — undermining the rules-based trade system from within
- → Unintended consequences: each use of financial infrastructure as a weapon accelerates the development of alternatives — BRICS payment systems, bilateral currency swap agreements, gold accumulation by central banks
- → The former IMF director argument: senior Western economic officials have warned that the overuse of financial sanctions is self-defeating — eroding the dollar dominance it is meant to protect
The Weaponisation of Financial Infrastructure
SWIFT — the Society for Worldwide Interbank Financial Telecommunication — was designed as a neutral, cooperative infrastructure for international financial messaging. Its value derived precisely from its universality: every bank in the world could communicate through it, regardless of the political relationship between their countries. When the US and EU excluded Russia from SWIFT in 2022, they converted this neutral infrastructure into a weapon of war. The immediate effect on Russia was significant but manageable — Russia had developed alternative systems in anticipation of exactly this move. The long-term effect on SWIFT’s role as global infrastructure may be more consequential: every country now knows that SWIFT access is conditional on political alignment with Washington and Brussels.
The seizure of Russian central bank reserves — approximately $300 billion held in Western financial institutions, frozen and potentially redirected to Ukraine — is even more significant. Central bank reserves are held precisely because they are supposed to be politically safe: they are a country’s emergency financial cushion, not a political asset. Treating them as a legitimate instrument of economic warfare tells every central bank in the world that holding reserves in Western currencies carries geopolitical risk. The accelerated gold accumulation by central banks since 2022 — particularly China, India, and Middle Eastern sovereign funds — is the direct response. See: De-Dollarisation and Geopolitics 2026.
“Every time we use the dollar as a weapon, we teach the world that the dollar is a weapon — and that countries that can build alternatives should do so. We are accelerating the very de-dollarisation we are trying to prevent.”
The WTO and the Rules-Based Trading System
The World Trade Organisation’s Appellate Body — the institution that resolves trade disputes between member countries and enforces WTO rules — has been effectively paralysed since 2019, when the United States began blocking appointments to its bench. The ostensible reason was concern about judicial overreach; the practical effect is that WTO dispute rulings can no longer be enforced. The US can now impose tariffs in violation of WTO rules — as it did with steel and aluminium tariffs — without any effective international legal consequence. This is not China undermining the rules-based trading system. It is the country that built that system choosing to operate outside it when the rules constrain its freedom of action.
The Self-Defeating Dynamic
The argument made by former IMF director and other senior Western economic officials is that the overuse of financial sanctions is strategically self-defeating. The dollar’s reserve currency status — which gives the US the ability to run large deficits, borrow cheaply, and impose sanctions with global reach — depends on the world’s willingness to hold dollar assets. That willingness rests on the perception that dollar assets are safe, liquid, and politically neutral. Each act of financial weaponisation erodes that perception. The sanctions may achieve short-term political objectives while systematically undermining the long-term financial infrastructure on which American power depends. For the full context, see our Global Economics series.
The most important structural threat to the Western-built international economic order is not coming from BRICS or China — it is coming from within. Western governments, by weaponising financial infrastructure, blocking international dispute resolution, and treating sovereign assets as political instruments, are systematically undermining the neutrality and predictability that made their institutions globally accepted. The consequences — accelerated de-dollarisation, alternative payment systems, gold accumulation — are already visible. Whether this process is reversible depends on whether Western policymakers recognise the self-defeating dynamic before it reaches a point of no return.
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