The Dollar Is Now the Asset Sanctions Are Designed to Protect

In February, Treasury Secretary Scott Bessent made an admission that would have been unthinkable from any of his predecessors. The United States, he said, had deliberately engineered a dollar shortage to collapse Iran's economy.

What we can and have done is created a dollar shortage in the country. — Scott Bessent

The campaign, branded Economic Fury, included maritime interdiction of oil tankers and sanctions on front companies in China and the UAE ^[1][2]. It was the dollar as weapon, deployed at full force, against a target already outside the dollar system. Now look at Sudan. The country's civil war is funded by gold — gold that flows almost entirely through Dubai, a dollar-denominated trading hub that purchased over 99% of Sudan's official gold exports in 2023 ^[3]. US intelligence and the UN have accused the UAE of arming the Rapid Support Forces via Chad and Darfur to secure access to those gold resources ^[4]. The architecture of the war economy is visible, mapped, and documented. And yet the US has restricted itself to entity-based sanctions — five entities in April, eight in June — targeting individuals and procurement networks while leaving the commodity flows untouched ^[5][6]. On July 20, the administration imposed a second round of sanctions triggered by Sudan's use of chemical weapons, but these target government exports, multilateral development bank loans, and Sudanese airline authority — not the gold trade that funds the fighting ^[7]. The State Department's own announcement made the omission explicit.

the Government of Sudan used chemical weapons in 2024 — United States Department of State

The contrast with America's allies is sharp. On July 13, the European Union banned Sudanese gold imports. Three days later, the United Kingdom sanctioned eleven gold-network entities by name. UK Foreign Secretary Yvette Cooper framed the move as targeting the war economy itself.

These sanctions are targeting Sudan’s war economy and they will shine a light on those who seek to profit from these illegal shadow networks. — Yvette Cooper

The US, which possesses the world's most powerful financial sanctions machinery, has not matched that framing or that reach ^[3]. The reason is not indifference. It is doctrine. On the same day the US imposed its July 20 Sudan sanctions, the Trump administration was on Capitol Hill warning Congress that overusing financial sanctions risks pushing global economies toward dollar alternatives — crypto, the renminbi — and that preserving dollar dominance must constrain how sanctions are designed ^[8]. Bessent has been explicit about the constraint.

Dollar dominance is essential — Scott Bessent

The Treasury is fighting bipartisan legislation that would make Russia sanctions mandatory, arguing that excessive financial pressure accelerates the very de-dollarization it fears ^[8]. The doctrine produces a calibration rule. Iran is already outside the dollar system — so the Treasury can manufacture a dollar shortage, interdict tankers, and sanction front companies without risking the system's integrity. Sudan's gold, by contrast, flows through Dubai, a dollar-denominated hub. Sanctioning that gold would mean disrupting dollar flows through a key Gulf ally, risking the alienation that pushes trade toward non-dollar settlement — precisely the outcome the Treasury is trying to prevent ^[3]. The tool is the same. The target's location within or outside the dollar system determines whether it gets used. The pattern holds beyond Sudan. In April, the Treasury extended a sanctions waiver on Russian oil despite Congressional and European opposition ^[9]. Bessent described the move in terms that echoed his doctrine.

deliberate short term measure — Scott Bessent

In March, the Treasury lifted sanctions on three Russian cargo vessels ^[10]. The framing was the same targeted and time-limited principle Bessent articulated to Congress.

The power and integrity of OFAC sanctions derive not only from OFAC's ability to designate and add persons to the SDN List, but also from its willingness to remove persons from the SDN List consistent with the law. — United States Department of the Treasury

In each case, the Treasury chose market stability over maximalist enforcement. There is counter-evidence worth weighing. The IMF's chief economist affirmed in late June that the dollar's position remains secure.

We are very firmly in the dollar-centered world. — Pierre-Olivier Gourinchas

If the dollar is not yet under threat, the Treasury's restraint may look premature ^[11]. But that is precisely what makes the doctrine preventive rather than reactive: the administration is guarding against a trajectory, not responding to a breach. Central banks are already reducing dollar holdings, with 51% citing geopolitical risk as the primary driver ^[12]. China is explicitly calling for the dollar's replacement as global reserve currency, citing the sanctions power dollar dominance confers ^[13]. The Treasury is watching the same data. There is also the awkward fact that the President himself has not always sounded like a man protecting the dollar. In January, Trump welcomed the currency's plunge to a four-year low.

I'm the person that likes a strong dollar, but a weak dollar makes you a hell of a lot more money. — Donald Trump

That sits in open tension with Bessent's insistence on a strong dollar policy ^[14]. But the sanctions machine follows the Treasury Secretary, not the President's trade instincts. The calibration — commodity sanctions outward, entity lists inward — is Bessent's architecture, and it has held across Iran, Sudan, Russia, and the vessel liftings regardless of what Trump says about the exchange rate. The paradox is now visible in full. The dollar is no longer merely the instrument of American sanctions power; it has become the asset that sanctions are designed to protect. That means the weapon can only be pointed outward, at targets already outside the system. It cannot be turned on the hubs — Dubai, the Gulf financial centers — that give the system its reach, even when those hubs are the conduits for the war economies the US claims to oppose. The irony is that the escape hatch the doctrine is trying to prevent is already in use. In January, Iranian leadership moved $1.5 billion to Dubai in 48 hours using cryptocurrency to bypass sanctions ^[15]. The same Dubai that the Treasury cannot sanction without risking dollar flight is already the destination for the capital flight of the country it sanctions most aggressively. The doctrine is coherent. Whether it is sustainable is a different question.