The Role of Money in International Politics: Powerful and Dangerous


This article will focus on an underappreciated and rarely discussed issue in international politics, the role that money, resources and wealth play in influencing government policies. For example, often overlooked when analyzing post-industrial and post-globalization politics is the rise of the multinational financial, corporate and oil industries as powerful actors influencing State policies and thus shaping the course of international relations. In fact, there has been a shift in global affairs towards a world no longer under the sole governance of States but instead governed by a conglomerate of State and non-State decision-makers. However, despite these changes to the global governing landscape and the different ideologies that have moved the boundaries of how humanity views international relations; one constant basic tenant throughout these transformations has been the pursuit for wealth/riches such as money, gold, oil and other resources. As a matter of fact, throughout history – governments have executed various policies in order to expand their treasury chest, increase their relative wealth, ensure loyalty and deliver on military objectives. These policies have been both peaceful and violent. Examples include transitioning from feudal to capitalist economies, establishing financial institutions, developing mercantile relationships, entering into trade wars, instigating coups or revolutions, marching to armed conflicts, entering the empire (ex: colonial empire) business, and revolutionizing the relationship between State and citizen.


Introduction: Humanity’s Lust For Wealth

Throughout history, the lure of riches has driven communities and States to dive headfirst into wars of greed which are distinguished from wars of survival. Wars of greed are rooted in the human psyche that inter or intra-State conflicts have the potential and possibility of delivering a society a surplus of gains. However, in order for this form of greed to take place, policy and decision-makers have to possess an undoubted self-confidence that initiating or entering into bloody conflicts will produce a war bounty of territorial and or resource gains, power, and or glory. Additionally, any bounty of wealth and power must be in excess of any potential war damages such as economic and human losses (Jackson and Morelli 2009). For example, the ancient Roman Empire, Napoleon and Hitler were willing to sacrifice millions of lives for the mere purpose of acquiring territory, resources, and ultimate global power and domination. In other words, for the powers to be the temptation of acquiring power, money and glory can easily outweigh the importance and regard they hold for human life. Unfortunately, things have not changed much since the days of ancient Rome, the First French Empire and the Third Reich. For example, in the current millennium – crises and conflicts in the South and East China Seas, in Iraq, in Syria, in Libya, in South Sudan, in Nigeria and in Ukraine are undoubtedly driven by a struggle for energy resources (often overlooked in the mainstream media, analyst and academic circles). The reason why the struggle for energy exists in these countries and regions is due to the value that oil and natural gas hold as the “world’s most important and valuable commodities” (Klare 2014). In fact, sales from oil and gas provide the bulk of national income for States dependent on revenues from resource sales such as Saudi Arabia, Kuwait, Qatar, the United Arab Emirates, Iraq, Russia, Nigeria, Iran and Venezuela (Klare 2014). However, it is not only energy-producing States that rely heavily on the production and distribution of oil and gas as sources for their income; energy corporations also obtain large portions of their revenue from oil and gas sales. In fact, both international and State-owned energy corporations through control/shareholdings in the oil and gas sector, including therefore in the management of the allocation and collection of petroleum resources, have acquired enough economic clout to influence State policy within petroleum exporting and importing countries (Klare 2014).

Moreover, for much of history, the desire to exploit rare and valuable geopolitical resources has dominated much of foreign policy conduct in international affairs. Since the early 20th century, the geopolitical struggle to control oil fields and oil supplies (including transit routes) has arguably been one of the principal causes of wars, revolutions and economic crises (Stevens 2019). In other words, controlling oil and natural gas fields can lead to an expansion of wealth; and sometimes the only way that countries and energy firms can access control over these fields is through manipulating the machinations and mechanisms of crises and conflicts. These strategies and tactics include instigating, provoking, supporting and or funding: fraudulent election campaigns, coups, demonstrations, uprisings, revolutions, economic-financial crises and inter or intra-State wars.


The Lure of Black Gold

A good example that demonstrates the power of money in this case black gold is the 1953 Anglo-American coup, also known as Operation Ajax, in Iran that ousted nationalist Premier Mosaddeq. Operation Ajax was a joint U.S. Central Intelligence Agency and British Secret Intelligence Service venture born out of Mosaddeq’s decision to nationalize the Anglo-Iranian Oil Company (AIOC) (Zahrani 2002). While the UK’s interest in removing Mosaddeq was limited to commercial-driven geopolitical oil interests through a desire to maintain its shares in Iranian oil; the motives of the U.S. is less clear. One theory states that the Eisenhower Administration was motivated by a proactive foreign policy to prevent a Communist takeover in Tehran (Zahrani 2002). The other is the Commercial Motivation Theory which argues that U.S. involvement was influenced by overseas interests of the Oil industry, the Eisenhower Administration’s pro-business stance, and the geostrategic value of Gulf oil (Zaharani 2002). Key evidence that backs the latter theory is that post-coup U.S. oil companies gained a 40% share in Iranian oil (Zahrani 2002). Whatever the reason, Washington played a dangerous game siding with Britain and the Anglo-Iranian Oil consortium over the interests of the Iranian State, since a failed coup might have pushed Tehran towards the Communist Bloc (Zahrani 2002). While the British Government risked harming its diplomatic-commercial influence with Tehran for the purpose of safeguarding its 51% interest in AIOC (Zahrani 2002). Finally, the 1953 coup showed weaker nations that despite the post-War emphasis on establishing a global order of independent States including ending all forms of aggrandizement (The Atlantic Charter 1941); the political independence of these lesser powers could be sacrificed to satisfy the economic-financial interests of greater powers.


The Bond Between Money and Loyalty

Throughout history, money has been used to buy off both the loyalty of the army and the public citizenry’s trust in the national institutions. One form of buy-off is the production and supply of paper currency also known as fiat paper money. Interestingly medieval China in the 9th Century AD introduced and circulated paper money as a form of monetary exchange (Tullock 1957; Rothbard 2002; Zelmanovitz 2010). However, this revolutionary form of money supply did not become a popular medium of monetary exchange in international affairs in spite of the potential for investments along the Silk Roads and with the rise of Colonialism in the 1400s. In fact, it was only in the colonial Commonwealth of Massachusetts in the New World that the use of fiat paper money was once again introduced into the public sphere by a government (Rothbard 2002; Zelmanovitz 2010). The creation and supply of fiat money by the Colonial Government of Massachusetts was, however, the result of desperation not ingenuity. They say war can profoundly change the course of history and sometimes failure can be more profound than success. For example, the modern fiat system is a product of failure in battle, failure of the colonial Massachusetts Army in its defeat in French Quebec. That defeat handicapped the Massachusetts Colonial Administration in its ability to provide monetary rewards to its soldiers which led to fears of munity rising within the army’s ranks (Zelmanovitz 2010). In order to avoid a backlash from the army through a loss of loyalty, the Colonial Administration in Massachusetts decided to introduce a novice form of payment as means in which to buy off the loyalty of its army. The decision taken by the Massachusetts Government was to issue fiat paper money, a revolutionary way to pay soldiers (Zelmanovitz 2010) and service. Therefore, this event that took place in Colonial America in 1690 proves that it is money and not ideology nor personality that buys human loyalty and service. To put it in honest terms: ideas, ideologies, parties, religions, peoples, cultures, civilizations, empires and nations rise and fall; the only constant survivor is the desire to acquire wealth (for survival and or power).


The Universal Clout of the U.S. Dollar

It is ironic that China, which is seen by many Western and non-Western analysts, policymakers and political pundits, as the great threat to American global economic supremacy and the next international superpower, created the very monetary system (the fiat paper money system) that is synonymous with America global financial, monetary and economic authority. It is nearly impossible to judge how history would have turned out without China’s issuance of fiat money; nevertheless, it is arguable to suggest that the U.S. would not have held the same global financial authority as it has had since 1945 without paper money. There is ample evidence that unequivocally proves the international monetary dominance of the U.S. dollar ($) and its importance to American global political power. This dominance is based on the U.S. ($) being the most powerful reserve currency in the world since the Bretton Woods Conference, which established both the International Monetary Fund and the World Bank in 1944 (Siripurapu 2020). According to the International Monetary Fund, there are 8 World reserve currencies: the U.S. $, the Euro, the British Pound Sterling, the Swiss Franc, the Canadian Dollar, the Australian Dollar, the Chinese Yaun, and the Japanese Yen (Coppola 2020). A major factor behind the monetary and financial clout of these 8 reserve currencies is their worldwide use since they are held in central banks around the world as foreign exchange (FX) reserves (Coppola 2020). However, the power of the other 7 global reserve currencies pales in comparison to the clout held by the U.S.$, with around 60 percent of global foreign exchange reserves currently designated and convertible into the U.S. $. (Coppola 2020). Moreover, the international financial and monetary might of the U.S. Dollar does not seem to be waning. For example, as recent as the 2nd quarter of the 2019 fiscal year, total FX reserves converted into dollars stood at 11.7 trillion $. Of those 11.7 trillion $, 6.8 trillion were in U.S. $ including in “dollar-denominated assets” (Coppola 2020). The international economic prestige and value of the U.S. dollar provide America with numerous economic powers and advantages. These powers and advantages include the ability to impose far-reaching financial sanctions (to be discussed in more detail later) and “borrow money at a lower cost” and with greater ease (Siripurapu 2020).

In fact, apart from military power, the United States retains considerable control over the global political economy as a result of the financial clout that it wields through the U.S. dollar. The U.S. dollar’s importance as a game-changer and influencer in international affairs is related to America’s ability to use its currency for both soft and hard power strategies. First, the U.S.’s coercive abilities are strengthened through the Federal Government’s ability to take political-economic risks by adopting economic policies and even running deficits “that would otherwise elicit a countervailing market reaction” (Kirshner 2008, p. 425). In other words, the American Government through its control of the U.S. dollar has the power to implement risky policies and run trade and economic deficits that would normally be considered precarious to the economic stability and financial security of all other countries.

Moreover, America also derives substantial political power from its ability to use the dollar’s widespread circulation and status as the world’s premier reserve currency to manipulate its interstate economic relations in order to press forward U.S. political interests (Kirshner 2008). This includes the ability to impose punitive financial sanctions (Siripurapu 2020). The effectiveness of U.S. sanctions is derived from the international backing they receive including from major powers and intergovernmental organizations (Siripurapu 2020). The willingness of countries and organizations to facilitate America’s political-economic bidding is due to U.S. military strength and the dominance of its currency in the international market. In terms of the global market, there are three areas where the Dollar’s dominance is most pronounced: financial transactions, international commerce (Siripurapu 2020), and the Petrodollar system (Bojarczyk 2012).


Financial Transactions

The majority of all global financial transactions including bank transfers deal in U.S. dollars which are eventually recycled to the New York branch of the Federal Reserve (Basosi 2020). The fact that all dollars are recycled, directly or indirectly, into the Federal Reserve and thus fall under U.S. Government jurisdiction provides America with the powers to cut off individuals, organizations and States access to their own dollars. These powers include freezing the assets of and or imposing sanctions on parties which either threaten American national security, economic and foreign policy interests or conduct relations with U.S. blacklisted entities (Siripurapu 2020; U.S. Department of The Treasury). An example of the global reach of U.S. financial sanctions is the 2015 punishment of BNP Paribas (a French bank). The U.S. Government imposed a hefty punishment on BNP Paribas of 9 billion U.S. $ for the bank’s violation of American imposed sanctions on Cuba, Sudan and Iran. This violation occurred when BNP Paribas processed payments in U.S. dollars from the aforementioned three blacklisted States (Siripurapu 2020).


International Commerce

The U.S. Government’s control of the global stream of dollars provides America with extensive levers of power and advantages to dictate the tide of international commerce. These advantages and powers include buying cheap or low-cost oil (in the majority of cases) and then seeing the recycling of U.S. dollars re-enter the American economy (this is the petrodollar system). The second reason why control of the worldwide flow of dollars provides the U.S. with considerable levers of influence within the international trade market, such as in relation to global oil sales, is the fact that “major commodities such as oil are” principally traded (imported and exported) on the U.S. dollar market (Siripurapu 2020). The third factor that explains American dominance of international trade is its ownership of the Dollar: ownership derived from the U.S. Federal Reserve possessing the exclusive right to issue and distribute U.S. Dollars and the U.S. Treasury Department has sole authority to print them (Federal Reserve Bank of New York 2013). This special authority given to the United States to print and issue U.S. dollars – ensures that only it can spend unlimited dollars to satisfy its import and export wants and needs (Basosi 2020). As famed historical sociologist Giovanni Arrighi put it: “the abandonment of the gold-dollar exchange standard (meaning the abolishment of the Bretton Woods System) resulted in the establishment of a de facto pure dollar standard that enabled the U.S. to tap the resources of the rest of the world virtually without restriction, simply by issuing (and printing) its own currency” (the U.S. Dollar) (Basosi 2020).

An additional advantage to controlling the international dollar system is that the U.S. can use its control of the Dollar supply, with the added backing of its vast military armada, to act as the global financial policeman. One power given to the world’s financial policeman is the capacity to enforce harsh measures most notably sanctions on entities it perceives as threats: in this case specific threats to both American and global interests and security (Siripurapu 2020). For example, the U.S. uses its global control of the $ market to impose severe economic, trade, financial, and military sanctions on Iran. Hefty sanctions on an economy like Iran (Siripurapu 2020), which is heavily dependent on revenues from oil sales (petroleum exports), puts a great strain on its economy which relies heavily on an inflow and outflow of the U.S. dollars.



Petrodollar recycling according to the International Monetary Fund is “the reflow to the rest of the world that results from the use oil-exporting countries make of their oil (petroleum) receipts” (Nsouli 2006). In other words, all foreign exchange reserves (meaning all U.S. dollars) that petroleum exporting countries receive from their oil sales ‘flow back’ to the consumers (importers) (Nsouli 2006). In fact, there are several ways that the exporting nations’ oil receipts are recycled to the importer(s). One way is through the petroleum exporter reinvesting the money (U.S. dollars) it receives from oil sales in external services; another way is reinvesting that money in foreign commodities (international products) such as military arms; and the third way is simply investing the receipts earned from petroleum sales in overseas assets such as in Treasury bonds, in private equities and or in bank deposits (Nsouli 2006; Basosi 2020). For example, the oil-rich Persian/Arabian Gulf monarchies invest considerable sums of U.S. dollars that they receive from oil sales in the American military and banking industries including in U.S. Treasury bonds (Bojarczyk 2012; Basosi 2020). There are four benefactors from this recycling system: the U.S. banking industry; the ‘military-industrial complex, a term coined by President Eisenhower in his presidential farewell address in 1961 (Weber 2020); the United States Federal Government; and the Pentagon. In fact, it is a shared benefit. The process is as follows: the increased circulation of wealth that flows within the American economy means there is more money available for the U.S. Government to borrow (ask for loans) from the banking sector; the Government then spends the money it borrows on armaments produced by military contractors; which eventually means that the Pentagon receives an increased supply of weapons that it uses to build up the military’s arms and technological capabilities. Therefore, and in conclusion, after examining the main points and overall theme of this article, it is the opinion of this author that World politics is governed by one master who is the source of all power: MONEY



Simon Nasr 

MA, King's College, University of London, UK.




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