Much of U.S. global power has historically been based on the power and stability provided by the U.S. Dollar serving as the reserve currency for much of the world. However, to offset the effects of near-peer strategic competition—particularly the US-China rivalry—the military must increasingly leverage economic and financial instruments of power. What happens to U.S. nuclear deterrence strategies if Saudi Arabia, along with BRICS+ nations, vote later this year to abandon the Petrodollar? Will extended deterrence fall by the wayside during the climate of geopolitical isolationism that would invariably follow? Is this threat to U.S. economic hegemony a potential catalyst to open war between great power competitors?
In response to these macroeconomic shifts and potential strategic vulnerabilities, to what extent can combatant commands leverage fiscal preparation of the environment (FPE) to achieve economic effects and generate tangible operational and tactical military advantages in this competition? By analyzing the Asia-Pacific as a specific region, what capabilities and potential investments should the U.S. prioritize to counter adversary influence? Specifically, what varying levers of FPE and opportunities in the development of defense, technology, and infrastructure offer the greatest operational advantage? Ultimately, researchers should approach this analysis to understand how these investments translate into tactical readiness, what variables impact the success of FPE, and how this framework might be applied more broadly across other regions to ensure the U.S. can maintain its deterrence strategies.
- Constantine, Lt. Col. Jason, "The Department of Defense's Best Weapon in the Pacific," AF Fellows Paper (Sam Nunn School of International Affairs, Georgia Tech), 2024, 3 pgs.
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- Olagbemiro, Lt. Col. Albert, "The Utility of Cryptocurrency as a Geo-Economic Tool in Pursuit of U.S. National Interests," AWC Strategic Studies Paper (Grand Strategy Seminar), 2020, 26 pgs.
- Schnell, Andrew T., "Building Blocs: Economic Sanctions on the People's Republic of China during the Early Cold War," SAASS thesis, 2025, 90 pgs.
- Schnell addresses the threat to U.S. dollar hegemony and global stability by investigating the potential for the BRICS+ coalition to create a parallel, non-dollar-denominated economic system in response to the U.S. weaponizing the dollar through sanctions. Using the historical analogy of the Cold War—where the Soviet Union rejected the U.S.-led Marshall Plan and a bifurcated global economy emerged—he demonstrates the immense difficulty of establishing a separate economic order. Schnell concludes that while a complete economic decoupling is incredibly hard to sustain, heavy-handed U.S. sanctions fuel backlash and inadvertently encourage targeted states to build alternative financial mechanisms (such as alternatives to the SWIFT messaging system) to escape U.S. leverage. He advises modern policymakers to adopt a highly measured, pragmatic approach to economic statecraft to avoid triggering geopolitical fragmentation and isolating the U.S. economy.