Grand Strategy: The temptation to de-dollarise

President-elect Donald Trump’s warning to the BRICS nations including India—demanding a commitment not to create a new BRICS currency or alternatives to the US dollar—is both provocative and a harbinger of challenges ahead. In a way, Indian responses to various de-dollarisation attempts - which could theoretically pave the way for a more multipolar world departing from the current US-led status quo - today also illustrate India’s careful approach to navigating the complexities of multipolarity even if the idea of a multipolar world is something New Delhi is keen on. While in the short run, de-dollarisation would help India evade the impact of US-led sanctions on countries like Iran and Russia, it could in the long run lead to a chaotic global financial system. Given its history as a target of unjustified US sanctions, New Delhi would have welcomed alternative payment forms as these would provide it with more options. In other words, while it could be argued that the de-dollarisation of global trade is not necessarily a bad idea given how the US and its allies have weaponised globalisation, trade and the dollar to arm-twist other countries, India is careful not to jump on the de-dollarisation bandwagon even though India has suffered in the past due to US sanctions against Iran, and before those direct sanctions against India in 1998, it could suffer again due to sanctions against Russia.