Africa

By Jomo Kwame Sundaram and Nurina Malek
KUALA LUMPUR, Malaysia, Jun 19 2026 (IPS)

US President Trump’s policies are supposed to make America great again (MAGA), which means different things to various parties. Some of its consequences are inadvertent, including undermining dollar dominance and inducing stagflation worldwide.

Jomo Kwame Sundaram

Bretton Woods
In July 1944, delegates from some 44 countries met in Bretton Woods, New Hampshire, to create a new multilateral monetary and financial system.

The US held 70% of the world’s gold reserves at the time, with gold priced at $35 per ounce. Other central banks bought and held US Treasury bonds and similar dollar assets as liquidity reserves.

This effectively made the US dollar the primary means of payment in the post-war international monetary system. The exchange rates of other national currencies were all set against the dollar.

As other economies recovered post-war, the US current account and trade surplus declined. Until 1971, the International Monetary Fund (IMF) occasionally adjusted fixed exchange rates for ‘structural’ balance-of-payments deficits or surpluses.

Exorbitant privilege
This dollar-based international monetary system gave the US what France’s Gaullist leadership called an ‘exorbitant [economic] privilege’.

Under the Bretton Woods arrangements, the US would never face balance-of-payments problems, as it paid for imports with its own currency, which it could print at will.

Nurina Malek

The US federal government could fund its large and growing budget deficits by selling Treasury bills. This debt is now around $39 trillion, over 125% of annual GDP!

Foreign central banks soon became accustomed to holding US Treasury bonds as official reserves, effectively funding the large and growing federal debt.

Such foreign central bank demand kept the dollar strong in foreign exchange markets. Persistent capital inflows into the US have kept the dollar overvalued.

The strong dollar has boosted domestic consumption of imports, depressed exports, widened trade deficits, and kept consumer price inflation in check.

In 1960, Robert Triffin warned the US Congress about the inevitable problems that arise when a national currency is also used as an international reserve currency.

He urged the US Federal Reserve Bank (Fed) to consider the dollar’s international role when making domestic monetary policy.

In August 1971, President Richard Nixon unilaterally ended the US Bretton Woods commitment to redeem dollars with gold. Thus, the dollar clearly became a fiat currency, with exchange rates shaped by market confidence.

Protection through diversification
After the 2009 Great Recession, Western central banks kept nominal interest rates low for over a decade through coordinated ‘quantitative easing’ (QE).

Low interest rates were maintained for over a decade through the 2020-21 Covid-19 recession before the Fed raised interest rates from 2022, ostensibly to address inflationary pressures.

Borrowers worldwide were thus induced to take on more debt. Governments, corporations, and households borrowed more, increasing accumulated debt.

International payment obligations are increasingly being settled by other means. Gradually, dollar-based arrangements are co-existing with euro- and renminbi-based arrangements and BRICS-initiated alternatives.

Thus, US indebtedness and stagnation have been growing with inflationary pressures. Unsurprisingly, other monetary authorities’ previous preference for holding US Treasury bills as official reserves has declined.

Instead, official reserves have been increasingly diversified to include more gold holdings ostensibly to help hedge against inflation and currency debasement.

About 36,200 tonnes, a fifth of all gold holdings, are now held by central banks, up from 15% at the end of 2023. By 2025, non-US central bank gold holdings exceeded their US Treasury bonds for the first time this century!

Trump 2.0
Criticism of the dollar system has resurfaced from time to time, especially as Washington weaponises more financial instruments and arrangements.

The second Trump administration has threatened major US federal government creditors, including China and longtime allies such as Japan and the Gulf monarchies.

As loyal allies are bullied, many are quietly moving away from prevailing dollar-based international monetary and financial arrangements, which have long been preferred for convenience.

After bombing ten nations in the first year of Trump 2.0, US military spending has been rising rapidly, especially with the Iran war and many of its consequences likely to be protracted despite the promise of a ceasefire.

With international confidence in the US consistently undermined by unexpected unilateral White House initiatives, governments are trying to reduce their vulnerabilities, especially by diversifying their reserve assets.

But unlike early in his first term, Trump now welcomes a weaker dollar as “great”. His ongoing efforts to lower Fed interest rates also reflect successive US presidents’ refusal to address ever-larger federal fiscal deficits over the decades.

With inflation rising, market premiums over Fed interest rates are pushing up commercial rates. These hurt the real economy, employment, and banks, many struggling with rising defaults.

All this exacerbates financial ‘market corrections’ in the US and beyond. Trump-induced international disruptions are worsening instability and slowing economies worldwide.

Trump’s policies have slowed the world economy, including the US. With efforts to address the Hormuz crisis undermined by Israel, his legacy will now surely include having induced the first major stagflation in almost half a century.

IPS UN Bureau

 

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Security Council. Credit: UN Photo/Manuel Elías

By Thalif Deen
UNITED NATIONS, Jun 18 2026 (IPS)

As the campaign for a new UN secretary-general gathers momentum, will the US exercise the decisive vote — or the veto– in the final selection?

The US has publicly declared its opposition to some of the basic goals in the UN’s socio-economic agenda, including gender empowerment and policies relating to diversity, equity and inclusion (DEI), while dismissing climate change as “a hoax” and a “giant scam.”

The Trump administration has also downplayed human rights and adherence to international laws—two concepts ingrained in the UN system.

When NASA announced last week that the astronauts who would fly on Artemis III, the next return-to-the-moon mission, the New York Times pointed out the crew consisted of four men and no women, triggering a question from the Times: “Was this part of the push by the Trump administration against DEI policies?”

If the US administration continues to take a hard line against DEI, what are the chances of the US administration supporting a female candidature for the next Secretary-General?

In an interview with the Times last January, President Trump said he does not “need international law” to guide his actions, arguing that only his own “morality” and “mind” will constrain his global powers.

So, what would be the fate of any candidate— male or female—who vociferously advocates these UN goals?

James E. Jennings, President, Conscience International, told Inter Press Service, the reason the United States has been disproportionately influential at the UN since the founding of the organization is because of its global leadership position and its long-term financial support for many of its programs.

However, he said, things have greatly changed in the last two years, with the US Administration abolishing the United States’ massive aid programs and trying to sideline or replace the UN with Republican-branded regressive policies.

“President Franklin Roosevelt’s Four Freedoms dovetailed with the ideals of the UN Charter, but Washington’s atavistic regime is determined to dominate the globe, not through equality but intimidation”.

“Such actions will be a disaster for both the UN and the US, whose soft power has been a major contributor to its strength through attraction of immigrants, investment, and generous aid programs. No more”.

It is difficult to reconcile Trump’s policies, Jennings argued, based on fear with those of the UN’s charter and goals of mutual respect among nations. Strong and unified pushback from the majority of UN member states with explicit support for independent, visionary global leadership will advance peace and protect vulnerable people everywhere.

“It is unimaginable that the US under the current MAGA Republican leadership would NOT try to select the next US Secretary-General outright, or if unable to do that would not try to block anyone considered unfit from Mr. Trump’s point of view. Personal leadership qualities and policy beliefs will matter less than whether the next head of the UN body kowtows to the US President”.

That fact alone makes it difficult to select a courageous and principled person. At a time of critical challenges for the world body, installation of UN leadership that would be intimidated by or under the thumb of Washington might well be the death knell for what is indubitably one of history’s grandest and most visionary efforts at peace and prosperity for all, he pointed out.

Meanwhile, come election time, will there be a battle of the vetoes – as it happened in a bygone era?

In 1981, Salim Ahmed Salim of Tanzania was backed by the Organisation of African Unity, the Non-Aligned Movement and China. But his bid was blocked by a US veto.

In 1996, a second five-year term for Boutros Boutros-Ghali of Egypt was vetoed by the US—even though he received the support of 14 of 15 members in the Security Council.

In 1981, China cast a record 16 vetoes against Kurt Waldheim to prevent a third term, leading to his withdrawal and the selection of Javier Pérez de Cuéllar.

Asked for his perspective, Mandeep Tiwana, Secretary-General, CIVICUS told IPS “The veto power wielded by the five permanent members of the UN Security Council is the most anti-people feature of the UN system. Civil Society groups have for years been calling for its voluntary relinquishment but to little or no avail”.

It is time, he said, for a fundamental reconsideration of the veto power. No process can be considered fair or transparent if any one state, however populous, has the power to block it.”

Stephen Zunes, Professor of Politics and Program Director for Middle Eastern Studies, University of San Francisco, who has written extensively on the politics of the UN, told IPS under both Democratic and Republican administrations, the United States has blocked the election of candidates for Secretary General, even when they had the support of the fourteen other members of the Security Council.

“Given how Trump has been even more prone to attack the United Nations and bully member states, including ostensible U.S. allies, it is likely that the United States will make it even more difficult this round for the UN to choose its next administrator,” he said.

So far, the list of candidates for the post of Secretary-General include: Michelle Bachelet Jeria (Chile): former President of Chile and former UN High Commissioner for Human Rights. María Fernanda Espinosa Garcés (Ecuador): former President of the UN General Assembly. Rafael Mariano Grossi (Argentina): Current Director General of the International Atomic Energy Agency (IAEA). Rebeca Grynspan Mayufis (Costa Rica): Secretary-General of the UN Conference on Trade and Development (UNCTAD). Macky Sall (Senegal): former President of Senegal and Maria Fernandez Espinosa Garces, former President of the UN General Assembly and former Foreign Minister of Ecuador.

IPS UN Bureau Report

 

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