Bryn Jones on a history lesson for Donald Trump
Have Trump’s belligerence in the Americas and his alliance with Israel to desolate Iran been shows of strength? Or do they indicate an economic-military empire in crisis? US President Monroe’s 1823 edict (a.k.a. the “Monroe Doctrine”) declared central and southern America – especially its infant republics – a no-go region for European powers. One to be policed by the U.S.A. Trump’s second presidency has reasserted and expanded the doctrine, claiming ultimate authority for the US over the whole western hemisphere and its resources, from Argentina to Greenland. Re-asserting the twentieth-century expansion of American hegemony, the Trump administration’s 2025 National Security Strategy also claims exclusive US dominion over the Indo-Pacific and West Asian (“Middle East”) regions. This anachronistic over-extension of imperial power has led to the Iran quagmire. Anachronistic because the US is no longer the youthful 19th-century wannabe hegemon but more like a declining empire.
The latter interpretation has spread beyond Marxists and academic historians to right-wing commentators and business elites, including the billionaire fund manager and philanthropist, Ray Dallio. They see America’s current crises as a stage of empire similar to the terminal decline undergone by the Spanish, Dutch and British empires. All exhibited: military over-reach, unsustainable financial debt and over-empowerment of elites.
In under 100 years, Spain went from being the richest, most powerful military power in Europe, thanks to plundering precious metals from American colonies, to a hugely indebted society, with a shrunken domestic economy and political retreat from its European domains. Think: Spanish Armada and the ruinous defeat by the United Provinces of the Netherlands. Similarly, by the early twentieth century, Britain’s economic empire, built on the dominance of the pound sterling as the world’s trading currency and military superiority in naval technology and warship numbers, was tottering. Within 40 years, Britain was financially bankrupt, its industrial base withered while lacking enough military strength to control and preserve its colonies.
Trump is heading America into the same over-reach trap: attempting military solutions to economic and security frictions in three separate continents. Empire maintenance involves huge military expenditure, involving conflict and competition with rival empires and colonial hinterlands. Despite military victories over German and Japanese rival empires in two world wars, the British Empire like Rome, its ancient predecessor, was over-committed, tackling threats in Asia, Africa and Europe. The USA’s massive militarisation tipped the balance in both world wars but also effectively replaced the UK as the world’s banker, adding financial and monetary dominance to US military superiority.
From 1945 to the early 1970s, US manufacturing was preeminent. Its multinational corporations extended that industrial muscle abroad. After usurping sterling as the world’s trading currency, other nations paid for US goods and financial stocks in dollars, creating massive inflows of funds to Wall Street and the US Treasury. These inflows raised the value of the dollar, reduced the costs of imports for US consumers, and gave Wall Street investors cheap money to lend to US industries. And, critically, permitted it to outspend rivals in nuclear, aerospace and surface armaments. A process that eventually bankrupted the USSR as it tried and failed to keep up with US firepower.
However, like the UK’s failure, hugely expensive wars in Southeast Asia in the 1960s led President Nixon to abandon the gold standard backing the dollar in 1971. Nervous investor nations, like France, had begun to demand gold instead of overvalued dollars. In response, the US
agreed with Saudi Arabia and the Gulf states that all their oil incomes would be paid in dollars. In effect the gold standard was replaced by an oil standard: in financial jargon, the “petrodollar’. Similar shifts to dollar reliance occurred among other sectors and countries. But other imperial economic practices began undermining even that anchor. Neoliberal globalisation policies meant China replaced the US as the world’s main manufacturing hub, just as Germany and then the US had threatened, and did, eclipse Britain’s “workshop of the world.” Income from China’s exports has led it to hold around three-quarters of a trillion dollars of US government debt in Treasury bonds.
The huge size of the US debt threatens US economic stability and, therefore, intrinsic financial risk to China. So, it has been reducing its US investments since 2020. On the other hand, these holdings give China potential leverage over US imperial power. If it liquidated all of its US holdings the dollar would shrink in value, the US Treasury would have to hike interest rates to attract funds from elsewhere, and US citizens’ debts, e.g. housing mortgages, would soar. It is on this fulcrum that political competition for global power intensifies. The B.R.I.C.S. trading alliance of China, Brazil, India, Russia and South Africa – plus a slew of smaller economies – aims eventually to replace dollar payments with their own currency.
Such a decline in dollar holdings by this bloc, whose global trading is approaching that of the US-led G7, would seriously damage the US capacity to finance its commerce and military. As the displacement of the pound sterling did for Britain after World War 2 and the Suez debacle. Trump and his backers grasp such threats to US hegemony. However, their 2025 National Security Strategy omitted a reference to dollar dominance. Instead, it emphasised coercing other economies into “fairer trade” in order to rebuild domestic industrial and especially military capacity. But unless these policies are synchronised, there are huge financial risks. Military spending takes almost a quarter of US Government revenue and is rising higher to buy more firepower for West Asia (aka “Middle East”) conflicts. The US government now pays almost as much in debt interest as its annual military spending!
Implemented as “Donroe” aggression, the Strategy’s demand for tighter control over Latin American trade and economies displays the kind of imperial aggressiveness that eventually crippled the Spanish and British empires. “Achievements” include forcing Venezuela to divert its oil incomes towards the US, away from China and claims on the resources of Canada and Greenland. But the oil-rich West Asia is even more crucial, even though the Strategy claimed this region has already largely been tamed. Egged on by Israel, eastern Donroe intensifies the US’s long-term preoccupation with extinguishing the threat of Iran and its proxies in Lebanon, Yemen and Iraq towards Israel. War on Iran seems more likely to weaken America’s imperial hegemony rather than to save it.
The conflict already threatens the ascendancy of the petro-dollar, and therefore the foundation of US economic and military clout. If Iran achieves its goal of only allowing oil tankers through the Straits of Hormuz for cargoes paid for in Chinese yuan, the US Treasury could lose upwards of $1 billion p.a. Dollar displacement would also weaken US power to impose financial sanctions through its control of the international payments system. More generally, over-commitment in Iran and West Asia weakens America’s goal of containing China’s influence and expansion. China benefits from the mayhem in the Gulf by exposing the US as an unreliable ally of Arab nations but from the depletion of US missile stocks to combat Iranian drones, which weakens its capacity to defend Taiwan against China (as Mark Seddon has argued elsewhere in Chartist 339 and on the website). More fundamentally, unmanageable public debt and loss of the petro-dollar shield against US inflation, plus elite hubris – personified in Trump – would replicate the failure of previous empires. Echoing his warning to an industrialising Germany, Karl Marx might warn Trump: “mutato nomine de te fabula narratur” – the name has changed, but this story is (also) yours.
