Trump Declares War on Multipolarity

Dear all,

We welcome you to the Greater Caribbean Monitor (GCaM).

In this issue, you will find:

•Trump Declares War on Multipolarity

•Marco Rubio, the Secretary of State Closest to Latin America

As always, please feel free to share GCaM with your friends and colleagues.

If you’ve been forwarded this newsletter, you may click here to subscribe.

Best,

The GCaM Team

•Trump Declares War on Multipolarity
699 words | 3 minutes reading time

The return of Donald Trump to the White House has already sent shockwaves through the international community. Known for his aggressive, unforgiving rhetoric, Trump’s previous tenure demonstrated a distinctly nationalistic approach to defending U.S. interests. Trump has at times appeared to embrace an underlying isolationist current in U.S. politics; now, however, he has has turned his focus to safeguarding America’s most powerful weapon: the U.S. dollar.

Overview. Trump recently issued a stark warning, threatening a 100% tariff on goods from BRICS nations if they proceed with plans to establish a new currency to serve as a medium for the settling of international transactions and rival the dollar as the world’s reserve currency

• BRICS—comprising Brazil, Russia, India, China, and South Africa, along with other emerging economies—aims to represent a significant counterweight to Washington’s geopolitical dominance. Since its establishment in 2006, the bloc has positioned itself as an alternative to the G7 and U.S.-led global leadership.

• In pursuit of reduced reliance on the dollar, BRICS has made notable moves, including the creation of the New Development Bank, an institution designed to rival the World Bank and the IMF, which have traditionally been dominated by Western nations.

• Despite these efforts, BRICS has yet to achieve meaningful success. Currently, approximately 90% of global trade transactions involve the U.S. dollar; 60% of central bank reserves are held in the currency.
  
  

The Dollar’s World. This raises an essential question: Is a world without dollar dominance plausible? While a partial shift cannot be ruled out, such a scenario is highly improbable under the current global financial structure.

• For Washington, maintaining the dollar’s primacy is critical—not only as a shield against external economic shocks, but also as a tool to advance its political agenda worldwide.

• For Trump, the dollar remains a cornerstone of U.S. foreign policy. He has made it clear that he will not hesitate to impose a wide range of sanctions against any country or actor perceived to undermine U.S. interests.
  
  

Economic Power. BRICS countries, such as China, Russia, and India, often run substantial trade surpluses, exporting far more than they import. This enables them to accumulate large foreign exchange reserves, primarily in dollars. However, this dynamic also creates dependency on external markets capable of absorbing their exports, as their domestic economies often lack the scale or consumption capacity to sustain growth independently.

• The United States, by contrast, maintains a significant trade deficit, providing surplus economies with a crucial market for their goods, while ensuring a persistent demand for dollars within the global financial system. This is partly explained by what economists call the Triffin dilemma.

• Nations reinvest their dollar earnings in dollar-denominated assets, such as Treasury bonds, completing a financial cycle that sustains U.S. deficits while reinforcing dollar dominance. 

• The dollar is more than a currency—it is the engine driving global economic flows between surplus and deficit economies.
  
  

Political Power. The United States leverages this position to exert influence over international financial systems, particularly through institutions like SWIFT, the global messaging network for cross-border transactions.

• Using tools like the Global Magnitsky Act, Washington can freeze assets and restrict dollar transactions for sanctioned entities worldwide, a powerful mechanism for enforcing foreign policy objectives. It does, however, come at the cost of alienating those who are negatively affected, driving them to seek alternatives to the dollar.

• This strategy was evident in 2018 during Trump’s first term, when sanctions were imposed on Iran, a BRICS member. These measures included barring Iranian banks from SWIFT and freezing an estimated $40 billion in assets.

• Russia experienced such measures in 2022, following its invasion of Ukraine. The exclusion of Russian banks from SWIFT led to a 30% drop in the ruble’s value within days. The ruble soon recovered, aided in part by Russia’s access to alternative payment systems and its trade partners’ willingness to accept payment in roundabout ways.
  
  

Balance. Trump’s threat to impose 100% tariffs on BRICS nations may be exaggerated—a clear bluff. However, both he and his advisors likely understand its symbolic power as a deterrent, underscoring the dollar’s unmatched influence and the critical role of the U.S. market.

• This strategy reinforces the dollar’s centrality in projecting U.S. power globally, even as BRICS efforts to challenge its dominance confront the entrenched complexities of the global financial system. For now, meaningful change remains a distant prospect.

•Marco Rubio, the Secretary of State Closest to Latin America
809 words | 4 minutes reading time

Marco Rubio, the Cuban-American senator, has long been one of Donald Trump’s closest allies. Despite being a strong critic of the president-elect during the 2016 Republican primaries, Rubio swore fealty to Trump shortly thereafter and remained steadfast even during the early days of the Biden presidency, when Trump’s political prospects were far from rosy. His reward has now come.

• As Secretary of State, Rubio will be one of the most important members of the new cabinet, placing him fourth in the line of succession to the presidency.

• Much ink has been spilled regarding the implications for Latin America. What is clear is that Rubio, the first Hispanic Secretary of State, sends a powerful message to the region, which has arguably been neglected by Washington since the end of the Cold War.

• For many in the region, this is not necessarily a good thing. U.S. neglect allowed governments across Latin America to grow closer to China with hardly an objection from Washington and outsource their economic travails to the United States via immigration. This state of affairs may soon come to pass.
  
  

Why It Matters. In the Senate, Rubio has been remarkable for his keen interest in Latin America. During his 13 years in the upper house, he has focused mainly on promoting the tightening of sanctions against Venezuela and Cuba, and to a lesser extent, Nicaragua. In Central America, he has expressed some concerns about Salvadoran President Nayib Bukele and sharply criticized attempts to keep Guatemalan President Bernardo Arévalo from taking office.

• Both due to historical affinity and geopolitical considerations, the future Secretary of State’s knowledge of the region distinguishes him from most U.S. officials.

• Rubio has promoted a zero-tolerance approach to corruption and democratic backsliding in the region. Against the State Department’s relatively light-touch use of sanctions, he is in favor of harsher enforcement.

• On the other hand, he has been a prominent promoter of U.S. investment in Latin America. He sees U.S. economic involvement as a way to tackle the “root causes” of immigration and lessen the appeal of closer links to Beijing.
  
  

Between the Lines. Rubio is not a sworn enemy of USAID, whose work in Latin America has been criticized as overly ideological. He is, however, likely to reform the agency, which falls under his remit as Secretary of State. He sees USAID as a weapon to promote stability, combat poverty, and promote democracy in countries that are of strategic interest to the United States.

• Rubio, who advocates for increased efficiency and accountability in public expenditures, has strongly opposed the use of USAID funds for programs related to gender identity, LGBT rights, and the promotion of abortion.

• This heralds a major shift in USAID’s focus, especially in contrast to the Biden administration. It does not necessarily imply a weakening of the agency, although stricter oversight of its activities is increasingly likely.

• Regarding Central America, Rubio’s greatest concerns are immigration, transnational crime (drug trafficking and gangs), and corruption. In general, and echoing the words of Vice President-elect J.D. Vance, Trump is likely to a follow a less “moralizing” foreign policy, instead prioritizing U.S. interests.
  
  

Yes, But. Although Rubio is closer to Latin America than his predecessors, the region is not his greatest concern. The immigration crisis will have to be dealt with, but the overriding ambition of Trump’s foreign policy remains the long-awaited pivot to Asia. Solving entanglements elsewhere will thus prove crucial.

• Rubio’s most immediate challenge will be the war in Ukraine, which Trump is determined to end, both to save billions of dollars in donations to Ukraine, and to refocus his diplomatic efforts.

• The Middle East provides another source of trouble, but recent events in Syria, where conditions for Bashar al-Assad have rapidly and unexpectedly deteriorated, have reduced the chances of a prompt resolution. 

• From Trump’s perspective, every day spent worrying about Zelensky and Putin, or indeed the Levant, is a day in which the United States neglects crucial considerations with regard to China. Trump does not benefit from a foreign policy divided on too many fronts. Rubio will prove key to refocusing these efforts.
  
  

To Close. Marco Rubio’s nomination is a strategic decision for Trump, who partly sees himself as a restorer of U.S. prestige and power projection abroad. A heavy hand in foreign policy will likely be the hallmark of Rubio’s tenure. 

• As for Central America, the spotlight will be on increasing efforts to curb immigration and dismantle organized crime networks. The refocusing of USAID’s efforts is likely to upset the cottage industry of NGOs in the region, but its geopolitical implications will remain relatively minor.

• The left-leaning, reform-minded Guatemalan government will not lose an ally, but its support will be conditional on meeting Trump’s demands on immigration. The unconditional support it now receives from Washington is likely to dissipate.

• Latin America may benefit from U.S. efforts to counteract China in the region. This is likely to lead to increased U.S. involvement and investment. Washington’s priorities will, however, remain in Asia.