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Article
Weaponizing the Dollar: How Financial Sanctions Entrench Global Inequality
Author(s)
Xenia Seabright
Full-Text PDF
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DOI:10.17265/1548-6605/2026.03.003
Affiliation(s)
University of Vienna, Vienna, Austria
ABSTRACT
International law’s promise to support peace, rights, and accountability is increasingly tested by the use of dollar-based payment and custody systems as instruments of financial sanctions. Some sanctions scholarship and policy analysis treat these systems as neutral channels and focus on formal legal prohibitions. This article argues instead that, in a dollar-centred order, sanctions operate through payment, settlement, correspondent banking, and reserve-custody infrastructures that shift decision-making power and distribute coercive pressure unevenly. It asks one overarching question: How do current U.S.-led financial sanctions entrench global inequality, and what reforms in international law could rebalance power and accountability in sanctions practice? The article advances two claims. First, the design of asset freezes, combined with the risk of secondary sanctions, related extraterritorial compliance pressures, and broader compliance expectations, turns private financial intermediaries into enforcement agents and extends the practical reach of sanctions beyond the issuing state’s formal jurisdiction. Second, this hybrid enforcement structure generates asymmetric burdens, including liquidity constraints, transaction frictions, humanitarian spillovers, and third-state adjustment costs, that are borne disproportionately outside sanctioning states. Methodologically, the paper combines doctrinal analysis of U.S. and EU sanctions measures, read alongside relevant UN humanitarian and accountability frameworks, with a Third World Approaches to International Law (TWAIL)-informed political economy analysis of monetary sovereignty and financial infrastructure. Two contemporary episodes anchor the analysis: the February 2022 U.S. freeze of Afghanistan’s central bank reserves, and the coordinated G7, EU, and U.S. sanctions targeting Russia after February 2022. On this basis, the paper proposes a reform agenda centred on stronger multilateral oversight, ideally through a UN-based or UN-adjacent mechanism, for measures affecting sovereign reserves, clearer legal limits and review mechanisms for central-bank asset freezes, and enforceable humanitarian and due-process safeguards.
KEYWORDS
financial sanctions, dollar clearing, correspondent banking, reserve immobilisation, de-risking, humanitarian carve-outs, TWAIL
Cite this paper
Xenia Seabright.Weaponizing the Dollar: How Financial Sanctions Entrench Global Inequality.US-China Law Review, May-June 2026, Vol. 23, No. 3, 158-178
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