A new economic order based on tangible assets and raw materials will further erode the dollar's status as a reserve currency.
US President Donald Trump has proposed providing Ukraine with permanent military aid in exchange for access to its abundant reserves of rare earth elements, which are essential for high-tech industries and defense applications. This proposal is consistent with Trump's long-standing view that foreign natural resources should be leveraged to offset US military expenditures. Notably, in 2011, he criticized the US strategy in Iraq, suggesting that the confiscation of oil assets could have compensated the US for its military involvement.
Such payments in kind are not without precedent. Historically, nations have engaged in similar agreements, particularly related to oil. For example, during the 1980s, the US entered into agreements with Middle Eastern countries, exchanging military support for favorable oil terms. In the current context, Ukrainian President Volodymyr Zelensky has expressed openness to this proposal, viewing it as a means of securing necessary defense aid while providing the US with valuable resources. However, challenges remain, as many of Ukraine's mineral deposits are located in conflict zones, complicating extraction efforts.
If implemented, the agreement suggests a broader shift in the global economic landscape, one in which raw materials and strategic resources are increasingly central to international trade and finance. The emerging order has been dubbed Bretton Woods III, in which nations seek alternatives to traditional fiat-based monetary systems by accumulating tangible assets and restructuring the dynamics of global trade. Unlike the original Bretton Woods system (1944-1971), which was based on fixed exchange rates and a dollar pegged to gold, Bretton Woods II (since 1971) has been characterized by fiat money and floating exchange rates. However, Bretton Woods III envisions a system of quasi-fixed exchange rates in which commodities play a more central role as economies intervene in foreign exchange markets to manage their currencies and maintain competitive advantages in trade.