The Chinese smartphone company ZTE employs 75,000 people and last year sold $17 bn of products. Yet, despite being a booming and profitable concern, this week ZTE shut down its operations. Why? Because the United States has ‘banned American companies from exporting technology’ to it. ZTE phones contain a number of US-made components, as well as US-designed software. Thanks to the ban, the phones can no longer be made. ZTE is out of business, and 75,000 people will lose their jobs – just like that.

The ZTE ban follows American complaints that the company had been circumventing US sanctions against Iran and North Korea. ZTE admitted this and paid a $890 million fine to the US government, but American regulators maintained that it was still not being honest about its dealings – thus the sanctions imposed against it.

Meanwhile, following the US withdrawal from the nuclear deal previously agreed between the USA, Iran, and several other countries, American officials have been warning European companies that they must stop doing business with Iran. The European company Airbus had signed an agreement to sell Iran billions of euros worth of passenger aircraft. More than 10% of those aircraft, however, consists of American parts. Conseqently, the US has now prohibited Airbus from selling them to Iran because of sanctions re-imposed on Iran following the US withdrawal from the nuclear deal. Airbus could, of course, sell the planes anyway, but it would then find itself being fined huge sums of money in the USA and, like ZTE, have its American supplies cut off.

Any other non-American companies who rely on US components or software, and who are considering doing trade with Iran are now going to have to seriously reconsider their position. European governments and the European Union are none too happy with this. French Foreign Minister Jean-Yves Le Drian complained that, ‘We feel that the extraterritoriality of their [American] sanction measures are unacceptable. The Europeans should not have to pay for the withdrawal from an agreement by the United States, to which they had themselves contributed.’ Meanwhile, French Finance Minister Bruno de Maire asked yesterday, ‘Do we want to be vassals who obey decisions taken by the United States while clinging to the hem of their trousers? Or do we want to say we have our economic interests?’

European politicians are now considering what measures they can take to protect themselves from American efforts to force them to comply with American sanctions policies. According to de Maire, the EU is considering various avenues. One of these, he says, involves ‘looking at Europe’s financial independence – what can we do to give Europe more financial tools allowing it to be independent from the United States?’ Connected with this is a ‘proposal is to set up a purely European finance house to oversee euro-denominated transactions with Iran’

For some time now, a number of Russians who disagree with their government’s economic policy have been complaining that by seeking to integrate Russia more and more into the world economy, the government has undermined national sovereignty and made it vulnerable to financial pressures from potential enemies, notably the United States of America. Economists such as Sergei Glazyev have for a while been urging the Kremlin to increase Russia’s financial independence by, for instance, ‘the creation of a system of exchanging information between banks, analogous to SWIFT but independent of the USA and the EU,’ the establishment of ‘our own rating agencies,’ pricing exported goods in rubles rather than dollars, and so on. For very good reasons, the Russian government has resisted going down this route. Economic autarky tends not to turn out well. Integration into the global economy has its benefits. Having said all that, it seems to me that examples like those above are going to add to the pressure not only on Russia but also on other countries around the world to go in the direction the likes of Glazyev are suggesting, albeit gradually and with caution. Looking at the fate of ZTE and Airbus, any senior manager of an international company worth his or her salt is going to have start thinking about how to reduce the company’s dependence on US suppliers. Politicians are also going to have to put more thought into how to strengthen their economic sovereignty. This is not something which is going to happen overnight, but the impulse to move in that direction must be stronger this week than last.

Some steps have already been taken. We see new financial structures outside US control beginning to emerge, such as the Asian Infrastructure Investment Bank and the petro-yuan. Already financial journalists are speculating that the US decision to renege on the Iranian nuclear deal will strengthen the latter. I tend to the view that such developments are an inevitable part of the global shift in economic power. As the US declines in relative economic terms, its grip on international institutions is bound to weaken. But decisions such as that concerning Iran can only accelerate this process. Very gradually, but nonetheless more and more perceptibly, other countries are going to want to distance themselves from the United States.

The Americans are like a man sinking in quicksand.: the more he struggles in an effort to get out, the faster he sinks. As their relative power declines, the Americans are fighting with all their might to retain their hegemony, striking out in sometimes rather peculiar directions. But the very act of struggling just sucks them down further. In the aftermath of Trump’s decision on Iran, the sound of the sand sucking America under can be heard louder and clearer than ever before.