US President Donald Trump has proposed supplying Ukraine with ongoing military aid in exchange for access to its abundant reserves of rare earth minerals — elements critical to high-tech industries and defense applications. This proposal aligns with Trump’s long-standing perspective on leveraging foreign natural resources to offset US military expenditures. Notably, in 2011, he criticized the US strategy in Iraq, suggesting that seizing oil assets could have reimbursed the United States for its military involvement.
Such payments-in-kind are not without precedent. Historically, nations have engaged in similar deals, particularly involving oil. For instance, during the 1980s, the United States entered into agreements with Middle Eastern countries, exchanging military support for favorable oil terms. In the current context, Ukraine’s President Volodymyr Zelensky has expressed openness to this proposal, viewing it as a means to secure necessary defense aid while providing the US with valuable resources. Challenges persist, however, as many of Ukraine’s mineral deposits are located in conflict zones, complicating extraction efforts.
If undertaken, the arrangement is suggestive of a broader shift in the global economic landscape; one in which commodities 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 global trade dynamics. Unlike the original Bretton Woods system (1944–1971), which was based on fixed exchange rates and a gold-linked dollar, Bretton Woods II (since 1971) has been characterized by fiat money and floating exchange rates. Bretton Woods III, however, envisions a system of quasi-pegged exchange rates in which commodities play a more pivotal role as economies intervene in foreign exchange markets to manage their currencies and maintain competitive advantages in trade.
Bretton Woods III
In the modern international financial order, emerging markets (particularly in Asia and the Middle East) accumulate large reserves of US dollars and reinvest them into US assets, particularly Treasury securities. Envisioned by Zoltan Pozsar, Bretton Woods III is a global order emerging as a byproduct of both persistent trade imbalances and the widespread decimation of fiat currencies. For decades, nations including China, Japan, and oil-exporters have maintained undervalued currencies to sustain export-driven growth. In so doing, those economies have become net lenders to the United States, effectively financing fiscal deficits and enabling prolonged periods of low interest rates.
China provides a prime example of an economy that actively manages its currency, the renminbi (RMB), by intervening in foreign exchange markets to maintain a competitive edge in global trade. The People’s Bank of China (PBOC) frequently adjusts the yuan’s exchange rate through a combination of currency pegs, capital controls, and foreign reserve management, ensuring that Chinese exports remain attractive by preventing excessive currency appreciation.
The implications of the new global economic regime, even if partly realized, are profound. On one hand, the former system supported global financial stability by ensuring demand for US debt. By doing that it has allowed the US to run sustained current account deficits for improbably long periods without fiscal strain. The tradeoff of doing so, however, has been the emergence of structural imbalances, with emerging markets becoming dependent on US monetary policy as the US has grown dependent upon foreign financing. The mutual reliance has given rise to a major risk: the potential for a rapid, disorderly unwinding or even sudden collapse of the linkage. If foreign creditors were to lose confidence in US debt sustainability or shift away from the dollar in favor of alternative reserve assets, exchange rate volatility, capital flight, and rapidly ascending borrowing costs are likely reactions with broad repercussions for global trade and financial markets. Geopolitical tensions and rapid dedollarization movements by major economies, such as the BRICS bloc, could accelerate such an unraveling, resulting in a fragmented global monetary order where multiple reserve currencies compete for dominance.
Another likely outcome of the Bretton Woods III order is the growing role of commodities as a store of value and medium of exchange in global trade: a growing preference for outside versus inside money. As resource-rich economies and emerging markets seek alternatives to excessive dollar dependence, gold, oil, and industrial metals will increasingly play a role in reserve diversification and trade settlement. Cryptocurrencies will as well. This shift has already begun as seen in efforts by the expanded BRICS bloc to settle cross-border transactions in commodity-backed currencies or through bilateral trade agreements denominated in non-dollar assets. Central banks in China, Russia, and the Middle East have been ramping up gold purchases, driving the price to all-time highs while signaling a shift toward tangible, asset-backed reserves over the US dollar and Treasury securities.
If that trend accelerates, it could lead to a regional- or alliance-based, multipolar monetary system with commodities (including but not limited to gold) playing a stabilizing role. Among the many implications of Bretton Woods III are a severe weakening of the exorbitant privilege of the US dollar as the world’s dominant reserve currency.
Lines Are Already Being Drawn
If this international structure ultimately takes shape, the Trump administration’s proposed deal — trading weapons to Ukraine in exchange for rare earth metals — may eventually register as an early milestone of a broader shift toward commodities-backed transactions, away from fully financialized global trade. The European Union (EU) has a €900 million agreement with Rwanda aimed at obtaining critical raw materials like cobalt and lithium essential for technological industries. That deal has faced criticism due to Rwanda’s alleged involvement in the conflict in the Democratic Republic of the Congo (DRC), where on the other side China has solidified its influence through substantial investments in the DRC’s mining sector. The Chinese have thus far committed $7 billion to infrastructure projects in exchange for access to the country’s abundant copper and cobalt reserves. In another instance, Turkey and Azerbaijan have strengthened their bilateral relations by trading natural gas and strategic metals, enhancing their economic and geopolitical ties. A definitive shift towards resource-based diplomacy is afoot where nations increasingly shirk paper and securities in favor of natural assets for forging alliances and advancing strategic interests.
Implications
A shift toward a real asset-based financial order may, after some period of time, significantly alter global power structures by elevating resource-rich nations while diminishing the influence of traditional financial centers. Countries endowed with vast reserves of oil, rare earth metals, or major, reliable agricultural production could see their geopolitical leverage increase as physical assets increasingly become a foundation for economic stability. A resultant shift might be the hoarding of critical resources, as nations seek to control strategic materials in favor of exchange. In extreme cases, that development could escalate into resource-driven conflicts, as states maneuver to secure deposits of high-value materials. Moreover, bilateral and barter-based trade agreements could become more prevalent, with nations exchanging commodities directly for infrastructure, military aid, or technological expertise rather than using dollar-based financial markets. (During the Cold War, payments-in-kind between collectivist nations were common; sugar for oil between Cuba and the Soviet Union, for example.) Such a realignment could weaken traditional financial hubs like New York and London, reducing their dominance in global capital flows.
Fully realized, the Bretton Woods III paradigm could reshape the hierarchy of global powers, elevating smaller nations that possess disproportionately large resource reserves — such as Mongolia, which produces 99 percent of the world’s supply of terbium, or Namibia, the fourth largest supplier of uranium on Earth — provided their institutions are stable enough to capitalize on newfound wealth. Conversely, countries that have historically maintained economic dominance through finance and technology, but lack natural resources or the will to procure them could become more middling powers until or unless they secure stable commodity supply chains. Storage space and low shipping rates would become a new manifestation of capital adequacy. A commodity-driven system could also redirect innovation, shifting investment away from speculative technology and finance toward energy optimization, materials science, and supply chain resilience. Financial crises could evolve to take new forms, driven not by credit expansion but via supply chain collapses, extreme weather disruptions, or geopolitical embargoes that trigger instability cascades.
An emerging order where tangible assets — not abstract financial instruments — come to define national economic security and influence is not a foregone conclusion. Decades of technological infrastructure, operational practice, and human capital have built global financial markets, and they won’t be swept away overnight. But fiscal and monetary excesses, combined with the shifting importance of once-overlooked resources, are ushering in Bretton Woods III in fits and starts. The latest phase of slow but steady dedollarization may have arrived in the form of an American president invoicing shipments of military weapons not for money, but for mining contracts leading to crates full of rapidly oxidizing, chalky, white metals.
