Steve Forbes writes that "President Bush can start to reverse the U.S.' and the west's Carteresque response to Russia's subjugation of Georgia by strengthening the U.S. dollar. In 2004 the weak dollar triggered a global commodities boom--just as it did in the 1970s. Major commodity-producing countries such as Russia have since received revenue windfalls of hundreds of billions of dollars. The higher the price of oil, the more assertive Moscow has become in its foreign policy.
In 1981 Ronald Reagan fearlessly attacked a rise in inflation far worse than the current one. He succeeded. The dollar was strengthened, and interest rates came tumbling down. Then sky-high oil prices tumbled, from almost $40 a barrel to $10 by the mid-1980s. That precipitous fall in oil was a critical--and utterly unappreciated--factor in the Soviet Union's collapse. Mikhail Gorbachev ascended to power with the vigorous support of hard-liners. Starved for hard currency, he turned to such liberalizations as glasnost and perestroika out of desperation, not principle.
Strengthening the dollar with Reaganesque determination would send oil to the $40--to--$50-per-barrel range. At the same time the U.S. and its allies could start putting restrictions on Russian/oligarch-held bank accounts in Europe and here."
The importance of economics to America's foreign policy is all too often overlooked.