US Dollar is losing its privileged place in international transactions as Russia is now in talks with Iran to dump Dollar and begin trade in national currencies.This trend has gained momentum after US President Donald Trump came to power in White House and adopted a economic and foreign policy that created obstacles for countries engaged in business with US.
Tehran and Moscow have now become close knitted strategic partners so much so that Leader of Islamic Revolution Ayatollah ALi Khamenei and Russian President Vladimir Putin are contemplating cooperation in replacing dollar with national currencies in bilateral and multi-lateral economic transactions thereby eliminating the US Dollar.
Iranian Supreme Leader Ali Khamenei has discussed with Putin that the system of American sanctions can be done away with joint efforts to dump the American currency in bilateral trade.”By ignoring the negative propaganda of the enemies, that seek to weaken relations between countries, we can nullify US sanctions, using methods such as eliminating the dollar and replacing it with national currencies in transactions between two or more parties; thus, isolate the Americans,” Khamenei said at a meeting with Russian President Vladimir Putin in Tehran.
The concept of replacing US Dollar from economic transactions across the world is not new. It has been in talks from pretty many years as the superpower tried to force its conditions on other countries and some countries like Russia and Iran intend to remain unaffected by the US sanctions while China, harbouring ambitions and also steadily walking towards seizing the status of superpower,is in favour of engaging in economic transactions with other countries in its national currency Yuan.
Moreover,Russia has become the top crude exporter to China because Moscow accepted the oil payments in renminbi instead of dollar.China established a payment versus payment (PVP) system for Chinese yuan and Russian ruble transactions in a move to reduce risks and improve the efficiency of its foreign exchange transactions.
Even Iran and India announced last month that they intend to settle all outstanding crude oil payments in rupees, as part of a joint strategy to do away with dollar and trade instead in national currencies.
According to Khamenei, economic relations have vast room for improvement. “In the transportation sector, we can expand cooperation, using the main axis of Chabahar port to the port of Saint Petersburg, as well as in other economic areas,” he said.
The impact of isolating American currency will be seen in an agreement between Russian oil producer Rosneft and National Iranian Oil Company (NIOC) to jointly work on several “strategic” contracts in Iran worth $30 billion.Meanwhile, some barter agreements would be finalised and Iran will also develop offshore and work on other projects in Russia. Russia and Iran also contemplated for a project aimed at delivering Iranian natural gas to India.
Echoing Khamenei’s views, Putin said that Russia considers Iran “a strategic partner and a great neighbor, and we will take advantage of every opportunity to expand and consolidate relationships in all dimensions.”
Russia and Iran also explicitly showed their cooperation during the seven -year old conflict in Syria for restoring peace in the region and Iranian supreme leaders stressed that the cooperation proved that the Iranians and Russians could achieve “common goals during challenging situations.”.”A full resolution of Syria’s crisis needs strong cooperation between Iran and Russia. Our cooperation can isolate America. This cooperation will restore stability in the region,”State media quoted Khamenei as saying.
Russian oil producer Rosneft had already purchased stake in Iraqi Kurdistan’s key oil pipeline that runs to Turkey, thus increasing its political and economic influence in the Middle East.
US President Donald Trump who sided with Saudi Arabia in an effort to isolate Iran, is witnessing a confrontation from a group of Asian countries who are prepared to abandon Dollar as the world’s reserve currency.
By: Arti Bali