The move from the United States to leave the Iran Nuclear Deal has created a geopolitical minefield for countries looking to do business with Iran. Global powers have decried the act, and some have even dismissed the sanctions entirely.
And though U.S. President Trump has vowed to excommunicate businesses with dealings in Iran, pressure is mounting from the EU to figure out a solution, and some are even looking to ditch the USD to maintain their ties.
Russia and China have been very vocal about the sanctions, urging businesses to ignore them outright. Even some of the U.S.’ closest allies and co-signatories of the Iran Nuclear Deal, including France, Germany and the United Kingdom have spoken out against the move.
The European Union’s head of foreign policy, Federica Mogherini, noted that "If there is one piece of international agreements on nuclear non-proliferation that is delivering, it has to be maintained. We are encouraging small and medium enterprises, in particular, to increase business with and in Iran as part of something (that) for us is a security priority."
The sanctions, imposed on August 6th, target Iran’s dealings in USD, industrial metals and gold and silver. But it’s the next round that will really sting. On November 6th, the second wave of sanctions will be imposed targeting Iran’s energy sector. As one of the largest oil producers in the world, the move could cripple the country and severely impact the price of crude oil around the world.
U.S. allies speak out
While Russia and China have been particularly bold in their attempts to move global oil trade away from the U.S. dollar, key allies of the United States are beginning to become more vocal about the idea, as well.
Heiko Maas, German foreign minister said, “Europe should not allow the US to act over our heads and at our expense. For that reason it’s essential that we strengthen European autonomy by establishing payment channels that are independent of the US, creating a European Monetary Fund and building up an independent Swift system.”
SWIFT, the Belgium-based international payments system, was created to be neutral and independent, but it is increasingly used as a tool used to enforce sanctions, especially by the U.S. The push to create a new payment system could allow the EU to break free from dollar-dominance.
French Finance Minister Bruno Le Maire joined the call to action back, stating, “With Germany, we are determined to work on an independent European or Franco-German financing tool which would allow us to avoid being the collateral victims of U.S. extra-territorial sanctions,” adding “I want Europe to be a sovereign continent not a vassal, and that means having totally independent financing instruments that do not today exist.”
What do “independent financing instruments” look like?
Le Maire’s words are of particular interest, especially to those in the cryptocurrency space.
Bitcoin has been celebrated as that exact instrument by many, and there may be a growing case for cryptos in this exact scenario.
Despite its previously hard-lined stance against the new asset class, Iran has made significant moves to open up to the possibility of using cryptos to dampen the impact of strict U.S. sanctions. Citizens have flocked to bitcoin to ease the pain of a plummeting currency, the finance ministry has announced the possibility of creating a state-sponsored coin and Mohammad Reza Pourebrahimi, the head of the country’s Parliamentary Commission of Economic Affairs, has even suggested that Russia may be open to using decentralized payment protocols to bypass U.S. banking systems.
“[IPCEA has already] obliged the Central Bank of Iran to start developing proposals for the use of cryptocurrency. Over the past year or two, the use of cryptocurrency has become an important issue. This is one of the good ways to bypass the use of the dollar, as well as the replacement of the SWIFT system. They [Russian authorities] share our opinion. We said that if we manage to promote this work, then we will be the first countries that use cryptocurrency in the exchange of goods,” Pourebrahimi explained.
This openness to the crypto space isn’t exactly new, either. Russia has floated the idea of its own cryptocurrency for some time. And though Maduro’s ‘petro’ has been a complete disaster, its attempt to ditch the dollar has, if nothing else, embedded the idea in other petrol-states who are not exactly friends with the U.S.
Could the EU use cryptos?
It’s unclear what the EU’s plan to ditch the dollar might entail. So far, it’s just a call for “independent financing instruments that do not exist today.” This could include a SWIFT alternative which may or may not be blockchain based, an EU-sponsored cryptocurrency or even the adoption of an already existing crypto.
The exact plan has yet to be outlined, so until that happens, we’re free to let our imaginations run wild.
What is clear, however, is the growing campaign against U.S. dollar dominance. And as the dollar continues to lose its appeal on the global stage, the case for crypto grows louder.
Picture from Wikimedia Commons.
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Texan living in Mexico, new tech enthusiast, decentralization fan, cryptocurrency enthusiast, geopolitical junkie, digi-explorer, and music lover. I believe that we are on the cusp of a new frontier in how we will view the government, money and energy. Let’s be a part of it, together.