In what may be a preemptive move against further US sanctions, Tehran announced that going forward, merchant purchase orders that are denominated in US Dollars would no longer be allowed to go through import procedures.
According to the state-owned IRNA news agency, the policy is in line with an official request by the Central Bank of Iran and is meant to address fluctuations in market rates of the US dollar. Quoted by IRNA, the central bank director of Foreign Exchange Rules and Policies Affairs, Mehdi Kasraeipour, said the move had “become effective from Wednesday by virtue of a letter sent to the Ministry of Industry, Mines and Trade.”
The central banker further explained that the decision “wouldn’t create major trouble” for traders because the share of the greenback in Iran’s trade activities is already negligible.
“It’s been for a long time that Iran’s banking sector cannot use the dollar as a result of the sanctions,” said Kasraeipour. As part of a trade embargo, US banks are banned from dealing with Iran.
“Considering that the use of the dollar is banned for Iran and traders are literally using alternative currencies in their transactions, there is no longer any reason to proceed with invoices that use the dollar as the base rate,” Kasraeipour added.
As part of the transition, Iranian merchants will need to inform their suppliers to change the base currency from the dollar to other currencies so that the related import documents could be processed at Iran’s entry points. It was unclear if cryptocurrencies are acceptable units, and whether Iran is developing its own version of the Venezuelan Petro.
Merchants will also need to specify whether they would proceed with their payments through banks or currency exchange shops.
Ever since the crackdown on the Iranian banking sector by the US and SWIFT some 5 years ago, Tehran has sought to switch to non-dollar based trade. It has already signed agreements with several countries and is in talks with Russia on using national currencies in settlements.
Last December, Iran announced that it would eliminate the dollar from all bilateral trade with China, which has fast emerged as one of Iran’s largest crude oil clients.
Previously, during a meeting with Russian President Vladimir Putin in November, Iranian Supreme Leader Ali Khamenei said that the best way to beat US sanctions against the two countries was joint efforts to dump the American currency in bilateral trade. He told President Putin that by using methods such as eliminating the US dollar and replacing it with national currencies in transactions between two or more parties, the sides could “isolate the Americans.”
As Federico Pieraccini previously noted, until a few decades ago, any idea of straying away from the petrodollar was seen as a direct threat to American global hegemony, requiring of a military response. However, in recent years, it has become clear to many nations opposing Washington that the only way to adequately contain the fallout from US retaliation was to progressively abandon the dollar. This serves to limit Washington’s capacity for military spending by creating the necessary alternative tools in the financial and economic realms that will eliminate Washington’s dominance. This is an essential component in the Russo-Sino-Iranian strategy to unite Eurasia and thereby render the US irrelevant.
De-dollarization for Beijing, Moscow and Tehran has become a strategic priority. Eliminating the unlimited spending capacity of the Fed and the American economy means limiting US imperialist expansion and diminishing global destabilization. Without the usual US military power to strengthen and impose the use of US dollars, China, Russia and Iran have paved the way for important shifts in the global order.