Renewed Efforts to Sideline US Dollar in Foreign Trade

EghtesadOnline: Months after a meeting between Iran’s Leader Ayatollah Seyyed Ali Khamenei and Russian President Vladimir Putin in Tehran spurred officials and lawmakers to sideline the US dollar in Iran’s international deals, members of parliament seem to be at it again.

News ID: ۷۴۵۰۵۲

25 February 2018

Gholamali Jafarzadeh Imenabadi, a member of Majlis Planning and Budget Commission, has voiced his support for replacing the US currency in international dealings, saying many countries are currently doing it but none has succeeded in executing it comprehensively.

“Replacing the USD in transactions has not fully alleviated economic pains anywhere in the world, but it has taken us out of the corner of the ring where it is ‘dollar or nothing’, so it has been a good initiative,” he told ICANA, the official news portal of the parliament.

As President Hassan Rouhani visited New Delhi last week to meet Indian Prime Minister Narendra Modi among others, it was announced that India will invest in Iran through its national currency rupee to mark the first time it has invested in a foreign country like this beyond Bhutan and Nepal, according to Financial Tribune.

Jafarzadeh said Iran had conducted non-dollar deals with India before, but this will further facilitate things. He added that Iran engages in transactions with South Korea and Russia with currencies other than the greenback but that is not up to a full extent, as replacing currencies is not an international norm.

Therefore, he called on the Minister of Economic Affairs and Finance Masoud Karbasian, to begin drafting an international protocol based on which a host of countries can replace the US dollar in their international transactions with Iran.

The important thing, the lawmaker added, is that the goal of mounting such an effort will change macroeconomic models rather than spiting the US.

“It is necessary that the global economic model be free from the monopoly of the dollar,” he said, adding that Europe would back such a measure if it was pursued scientifically and logically.

Jafarzadeh referred to Iran’s negotiating experience with OPEC and the International Monetary Fund as success stories that ensured mutual and multilateral interests.

Easier Said Than Done

Seyyed Mehdi Farshadan, one of his fellow lawmakers in the parliamentary commission, has also come out in support of replacing the USD with other currencies, but has conceded that it will be no easy feat.

At present, he said, Iran engages in business deals with neighboring countries such as Turkey, Iraq and Russia in their national currencies.

Iran and Turkey finalized their currency swap agreement in October, based on which a credit line of 5 billion lira ($1.4 billion) and its equivalent in rial were allocated to Bank Melli Iran and Ziraat Bank to be employed by the two country’s traders.

Last week, Central Bank of Iran’s head of Exports Department said the country has signed memoranda of understanding and protocols pertaining to monetary agreements with 10 countries. Samad Karimi also announced that Iran and Pakistan have agreed to settle any deals in euros every three months based on the volume of imports and exports.

Farshadan added that Iran can become “a suitable model for replacing the dollar in international deals” and work with other countries feeling the sting of US financial pressures.

“Since European countries have a single currency, they could potentially welcome Iran’s proposal to replace the dollar and engage with Iran in euros,” he said.

Ahmad Anaraki Mohammadi, a member of Majlis Economic Commission, also advocated the replacement of USD in Iran’s international dealings.

“As the Leader has emphasized, we expect the government to take initiatives in line with replacing the dollar as soon as possible so that all Iranian businessmen’s deals are not affected the second the smallest fluctuations take place in the rate of USD,” he said.

Mohammadi pointed to China whose dealings with Iran currently employ national currencies to an extent and said as many countries are doing this at different levels, it will not be impossible to move away from the American currency.

“If we can reduce the risk of investments in Iran, Europeans would also welcome non-dollar transactions,” the MP concluded.

Rahim Zare’, rapporteur of Majlis Economic Commission, and Nabi Hezarjaribi, another member of Majlis Planning and Budget Commission, have been among other lawmakers calling for bilateral or multilateral monetary agreements to sideline the USD in Iran’s international deals.