Rouhani Proposes Transport Insurance, Cryptocurrency for Muslim Nations

EghtesadOnline: President Hassan Rouhani on Thursday proposed setting up a transport insurance mechanism for Muslim nations.

News ID: ۷۴۹۲۳۶

21 December 2019

Iran’s oil-reliant economy has been hit by new US sanctions after President Donald Trump pulled out of a landmark 2015 international nuclear deal with Tehran.

At an Islamic summit in Kuala Lumpur, Rouhani said it was time for the Muslim world to look inwards, including in the key insurance sector, Reuters reported.

“We understand that many of our economic transactions and activities are dependent on foreign insurance, the insurance coming from big countries,” he said in a speech that was translated into English, according to Financial Tribune.

“This is why, as Muslim countries, (if) we are able to cooperate in order to set up insurance, particularly and exclusively for Muslim states, particularly in transport and transit, it will save us from the dependence on foreigners.”

Ships need various forms of insurance, including annual war-risk cover as well as an additional ‘breach’ premium when entering high-risk areas.

The new US sanctions on Iran’s shipping and petrochemical industry came into effect in November 2018 and were stepped up in May as part of the Trump administration’s “maximum pressure” policy to cut crude Iran’s exports to zero.

US Secretary of State Mike Pompeo announced on December 11 that his government has plans to impose a fresh round of sanctions on Iran’s largest shipping company and biggest airline.

The new restrictions will target the Islamic Republic of Iran Shipping Lines, its China-based subsidiary, E-Sail Shipping, and Mahan Air.

The sanctions on IRISL and E-Sail will take effect in 180 days in order to give customers who ship humanitarian goods time to adjust their contracts. The sanctions on Mahan Air, however, will take immediate effect. Earlier this year, Germany and France announced a similar ban on Mahan Air.

‘Foreign Trade With Our Currency’

In the banking sector, Rouhani said Muslim nations could do better to trade in their own currencies, a view that was supported by Turkish President Tayyip Erdogan.

“We have to free bilateral trade from foreign exchange pressure,” Erdogan said at the summit. “Instead of doing trade with foreign currency we would like to do foreign trade with our national currencies.”

Rouhani proposed creation of a Muslim cryptocurrency as one of a number of means to resist the economic pressures and dominance of the United States.

He proposed the cryptocurrency as a common denomination for Muslim countries to be used for goods and services.

He alluded to Malaysian Prime Minister Mahathir Mohamad’s previous proposal to use gold or dinar as an alternative currency.

“With the existence of blockchain technology, we can introduce a common cryptocurrency with the cooperation of central banks,” The Malaysian Reserves reported.

“Perhaps with this new technology, we can create a new currency and promote this new technology in the Muslim world,” the elder statesman told the summit.

Rouhani said the creation of cryptocurrency could help defend the sovereignty of Muslim nations and curb their reliance on the dollar.

Mahathir welcomed Iran’s proposal, saying that countries should not be overly dependent on a single currency.

“We have made this suggestion a long time ago. We cannot always use the US dollar as it makes us too reliant on the US, who at any time, can impose sanctions against us and this will affect our economic growth.

“This is the first time we are hearing this from Iran and also Turkey. If we are in agreement, we don’t have to rely too much on the USD and we can use our own currency.

“We have mooted this idea a long time ago, but big superpowers made it impossible for this idea to be realized,” he said.