Is it really a goodbye for US dollars? – The European Union is preparing to switch payments from US dollars to Euro for its Iranian oil purchases, thereby disregarding US dollars in the scenario. It can be recalled that Brussels has been at disparity with Washington after US President Trump announced his withdrawal from the Iranian deal over nuclear weapons. Furthermore, Trump has expressed his plans of re-imposing economic sanctions against the Islamic Republic.
A diplomatic source who is privy to the information told the RT news that the European Union will be shifting from dollar to euro to make payments for crude from Iran.
Few weeks after Trump’s declaration of withdrawal from the deal, the foreign ministers of the UK, France, Germany and Iran had come up with an agreement to establish practical solutions in response to Washington’s move, said Federica Mogherini, EU foreign policy chief. Despite United States’ reintroduction of sanctions, the European coalition has been reportedly planning to continue and develop economic ties with Iran when it comes to oil and gas supplies.
“We’re not naïve and know it will be difficult for all sides”, Mogherini further stressed. She also pointed out that all sides should be working together to lift the sanctions being an integral part of Iranian nuclear deal. Known as the Joint Comprehensive Plan of Action, the historic nuclear deal was agreed upon three years ago in Vienna between Tehran, China, France, Russia, US, Germany and UK. The deal aimed at lifting decades-long international sanctions in exchange for Iran constraining its nuclear programs. Also, the parties to the agreement announced the start of its implementation on January 16, 2016. Because of the lifting of international sanctions, Iran was for the first time given access to the world’s markets. From there, Tehran started to manage its exportation of crude across the world.
Unfortunately, purchase of oil on international markets has been in US dollars, which is why it would be difficult for Iran’s partners to pay for crude and for Tehran to receive payments. Since dollar is the leading currency on international financial markets, the re-imposition of sanctions would disconnect Iran from the global financial system.
On the issue on Washington’s extraction from the deal, the cancellation of dozens of contracts between European business and the Islamic Republic could possibly happen if EU would obey Washington’s sanctions. A huge damage would cause Iran’s economy as well as European firms for losing a big market in the Middle East. Due to these unfortunate possibilities, both sides could continue trading despite sanctions re-imposed by US if they would switch to alternative settlement currencies.
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