News ID: 232714
Published: 0310 GMT October 13, 2018

Bilateral monetary treaties can help Iran break free from dollar domination

Bilateral monetary treaties can help Iran break free from dollar domination

By Gholamreza Bahrami

The greatness of the dollar's domination in international financial markets is to the extent that fluctuations in the currency's price, per se, become a threat when a country comes under sanctions.

Resorting to sanctions policy as a leverage to put countries under pressure on one hand and the imposition of US unilateral sanctions on the other, have made many countries think of using national and local currencies in foreign trade to replace the dollar, IRIB reported.

This will become possible by signing and implementing bilateral and multilateral monetary agreements between the states. Once it is enforced, such arrangements will make banking sanctions ineffective.

Adnan Mousapour, the head of the Export Development Committee of Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA), maintained that bilateral and multilateral monetary treaties are meant to strengthen countries' export sectors.

He added such agreements also facilitate exports.

Since the victory of Iran's 1979 Islamic Revolution, particularly during the early years of the Iraqi-imposed war (1980-88), the country has used such agreements to achieve the Resistance Economy targets set by its leadership.

Now that the US is intensifying pressure on Iran and tightening the noose of sanctions by forbidding other states from using the dollar in their transactions with Tehran, such agreements can prove effective in minimizing the adverse impacts of hostile policies on the people of the country.

Hossein Salahvarzi, ICCIMA's vice president, held that a monetary agreement is an instrument capable of freeing the domestic economy from the domination of the dollar and smoothing the path for increased economic transactions with other states.

He said this is because other states are also willing to reduce dependence on the dollar by implementing such agreements.

Commenting on the same issue, Mehdi Sharifi, the managing director of Iran's Petrochemical Commercial Company, underlined that such treaties will enable the country to sell its petrochemicals to other states without the risks posed by fluctuations in the rate of the dollar.

"We have entered into negotiations with India on exporting certain petrochemicals, such as urea, to the South Asian country. In fact we have confirmed that we can use the rupee [in  trade with New Delhi]."

The same confirmation has been given to the Chinese government to use the yuan in Tehran-Beijing transactions, he added.

The signing of bilateral and multilateral monetary agreements is aimed at reducing the problems brought about by banking sanctions, lowering the costs involved in forex transfer to and from a country and managing fluctuations in foreign currency markets. In the case of Iran, for these treaties to produce more favorable results, the country's central bank (CBI) is required to establish the required infrastructure at the earliest.

To enforce such treaties, the CBI and central banks of other signatories to these agreements should open local currency accounts to make it possible for their governments, businessmen and traders to conduct economic transactions with each other by making payments through these accounts.

Such a mechanism, said CBI Governor Abdolnasser Hemmati, will soon be created to facilitate Iran's trade with Turkey and Russia by eliminating the dollar, as has been requested by all the three sides, from Tehran's transactions with Ankara and Moscow.

In the year to March 2018, Iran imported goods worth $50 billion. In case the Iranian government signs bilateral monetary agreements with the four main exporters of products to the country, it can import more than 50 percent of the products it purchases annually without using the dollar.

Such monetary arrangements will make it possible for Iran to break free from the West's monopoly and eliminate the threats of certain Western states against it. Iran's diplomatic apparatus plays a very significant role in concluding such accords.

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