Iran plans to use other currencies to get around US sanctions

The United States is set to hit Iran with tough economic sanctions in November. Photo/123RF.

Iran plans to get around US sanctions on its oil sales by selling its petroleum and conduct international trade in currencies other than the US dollar, the Iranian diplomat who negotiated the nuclear deal said Saturday.

"The actual mechanism would be to avoid dollars," Iranian Foreign Minister Mohammad Javad Zarif told reporters at a roundtable at the Iranian mission to the United Nations in New York on Saturday evening, saying countries are starting to make agreements to use their own currencies in bilateral trade.

"You can use your own currency," he explained. "Sell stuff in your own currency, buy stuff in the other country's currency, and at the end of a specific period, balance it out in a non-dollar currency. It's quite possible. And may even be profitable."

The United States is poised to impose sanctions in early November targeting Iran's oil sector. The sanctions were suspended under the nuclear deal the United States and five other world powers agreed to in 2015. But after President Donald Trump announced in May that he was withdrawing from the deal, US officials have been pressuring countries around the world to stop their oil sales from Iran to prevent it from its chief source of income, and threatened secondary sanctions if the sanctions are defied.

It is unclear how successful the strategy to avoid them will be. The power of US sanctions lies in the use of the US dollar in most international transactions. A foreign company that sends its proceeds from trade with Iran through an international bank would likely face sanctions because part of it would be conducted in dollars. An international company with an American employee who has something to do with a transaction, no matter how inconsequential, could also run afoul of US sanctions.

Only a handful of other countries agree with the US decision to abandon the nuclear deal. The European Union said Monday that its member countries would establish a system to allow oil companies and private businesses to keep trading with Iran. But many international corporations have already stopped doing business with Iran because so much international business is conducted at least partially in US dollars.

The attempts to evade US sanctions are rooted in the belief that the nuclear deal is working as intended, and Iran has kept all its commitments under the agreement under monitoring by the International Atomic Energy Agency. In effect, Iran and the other countries involved in the agreement are trying to keep the deal alive.

Zarif said Iran might pull out of the deal if the special mechanism being created by the Europeans doesn't work. Asked if that would open the door to a US military attack, he said, "I think if the United States believed it could succeed in such an attack, it would have done so."

The uncertainty over the looming US sanctions has sent oil prices to a four-year high. The sanctions against Iran, which is the third largest producer in the Organization of the Petroleum Exporting Countries, become effective on Nov. 4.

The Trump administration has been on a confrontational path with Iran, which it considers the main source of instability in the region. Secretary of State Mike Pompeo has stopped just short of calling for regime change, and ordered a US campaign across social media platforms and radio in support of protesters demonstrating against governmental corruption and failed economic policies.

US officials have excoriated Iran for getting involved in regional conflicts in Syria, Iraq, Lebanon and Yemen. But Zarif, who speaks fluent English and is the Iranian government's premier spokesman, portrayed the United States as the aggressor in the region.

"Have you seen that map with all the US bases around us, and said, 'Why are these Iranians putting their country in the middle of all these bases?" he said sarcastically. "We are in our region. We have not invaded any country. We have not sent troops anywhere we were not asked. We have not bombed any country. We have not taken territory from any country. We are content with our size, with our geography, with our resources. We have no eye on anybody else's territory, resources or people."

Both Trump and Pompeo have denounced former Secretary of State John Kerry for holding talks with Zarif. The two men formed a professional friendship during long months of negotiating the deal.

"I didn't know that you still had witch hunts here in the US," Zarif said when asked to characterise the conversations with Kerry.

"What he has done has been to encourage us to stay in the deal," he added, lauding the virtues of dialogue between Americans and Iranians.

- Washington Post