How can de-dollarization by Iran, Russia affect int'l financial system?
Tehran, Iran, Oct.19
Referring to Russia's role in reducing the impact of US sanctions on Iran's economy Shoeib Bahman, a Tehran-based political analyst, told Trend that Iran-Russia trade relations are not high and bilateral relations are nearly $2 billion.
"Therefore, the field of bilateral commodity exchange is not very important," he added. "But what is important in the current situation is the Tehran-Moscow agreement.”
In the foreign exchange, the two countries have decided to replace the dollar with local currencies, and its implementation is of great importance, Bahman said.
Russia and Iran have launched an oil-for-goods exchange program seeking to eliminate bilateral payments in US dollars and plan to keep it going for five years.
The idea about ditching the greenback from bilateral trade was first pitched in 2014 when Iran was still under sanctions. Even after the deal was reached, the two countries decided to go ahead and a preliminary agreement was reached last year.
Based on the agreement, Russia will receive 100,000 bpd of Iranian crude in exchange for $45 billion worth of Russian goods.
Iran has been actively looking for ways to drop the dollar as an international trade currency because of the lingering US sanctions.
Russia is also willing to reduce its dependence on the US currency for similar reasons: sanctions and lack of access to Western financial markets. Iran is a natural partner, a sanction buddy of Moscow - their partnership will only deepen if the US reimposes sanctions on Tehran.
Citing the Iran-Russia barter deal in the past, which almost collapsed when JCPOA was implemented in 2015, he said this project (an oil-for-goods deal between Iran and Russia) now has a great importance.
According to the agreement, Iran plans to sell 500,000 bpd of its oil through Russia in exchange for goods.
Bahman added that European countries have also welcomed the plan because of the possibility of sanctions by the United States to direct Iranian oil purchases.
"In addition, Russian companies are interested in the presence and investment in Iran's oil and gas sector."
Referring to the relations between Iran, Russia and Turkey, the political expert said: "This partnership has regional and international dimensions. Regional cooperation is not exclusive to economic relations and can extend to Syrian crisis. By this way Russia can gain the upper hand in west Asia over the US."
"But internationally, Turkey is a NATO member,” he said. “The rapprochement of Turkey to the East and Iran is a huge blow to the structure of NATO and the United States, because the US has lost its ally in the region.”