De-dollarizing transactions among ACU members

Governor of the Central Bank of Iran (CBI) held talks with senior banking officials from various Asian countries on the sideline of the 51st Asian Clearing Union (ACU) summit in order to encourage getting new members and de-dollarize the economic transactions among ACU members.

As reported by the CBI portal, Mohammad-Reza Farzin met and held talks with Governor of the Central Bank of Russia Elvira Nabiullina, Governor of the State Bank of Pakistan Jameel Ahmed, Deputy Head of the Monetary Policy and Economic Analysis Directorate of the National Bank of the Republic of Belarus Sergey Kalechits on the sidelines of the summit held in Tehran on May 23-24.

In the meeting with Nabiullina, the two sides emphasized strengthening trade exchanges and using the national currencies of the two countries in bilateral trade.

During the talks with the Belarusian delegation, Farzin said strengthening relations through bilateral and multilateral monetary agreements is a model that can play an important role in the development of trade relations between two countries.

Referring to Belarus’ readiness to join the ACU, the CBI head said, “Belarus's membership with its good capacities in its economy can lead to the development of the activities of this union.”

In the meeting with Farzin, Ahmed, the governor of the State Bank of Pakistan, welcomed the development of the banking relations with Iran by creating a non-SWIFT platform for connecting the bank systems of the two countries and clearing trade under the framework of the Asian Clearing Union and said, “We are ready for the development of banking relations. By introducing representative banks and creating a joint working group, we will provide the grounds for deepening banking relations.”

According to Farzin, accepting new members with the aim of creating synergy and diversifying the currency basket of the union can encourage de-dollarization in trade exchanges among the ACU members. This is one of the major goals of this union in the future, he said.

 

Lifting US sanctions on Iran not an easy job

The most complicated issue in the United States-Iran relationship is the intertwined US sanctions, which were aimed at punishing the Islamic Republic on multiple counts and in the worst possible manner. 

These include from activities related to the nuclear program and support of terrorism to missile proliferation and human rights abuses. Some of Iran’s major institutions, including the Central Bank Iran, were sanctioned, both for their roles supporting the nuclear program and for aiding the alleged terrorist attacks by proxy militias.

The Biden administration wants to lift the sanctions related to Iran’s nuclear program – as promised in the 2015 deal – if Tehran, in turn, rolls back recent breaches of the nuclear deal. The complicating factor in current and future diplomacy is that key Iranian institutions and individuals could remain sanctioned for secondary reasons, thus not providing Iran the economic relief it seeks.

Iran’s oil industry, the country’s main source of export revenue, is a prime example. Biden could lift sanctions on NIOC for its role in funding programs on weapons of mass destruction. But it would remain sanctioned for financially facilitating terrorism orchestrated by the Revolutionary Guards. The same problem of overlapping sanctions could arise in any future talks about Iran’s missile program because institutions involved in proliferation are also sanctioned for supporting regional terrorism.

The Biden administration has the authority to provide temporary exemption from sanctions; it would keep sanctions in place legally but nullify their effects until the Treasury formally revokes sanctions. “Iran is unlikely to be satisfied with such an approach and could demand formal removal of counter terrorism sanctions on these entities, a move that would be hugely unpopular in US domestic circles,” Brian O'Toole wrote for the Atlantic Council.

The issue of sanctions was further complicated when President Donald Trump abandoned the nuclear deal—brokered by the world’s six major powers over two years of intense diplomacy—in 2018. He then re-imposed earlier sanctions from the Bush and Obama administrations that had been lifted when the Joint Comprehensive Plan of Action (JCPOA) was implemented in 2016. He also took the unusual step of sanctioning Iran’s banking and oil sectors for funding the Revolutionary Guards and extremist proxies across the Middle East.

On April 2, Iran has begun indirect talks in Vienna with the United States on returning to compliance with the JCPOA. The Iranian delegation included representatives from the Central Bank of Iran and the Petroleum Ministry, which reflected Tehran’s interest in sanctions relief.

Therefore, there is an urgent need to assess the sanction imposed on Central Bank of Iran, National Iranian Oil Company, National Iranian Tanker Company, National Petrochemical Company, Islamic Republic of Iran Shipping Lines and 18 commercial banks. The filth of more than four decades can’t be cleaned in a few days or months.