According to Ali Shamkhani, the secretary of the National Security Council of Iran, recent bilateral cooperation efforts between Iran and Russia are rendering U.S.-established sanctions ineffective at a global level. Shamkhani noted that many other countries are also on this path, abandoning the hegemony of the U.S. dollar.
In a meeting with Russian officials, Shamkhani explained that the recent bilateral advancements between Iran and Russia, involving monetary and banking matters, were essential for “dooming the illegal Western sanctions to failure,” reported Xinhua. Iran has been facing U.S. sanctions since 1979, with the sanctions lifted during the 1981-1987 period, only to be re-enacted and maintained ever since.
The two countries, which are two of the most sanctioned nations by the U.S. in the world, are on the verge of finalizing a comprehensive strategic agreement further advancing the integration between their economic systems, turning away from Western influence and the clout of the U.S. dollar in their trading operations.
Sanctions and the so-called ‘weaponization’ of the U.S. currency have been brought into the spotlight, with criticism levelled at their negative effect on the status of the U.S. dollar as a reserve currency. Renowned economist Jeffrey Sachs recently stated that other countries fear the confiscation of their dollars if they get into a policy disagreement with the U.S. Economist and author of “Currency Wars,” Jim Rickards, has also called out the behaviour of the U.S. Treasury, stating that it is the greatest enemy of the dollar as a reserve currency.
Analysts state that the continued implementation of sanctions, as well as restrictions on the goods that can be imported, have taken Russia and Iran into close ranks. Many companies and entities are not willing to risk facing secondary economic sanctions, so they choose to cut ties with Russia and Iran, even abandoning lucrative deals.
The latest round of sanctions applied to Iran on March 2, aimed at various international companies accused of being involved in the sale of Iranian oil and petrochemicals. This is why the two nations are working to establish the International North-South Transport Corridor, with more than 7,200 km of roads, rail, and sea communication links, facilitating trade between Russia, Azerbaijan, Iran, and India, as well as accessing Central Europe.
De-dollarization efforts, coupled with Iran and Russia’s bilateral agreements to avoid sanctions, are bringing changes to the global economic landscape. Countries around the world are taking heed and following suit, abandoning the hegemony of the U.S. dollar.
Several countries that have already taken certain steps towards de-dollarization include China, Russia, Iran, and many others. The Russian and Chinese central banks carried out the first swap under their bilateral currency agreement towards the end of 2019, enabling them to switch to national currencies bypassing the dollar.
Similarly, Iran began opening up to digital currencies as early as 2019, with the country’s central bank announcing the launch of a gold-backed cryptocurrency to bypass U.S. sanctions. At the same time, President Rouhani instructed the country’s central bank to begin work on a feasibility study for its own cryptocurrency.
Other countries such as Venezuela and Turkey have also demonstrated their willingness to adopt digital currencies to bypass U.S. sanctions. Venezuela launched its Petro cryptocurrency in 2018, while Turkey’s central bank has floated the idea of developing its own digital currency.