The European Union is planning to switch payments to the euro for its oil purchases from Iran, eliminating US dollar transactions, a diplomatic source says.
Brussels has been at odds with Washington over the US withdrawal from the Iran nuclear deal, which was reached during the administration of Barack Obama. President Donald Trump has pledged to re-impose sanctions against the Islamic Republic.
“I’m privy to the information that the EU is going to shift from dollar to euro to pay for crude from Iran,” the source says.
Earlier this week, EU foreign policy chief Federica Mogherini said that the foreign ministers of the UK, France, Germany, and Iran had agreed to work out practical solutions in response to Washington’s move in the next few weeks. The bloc is reportedly planning to maintain and deepen economic ties with Iran, including in the area of oil and gas supplies.
Mogherini stressed that the sides should jointly work on the lifting of sanctions as an integral part of the historic nuclear deal. “We're not naive and know it will be difficult for all sides.”
The Iran nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA), was sealed three years ago in Vienna between Tehran and the P5+1 powers (China, France, Russia, UK, US, plus Germany). The agreement saw decades-long international sanctions lifted in exchange for Iran curbing its controversial nuclear program. On January 16, 2016, the parties to the deal announced the beginning of its implementation.
The lifting of international sanctions gave Iran access to the world’s markets for the first time in nearly four decades. Since then, Tehran has managed to significantly increase its exports of crude.
However, oil is pegged to the US dollar on international markets, making it difficult for Iran’s partners to make payments for crude and for Tehran to receive them. With the dollar playing the leading role on international financial markets, re-imposing sanctions would mean cutting Iran off from the global financial system
At the same time, dozens of contracts signed between European businesses and the Islamic Republic could be at risk of cancellation if Brussels obeys Washington’s sanctions. This would damage Iran’s economy and European firms would lose a huge market in the Middle East. Switching to alternative settlement currencies allows both sides to continue trading despite US sanctions.
EDITOR'S COMMENT: With friends like these, (the EU) who needs enemies? This is a knife in the back for the United States and Europe knows it. Perhaps reimposing Steel Tariffs upon the EU when June 1 rolls around, might be wise. Perhaps notifying NATO that the US is drawing-down our participation and troop commitments is needed as well.
We in the US have spent blood and treasure in Europe for 70+ years. Europe still exists as free states thanks to us. Yet _this_ is how they repay us? I'd say it's time to lay the groundwork for other "Exits" from the EU, similar to BRexit. It's time for centralized leadership in Brussels to be dumped in the ash bin of history.