ACCORDING to a PressTV report of November 24, Iran and China are working on a trade or barter deal that would circumvent US sanctions. It would bypass US-dollar denominated transactions, exchanging Iranian oil for Chinese goods and services and investments. The head of the Tehran Chamber of Commerce, Industries, Mines and Agriculture, Masoud Khansari told Tehran’s Tasnim news agency on November 19, 2019, that ‘The mechanism, aiming to increase economic exchanges between Iran and China, is in the process of being finalised and implemented.’ He meant indeed, a barter deal between the two countries, avoiding a monetary exchange, is being worked out.
This is nothing new. Already in July 2011, the Financial Times reported that due to the US sanctions against Iran, China, Iran’s largest hydrocarbon client, was unable to pay Iran in cash as monetary transactions were blocked. China had at that time accumulated at least $30 billion in unpaid bills, which deprived Iran from necessary hard currency to purchase goods, mainly medicine and medical equipment from countries that were either daring to go against the US sanctions, or clandestinely on the black market.
The case was similar with India which, together with China, purchased then almost 50 per cent of Iran’s oil — Iran’s lifeblood. While India exports almost nothing to Iran, China is a key exporter of a myriad of goods and services to Iran, including building infrastructure and investing in the expansion of Iran’s oil sector. That’s when the two countries started making barter arrangements.
In the meantime, an agreement was reached in July 2015 on Iran’s nuclear deal, the Joint Comprehensive Plan of Action, which for a short time lifted all sanctions, until on May 8, 2018 president Trump canceled Washington’s engagement in the deal — most likely on the behest of Israel — and new deadly US sanctions were imposed, stronger and more brutal than before — ‘the strongest ever sanctions imposed on any nation’ — asTrump boasted. And with these sanctions came the threat of punishment for every country that would do business with Iran, including the European Union members who were part of signing the nuclear deal — Germany, France and the United Kingdom.
While at the outset the Europeans did not want to appear as Washington vassals — and more — their corporations had already signed new business deals with Iran and were not keen on cancelling them, The EU had attempted to design an international payment system outside of the dollar-dominated SWIFT transfer system, the Instrument in Support of Trade Exchanges. Designed in January 2019, it is a special European transfer system, serving only European purposes to trade with Iran outside of US-dollar controlled sanctions. However, to this date, not one single transaction has been carried out under INSTEX, mostly because the Europeans are captive of an unexplainable puppetry dependence on Washington. The leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei called INSTEX ‘a bitter joke’.
In comes China again, establishing a barter deal with Iran. A TCCIMA delegation recently visited Beijing and concluded a barter trade agreement that would be carried out through both mainland China and Hong Kong. Among other potential deals for Iran are investments in its power sector by Chinese companies, for example, in energy and infrastructure projects. Rejecting US objections, Beijing says, dealing with Iran was legitimate under any international law. Iran is also an integral link in China’s Belt and Road Initiative.
Earlier this year, Chinese president Xi Jinping said Beijing was seeking to develop a ‘comprehensive strategic partnership’ with Tehran, and that ‘no matter how the international and regional situation changes, China’s resolve to develop a comprehensive strategic partnership with Iran will remain unchanged.’ President Xi emphasised that the two sides should work together and ‘accelerate the building of a new type of international order and a community with a shared future for mankind’. A community with a shared future for mankind is indeed China’s long-term objective for decades to come. It converges with the objective of the BRI as well — an objective towards a multi-polar world and a peaceful coexistence among nations.
Barter deals do not provide Iran with the necessary cash to purchase needed imports. There are other avenues than barter, for a rapprochement outside the dollar-domain in trade between Beijing and Tehran, or Moscow and Tehran, for that matter. It should be relatively simple to open swap accounts between the Chinese and the Iranian central banks and to use the Chinese Interbank Payment System for monetary transfers. Such a solution should also leave Iran with sufficient revenues to pay for her imports. The reason such options may not be pursued with more vigour is perhaps that Iran is still very much divided between those Euro-US-centred Atlantists and those who follow the Ayatollah’s vision towards a future in the East. A strong Fifth Column in Iran is also omnipresent and rears its ugly head whenever opportunity arises, such as the recent 50 per cent hike in gasoline prices.
It is a mystery for most observers why the gasoline price increase was not announced and explained by president Rouhani or the authorities prior to being implemented. It may have prevented much of the violence that is as of this day lingering on, causing bloodshed and mayhem. Most anywhere in the world, people would take to the streets if they were hit with an unexplained price hike of a major commodity. That the opportunity would be taken advantage of by foreign-instigated violent elements was also foreseeable. And in this case, I dare say, preventable.
The demonstrations began peacefully and then, suddenly on day two they turned violent. It does not require rocket science to figure out that the violence was planted by outside forces trained and paid for by such notorious organisations like the National Endowment for Democracy, the extended arm of the US Central Intelligence Agency, and funded with hundreds of millions from the US state department. These are the same people who are funding the unrests in Hong Kong. Their brand is chaos, crisis and destabilisation — that’s what they do all over the world where a ‘regime change’ is on Washington’s agenda. These forces are a clear impediment for Iran towards its way to the East, associating wholeheartedly with the Shanghai Cooperation Organisation and de-coupling from the western economy.
In the face of a deeply divided Iran, barter deals with China, and possibly with Russia, may be the first step towards a more serious move to de-dollarise, to decouple from the West. The Iranian people deserve to live well; they deserve to get out from under the misery-imposing boots of Washington. Even the Eurocentrics and the Washingtonites must recognise the US-Western hypocrisy and realise that the United States will never let go until it has a total grasp on Iran’s resources — that a resolute move to the East will give them relief from shortages of food and medicine as well as western oppression and colonisation.
Countercurrents.org, November 28. Peter Koenig is an economist and geopolitical analyst. He lectures at universities in the United States, Europe and South America.