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Iran Suggests 'Oil for Goods' Plan to Circumvent US Sanctions

Iran Suggests 'Oil for Goods' Plan to Circumvent US Sanctions

Monday, 26 October, 2020 - 07:45
A gas flare on an oil production platform in the Soroush oil fields is seen alongside an Iranian flag (File Photo: Reuters)

Iran is proposing an oil for goods plan to circumvent the US sanctions on its oil sales and restrictions on trading with dollars.

Over the past two weeks, the official exchange rate declined, following the tightening of sanctions on the Iranian banking network, which prompted the government to take urgent measures by pumping between $50 and $75 million per day to the market.

However, it seems that the government’s attempt came late as prices continued to increase, which directly affected the availability of basic commodities in the market.

Last week, Minister of Oil Bijan Zanganeh unveiled a new barter plan to solve the issue of oil sales, which was approved by President Hasan Rouhani.

Rouhani accepted the proposal of the Ministry and the Central Bank to create a “unified channel” for importing goods in exchange for oil, adding that it is a classic method to increase foreign trade.

“We will start operations next week,” announced Zanganeh during a joint press conference with the governor of the Central Bank.

US President Donald Trump reimposed sanctions on Iran as part of the maximum pressure strategy to reach a comprehensive agreement, that includes modifying Iran's regional behavior and restricts its nuclear and ballistic missile programs.

During the joint press conference, governor Abdolnasser Hemmati indicated that the US took the decision to block Tehran’s monetary and banking transactions.

He noted that the barter agreement will solve this issue, expecting the country to witness a “major development” in foreign trade.

Hemmati said that the central bank saved about $18.5 billion during the last seven months, despite the decline in oil prices.

The growing trend of exports of crude oil and products, and the acceleration of non-oil exports in recent months, created better conditions for the supply of foreign exchange for imported goods, he said.

The governor also stated that exchange of oil for the basic and essential commodities will increase, leading to a growth in foreign trade, noting that the Ministry of Industry will help import necessary production goods.

The officials did not disclose information about the countries willing to exchange oil for goods, however, over the past months, China, Venezuela, and Syria have been associated with Iranian attempts to circumvent the sanctions.

A few days ago, Tehran announced it will be purchasing weapons based on its needs, after the lifting of the UN arms embargo.

European political circles supporting the nuclear deal downplayed the US opposition to lifting the arms embargo, as they predicted slim chances of concluding arms purchase deals with Iran's crippling economy.

On Friday, the Financial Action Task Force (FATF) concluded its plenary meeting by agreeing to revise its standards to further strengthen the global response to proliferation financing related to weapons of mass destruction.

FATF announced it was keeping Iran and North Korea on its blacklist with their status unchanged.

The US Treasury issued a statement saying that FATF agreed to revise its standards after North Korea and Iran established complex and elaborate networks, including front and shell companies to evade US and UN financial sanctions and to access and move funds to further their dangerous purposes.

The Financial Action Task Force (FATF) is an international policy-making and standard-setting body dedicated to combating money laundering and the financing of terrorism and proliferation.

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