Iran Retaliates Against Sanctions: To Drop All Trade In "Filthy" Euro, Dollar

Yet another step in the escalation between Iran and the US came earlier today, this time in the form of some trade war shots, after the leading economic daily Doniye e-Ektesad quoted First Vice President Mohammad Reza Rahimi as saying that "We are going to remove dollar and euro from our foreign currency basket and replace them with (Iranian) rial and all other currencies of the countries which accept to cooperate with us. These currencies are filthy and we will no longer sell our oil in dollar and euro." AFP further clarifies: "He did not say when that would go into effect, or how Iran was going to implement that decision as the second largest exporter in the Organisation of Petroleum Exporting Countries (OPEC), in an energy market dominated by the dollar." This is certainly not the first time Iran has threatened to move away from the dollar: the problem, of course, is execution. "Rahimi also said that Iran would limit its purchases from the European Union, which amounted to 11.4 billion euros or 27 percent of the Iranian imports in 2009, according to official EU statistics. He said this would mainly affect Iran's food imports such as wheat and soybeans from Europe."

Oddly enough, Iran is now threatening with going Chinese, and becoming self-reliant.

Rahimi said that "sophisticated equipment," currently imported, will also be manufactured locally "by the Iranian youths, but it needs time."

Following a fourth round of UN Security Council sanctions against, the United States and the European Union expanded their own punitive measures against Iran in July over suspicions that Tehran's nuclear programme is masking a weapons drive. Iran denies these charges.

Canada and Australia followed suit after the US and EU sanctions, which target Iran's economy and banking system, banning investment and transfer of technology to its vital oil and gas sectors.

One can only wonder just how much of a factor Russia may be in this decision, and whether the ruble and the renminbi will be the ultimate benfactors of this decesion, should it prove to be more than just rhetoric.