Russian Energy Minister Aleksandr Novak says the Kremlin is mulling taking payments for oil in national currencies, particularly with Turkey and Iran - circumventing the U.S. dollar. Novak added that both countries have expressed interest in the idea.
“There is a common understanding that we need to move towards the use of national currencies in our settlements. There is a need for this, as well as the wish of the parties,” said the energy minister.
Novak notes that rearranging their financial relationships to accept the national currencies would require an upgrade to the financial and economic mechanisms which facilitate the oil trade.
“This concerns both Turkey and Iran – we are considering an option of payment in national currencies with them. This requires certain adjustments in the financial, economic and banking sectors.”
For those paying attention, circumventing the U.S. dollar is exactly what both Saddam Hussein and Mummar Gaddafi threatened to do before being regime changed under the guise of humanitarianism. Then again, they didn't have nukes.
Iran - which has threatened to restart it's nuclear enrichment program within days, signed an agreement with Turkey to use local currencies in trade instead of the U.S. dollar and the Euro. The arrangement is aimed at improving economic ties and bilateral trade, while also undermining the West's primary currencies.
“Considering that the use of the dollar is banned for Iran and traders are literally using alternative currencies in their transactions, there is no longer any reason to proceed with invoices that use the dollar as the base rate,” said the Foreign Exchange Rules and Policies Affairs director fro the Central Bank of Iran (CBI), Medhi Kasraeipour.
During a November meeting with Russian President Vladimir Putin, Iranian Supreme Leader Ali Khamenei said that the best way to sidestep US sanctions against the two countries would be a joint effort to circumvent the U.S. dollar and conduct bilateral trade - which would "isolate the Americans."
Last year, Venezuela stopped accepting U.S. dollars for oil payments in response to sanctions - requiring that imported and exported crude products be paid transacted in Euros.
The measure is designed to bypass financial sanctions President Donald Trump's administration leveled against Venezuela's government last month for jailing political opponents and creating a super body of pro-government delegates that bypasses all institutions. -Fox Business
Venezuelan President Nicolas Maduro said that Venezuela was looking to “free” itself from the U.S. dollar, According to Reuters,
“Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,” Maduro said in a multi-hour address to a new legislative “superbody.” He reportedly did not provide details of this new proposal.
Maduro hinted further that the South American country would look to using the yuan instead, among other currencies.
“If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the euro,” Maduro also said.
Meanwhile, Venezuela's bolivar has lost nearly all of its value as the country spirals into an economic crisis.
"There's no way they can get anything under control in Venezuela unless they dollarize," says Steven Hanke, a professor at Johns Hopkins University who advised the governments of Ecuador and Montenegro when they ditched their currencies for the dollar. "The bolivar is gone already." -CNN
"Dollarization is a solution, but it's not the optimal solution," says Jean Paul Leidenz, senior economist at Ecoanalitica, a Venezuela-based research group. "It's an extreme measure."
Historical precedent suggests that dropping the U.S. dollar is ill advised. If the economic hitmen don't punish countries seeking to circumvent the greenback, other types of hitmen will be sent in to finish the job.