China and Iran Circumvent Sanctions Via Barter

3
1390

According to Financial Times, Tehran and Beijing are getting around sanctions placed on oil by the U.S. by resorting to a direct trade agreement. Since the U.S. dollar is the currency of choice in doing cross border deals of this kind, the U.S. has effectively blocked transfers of dollars to Iran. Read more at http://www.ft.com/cms/s/0/2082e954-b604-11e0-8bed-00144feabdc0.html#axzz1TLTSPi4T

3 COMMENTS

  1. Interesting side note: Since World War II, the US Dollar has been the world’s preferred currency for international exchange. As the dollar continues to decline in value this could change and could be catastrophic to the US economy. It never occurred to me until now that the weakening of the dollar also effects the impact our economic sanctions have on rouge countries. China has been saying for a while now that it wants to get away from using the US dollar for international transactions. If we get to a point where the world doesn’t require US dollars for international trade our sanctions won’t be very effective.

    • Absolutely correct! You’ve got it right on. Economic sanctions go out the window when the dollar is weak and our economy is slow. We can only enforce economic sanctions with a strong dollar, a desirable dollar. Interestingly enough, the same applies to a barter exchange, but in a micro sense. You can’t enforce rules within your small barter economy without a valuable barter currency to back them up. Consider that you can buy ITEX dollars on the open market for less than 10 cents per.

LEAVE A REPLY

Please enter your comment!
Please enter your name here