Iran Sanctions Backlash: Oil Buyers Ditch Dollar? – OpEd


By Annie Robbins

This is not news that will sit for long. It is not being reported in the MSM here but, if accurate, it is stunning information.

First, from Commodity Online service: China and UAE ditch US Dollar, will use Yuan for oil trade

NEW YORK (Commodity Online): The US dollar is fast losing out its reserve currency status with China aggressively replacing the dollar with the Yuan as a currency for bi-lateral trade. The latest is an agreement signed between the China and the United Arab Emirates (UAE), which will use the Yuan for oil trade.

The deal is worth around $5.5 billion dollars and the Chinese central bank said that the deal aims at “strengthening bilateral financial cooperation, promoting trade and investments and jointly safeguarding regional financial stability”

Earlier, Russia and Iran had decided to use Rubles as a means of currency. With both China and Russia converting their bi-lateral trades into non-US dollar deals, the greenback is now under threat of losing out its status as the world reserve currency. And the impact of such a transition will essentially tip the balance of global power.

And now from China Money Report, an investors’ site. “Gold for Oil: India and Iran Ditch Dollar”:

According to a new and yet unconfirmed report, India bought oil from Iran using gold. India certainly has the gold resources to fund the oil, while Iran is under pressure by the West, due the continuation of its nuclear program.

There were reports that officials have been floating this idea for some time, and now, as the EU finally decided upon an oil embargo on Iran, more details became available, yet still pend confirmation.

Oil is priced in US dollars, and bypassing the greenback posed challenges for both parties. Two banks are reportedly involved in this deal: India’s state owned UCO Bank and Turkey’s state owned Halkbank.

Both banks don’t have any business with the US and therefore are less vulnerable to sanctions. According to the report, an Indian delegation has spent time in Tehran and finalized the details of the transactions. The annual capacity of trade between these two countries is 12 billion dollars.

UAE, China Agree to Drop Dollar, Trade UAE Oil for Yuan

The dollar is losing reserve currency status before your eyes. When the Euro crisis resolves one way or another, a tsunami will hit the dollar.

The currency swap agreement between China and the United Arab Emirates [UAE] signed during Premier Wen Jiabao’s tour of the Persian Gulf region ending today, will raise eyebrows in the western capitals, especially London and Washington. The list of countries with which China has such deals is slowly and steadily lengthening and this is the first such deal with a Gulf Cooperation Council [GCC] state.

We can thank our 100-0 Congress for this. Not smart unless they are really chomping at the bit for dramatic escalation and repercussions.

Global research provides some decent background in Tehran Pushes to Ditch the US Dollar:

The official line from the United States and the European Union is that Tehran must be punished for continuing its efforts to develop a nuclear weapon. The punishment: sanctions on Iran’s oil exports, which are meant to isolate Iran and depress the value of its currency to such a point that the country crumbles.

But that line doesn’t make sense, and the sanctions will not achieve their goals. Iran is far from isolated and its friends – like India – will stand by the oil-producing nation until the US either backs down or acknowledges the real matter at hand. That matter is the American dollar and its role as the global reserve currency.

The short version of the story is that a 1970s deal cemented the US dollar as the only currency to buy and sell crude oil, and from that monopoly on the all-important oil trade the US dollar slowly but surely became the reserve currency for global trades in most commodities and goods. Massive demand for US dollars ensued, pushing the dollar’s value up, up, and away. In addition, countries stored their excess US dollars savings in US Treasuries, giving the US government a vast pool of credit from which to draw.


If the US dollar loses its position as the global reserve currency, the consequences for America are dire. A major portion of the dollar’s valuation stems from its lock on the oil industry – if that monopoly fades, so too will the value of the dollar. Such a major transition in global fiat currency relationships will bode well for some currencies and not so well for others, and the outcomes will be challenging to predict. But there is one outcome that we foresee with certainty: Gold will rise. Uncertainty around paper money always bodes well for gold, and these are uncertain days indeed.

A couple weeks ago Alex Kane provided us with of evidence Iran wants talks. There are talks in the making.

ANKARA, Jan. 19 (Xinhua) — Turkish and Iranian foreign ministers on Thursday called on relevant parties to resume nuclear talks with Iran as soon as possible for regional stability.

At a joint press conference held in Turkey’s capital Ankara Thursday, Turkey’s Foreign Minister Ahmet Davutoglu and his Iranian counterpart Ali Akbar Salehi hoped that the nuclear talks between Iran and five permanent members of the United Nations Security Council plus Germany could be held at Istanbul as soon as possible.

“The key thing is to start negotiations and ease tensions at once. And Turkey is ready to provide any help or any contributions to the resumption of nuclear talks since it is high time for talks and a settlement,” said Ahmet Davutoglu.

I.e., we chose these sanctions when there were alternatives.

Annie Robbins is Writer at Large for Mondoweiss, a mother, a human rights activist and a ceramic artist. She lives in the SF bay area.

This article appeared at and may be found here:


Mondoweiss is a news website devoted to covering American foreign policy in the Middle East, chiefly from a progressive Jewish perspective. Mondoweiss is maintained by Philip Weiss and Adam Horowitz. Weiss lives in New York state and Horowitz lives in New York City.

One thought on “Iran Sanctions Backlash: Oil Buyers Ditch Dollar? – OpEd

  • February 2, 2012 at 4:56 am

    Great article.

    The Yuan is going to rise in value and therefore it is a currency worth trading in.


Leave a Reply

Your email address will not be published. Required fields are marked *