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Iran proposes new currency for trade with China, Russia, India, Pakistan in Shanghai Cooperation Organization

Iran proposed a new currency for trade with China, Russia, India, Pakistan, and other members of the Shanghai Cooperation Organization (SCO). This could help circumvent illegal Western sanctions and weaken US dollar hegemony.

Shanghai Cooperation Organization SCO summit 2018
The 2018 summit of the Shanghai Cooperation Organization (SCO)

Iran has proposed creating a new currency to do trade with China, Russia, India, Pakistan, and other members of the Shanghai Cooperation Organization (SCO).

Tehran sent a letter to the SCO in early 2022 suggesting that a new currency could help the Eurasian nations strengthen their bilateral trade with each other, according to Iran’s foreign minister for economic diplomacy, Mehdi Safari.

A Eurasian currency would also make it easier for these countries to circumvent unilateral Western sanctions, which are illegal under international law.

Such a development would directly challenge the US-dominated financial system and the status of the dollar as the de facto global reserve currency. The US dollar is still used in the majority of global trade transactions, although the overall percentage is shrinking by the year.

Brazil’s left-wing leader Lula da Silva has similarly pledged that, if he wins the October 2022 presidential elections, he will create a new currency for trade within Latin America, called the Sur (“South”), in order to combat “the dependency on the dollar”.

The Shanghai Cooperation Organization is a Eurasian political and economic alliance that brings together countries representing more than 40% of global population and roughly one-third of the world’s GDP.

Shanghai Cooperation Organization SCO summit 2019

The 2018 SCO heads of state summit

The SCO was formed in the 2001, at first largely as a security organization aimed at combatting terrorism and extremism and promoting peace and stability in Asia.

In the two decades since, the SCO has evolved into a highly influential political and economic organization.

China, Russia, India, and Pakistan are all members of the SCO, along with the Central Asian countries of Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan.

Iran became accepted as a member of the SCO in September 2021, initiating a technical accession process that could take a year or two.

Afghanistan, Belarus, and Mongolia are also recognized as SCO observer states.

On May 26, the Shanghai Cooperation Organization held its 17th forum meeting, via video. The conference was chaired by Russia.

Dozens of figures from the eight Eurasian member states discussed “more intensive interaction between the SCO states in the field of international security, economic cooperation matters and expanded cultural and humanitarian cooperation”, the organization reported.

Several members of the SCO, including Russia, Iran, and China, have been targeted by unilateral US sanctions, which violate international law.

A new Eurasian currency would help these sanctioned nations trade with each other, without the need of dollars and access to the US-controlled financial system.

Russia and China have sought to de-dollarize their economies for several years, recognizing how the US government has weaponized its currency through the use of financial sanctions.

The devastating Western sanctions imposed on Russia over its military intervention in Ukraine have accelerated this process of de-dollarization.

The Western proxy war on Russia has also led to a significant deepening of the integration of the Russian and Chinese economies.

These sanctions have likewise encouraged countries in Asia to develop new forms of trade using other currencies.

China is purchasing Russian oil in its own currency, the yuan.

India and Russia are doing trade together in their own currencies, the rupee and ruble, respectively.

In 2020, Iran’s central bank effectively dropped the dollar and listed the Chinese yuan as its top foreign exchange currency.

China and Iran subsequently signed a historic 25-year cooperation agreement in 2021. As part of the deal, China will reportedly invest $400 billion to help develop Iran’s economy and infrastructure, in return for oil.

5 Comments

5 Comments

  1. John

    2022-06-03 at 00:54

    One thing I don’t understand. When Aaron Mate interviewed Michael Hudson he said something like “no that the US dollar will fall in value” and I just don’t understand how it can’t fall with all this de-dollarization. Love it when you interview him! Also, curious to know if Lula would consider using this currency for South America. Would they let him? How will the US try to screw it up? Can they do anything? Lastly, I wish China and Russia would get out of the fossil fuel. We’re running out of time.

    • Joseph E Fasciani

      2022-06-09 at 20:35

      At 79 and a long time student of history, I’m afraid that the dark hand of the deep state will act to eliminate any upstart government or individual to the USA’s striving for hegemony. Lula’s life may end very precipitously, as with so many other popular leaders.

  2. Eric Arthur Blair

    2022-06-06 at 11:35

    Unlike the utterly witless stinkin’ Blinken, the halfwit smellin’ Yellen understands how the US seizure of USD$300 billion of Russian foreign reserves is both illegal and fatally undermines global confidence in the USD / US treasury bonds as a safe haven investment.
    https://www.australiannews.net/news/272572157/us-fears-consequences-of-seizing-russian-assets-nyt
    China understands its need to offload its USD$3 trillion in foreign reserves before firming up a new international currency (maybe Renminbi-Ruble-Rupee linked to gold, commodities and industrial-agricultural capacity?)
    But who can China sell their USD assets off to, before they render it valueless by launching the triple R?

  3. Masoud

    2022-06-07 at 14:38

    First word says Iran, first photo features everyone but Iran. LOL

    • Benjamin Norton

      2022-06-08 at 11:46

      Iran did not officially become a member of the Shanghai Cooperation Organization until 2021, and there was no in-person summit with the heads of state because of the Covid pandemic, so there is not a photo of Iran’s president with the other SCO presidents.

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