TEHRAN, IRAN — As Iran reels from the economic war the U.S. is waging on it, the country is hoping to avoid further damage from fast-approaching sanctions by launching a new digital currency, according to Iranian media reports.
The plan to put the new “indigenous cryptocurrency” in circulation was announced by Alireza Daliri, the deputy for management and investment affairs of the Directorate for Scientific and Technological Affairs of the Presidential Office, according to Iranian English-language broadcaster PressTV. Daliri said:
We are trying to prepare the grounds to use a domestic digital currency in the country… This currency would facilitate the transfer of money [to and from] anywhere in the world. Besides, it can help us at the time of sanctions.”
The move, which the Central Bank of Iran will execute in collaboration with local knowledge-based organizations, will begin with the main purpose of clearing bank transactions. While details remain unclear as to how the currency will operate, Tehran hopes that the new coin will meet the needs of Iranians who had used cryptocurrencies like Bitcoin to not only avoid sanctions on global transactions, but also as a vehicle of capital flight. After pre-launch flaws are ironed out, the country’s authorities hope the digital currency can be introduced across the domestic economy for use on a broader scale.
Countries affected by U.S. sanctions and account freezes — such as Iran, Russia, and Venezuela — have long sought solutions to their woes by weaning themselves from the U.S. dollar. Yet the potential for major shocks to the economy from the phasing-out of the greenback and switch to a new currency has stalled such moves to decouple their economies from U.S.-dollar hegemony.
The timing of the cryptocurrency’s introduction couldn’t be more important, as the aggressive moves by the Trump administration are already putting a tight squeeze on Iran’s suffering economy. On Monday, the country’s currency took another dive, down to 120,000 rials to the dollar.
The Islamic Republic will soon be faced with further tests for its “resistance economy,” which allowed it to survive nearly four decades of unremitting pressure by the U.S. and its junior partners through the diversification of its historically oil-export-dependent economy, protectionist measures meant to safeguard local producers, and limited integration in global finance.
The autarkic “resistance” model showed its limits in terms of ensuring the growth of Iran’s economy and sating the demands of Iran’s youthful demographic, sparking calls by factions among Iran’s elites to secure foreign investments. Such aspirations swelled following the easing of sanctions following the six-party deal.
Yet the renewal of a strict sanctions regime by the U.S. Department of the Treasury threaten to hit any businesses participating in Iran’s economy hard. This has discouraged foreign investors and banks from seeking involvement in the country, which risks the cost of being isolated from major financial institutions in the West.
Sanctions push the scramble for solutions
Come August 6, Iran will no longer be able to buy or acquire U.S. dollars. It will also face crippling restrictions by U.S. financial authorities on its ability to buy gold and other precious metals, be prevented from selling Iranian debt, and banned from trading industrial metals.
One hundred and eighty days later, on November 4, will see Iran barred from its ability to buy or sell petroleum products, and foreign entities will be prevented by the U.S. from trading with its central bank. The energy sector will be gravely affected.
The successive rounds of sanctions are a result of the renewed hostile policy toward the Islamic Republic that reached an apex when President Trump broke from 2015’s six-party Joint Comprehensive Plan of Action (JCPOA).
Trump’s move to scupper the nuclear accord in May was widely condemned by co-signatories to the deal, including U.S. allies like Germany and France who continue to seek pathways by which they can continue pursuing trade relations with Tehran, in spite of the new sanctions.
Resilience and resistance
Throughout the past several months, intermittent social protests resulting from the economic pressure have broken out, yet none have reached the sort of critical mass seen in the 2009 protests by the so-called “Green” movement.
Officials have urged Iranian citizens to remain calm and to hold out through the rough times promised by Washington, noting that the country will weather the latest storm wrought by Trump and his apparently “regime change”-focused administration of pro-Israeli, pro-Saudi hawks.
On Monday, Iranian First Vice-President Es’hagh Jahangiri stressed the transient nature of the new economic conditions, according to Iran’s Mehr News Agency, explaining:
If we can manage this situation well and pass through this stage, the country’s economy will be re-stabilized and economic indicators will once again become positive.”
The country’s isolation from global markets and the international community was imposed following the 1979 Islamic Revolution. Yet following the 2015 accord, world leaders and major businesses embraced the idea of assisting the development of Iran’s economy through lucrative deals and access to the large Iranian market and its 80 million citizens.
Officials hope the latest attempt to introduce a digital coin backed by the state power of the Islamic Republic will fare better than Venezuela’s “Petro,” which largely flopped amid lackadaisical support and skepticism from traders who saw little potential in the besieged South American country’s oil-backed crypto token.
Yet if the new Iranian cryptocurrency gains support from Iran’s would-be trading partners, we could see Tehran gain a powerful new asset in its fight to fend off the politicized economic war being waged by the Trump administration on the Iranian nation.
Top Photo | A closeup of Iran’s currency is shown. Photo | Shutterstock
Elliott Gabriel is a former staff writer for teleSUR English and a MintPress News contributor based in Quito, Ecuador. He has taken extensive part in advocacy and organizing in the pro-labor, migrant justice and police accountability movements of Southern California and the state’s Central Coast.
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