EU Wants to Create ‘Payment Channels’ With Iran: Is There a Crypto Connection?
In spite of the sanctions that have been re-implemented by the United States earlier this year, members of the European Union, who were also signatories to the Iran nuclear deal signed under the Obama Administration, are now seeking to create individual payment channels to conduct business with the Islamic Republic of Iran. This news is according to Federica Mogherini, the foreign affairs chief for the European Union.
The deal itself, called the Joint Comprehensive Plan of Action, or ‘JCPOA' involves actions such as lifting ongoing sanctions on Iran which were designed strictly to cut oil sales from Iran, in exchange for the country toning down its past nuclear program.
Countries that were also initial signatories to this deal included the Russian Federation, the United Kingdom, Germany, China and France, with the US also being one of the nations behind the deal. However, in May of this year, the US made it clear that it would be withdrawing from the nuclear deal, and re-affirming its previous sanctions on the nation.
The US has also made a very clear point to its allies, such as the member states of the European Union: cease business dealings with Iran, or face secondary economic sanctions as well.
At this moment in time, EU member states have not been receptive to the US' overtures and hard stance, with some European officials stating that they are striving towards “the preservation and maintenance of effective financial channels with Iran, and the continuation of Iran's export of oil and gas” in spite of potential repurcussions.
What Shape Will These ‘Financial Channels' Take? Could They Be Cryptographic?
The member states of the European Union are standing at a particularly challenging crossroads; either they can abide by the unilateral, re-firmed stance of the US towards Iran, and cut off all their ties with the Islamic Republic, or resume their relationship with Iran, which will result in an unspecified amount of damage to their own respective economies through resultant secondary US Sanctions.
It's the latter option which presents the more dangerous of the two, especially during a period of time when the EU's economy is looking more and more unstable, especially in the face of a continually challenging subject matter like Brexit being ongoing.
One of the other alternatives that EU members could take time to consider, would be the embrace of Iran's new cryptocurrency as a medium of exchange, or a ‘special payment channel', by doing so, that would allow them to conduct business with Iran, while making sure not to enrage the US in the process.
As the third largest producer of Oil in the world, and a major player within OPEC, it depends extensively on its revenues from Oil in order to fuel its now hit economy. As a result, the country is in dire straits to offset the costs incurred by the reimposition of economic sanctions through the launch of its cryptocurrency. The Islamic Republic's crypto, like the Venezuelan Petro (in definition alone), would presumably be backed by the nations oil reserves.
This is still an option yet to be written on paper and placed on the table for the European Union member states to consider, and whether these 26 states could bring themselves to utilize cryptocurrencies as a way of circumventing sanctions remains to be seen.
But through engaging in such an unusual and innovative action, it could set a dangerous future precedent for economic dealings with other nations, allowing for trade negotiations to be taken away from the lights and eyes of the world, and back behind closed doors, despite being publically aligned with the imposition of sanctions and declaring a (de facto) unwillingness to trade.