By ripping up the Iran nuclear deal on May 8 and targeting the Islamic Republic's energy sector, Donald Trump has unwittingly dealt a blow to the US dollar.
Having withdrawn from the 2015 Joint Comprehensive Plan of Action (JCPOA) concluded between the P5+1 group, the EU and Iran, US sanctions against the Islamic Republic will be reinstated, some of which will take effect after a 90-day period and the rest, including a ban on Iran's oil producers, after a 180-day period.
Commenting on the May 15 move, Russian Foreign Minister Sergei Lavrov called Trump's conditions a "significant pressure" upon the other signatories of the Iran nuclear accord.
"We see… that significant pressure will and has already been exerted on them [the remaining parties to the nuclear deal with Iran], they [the United States] have already put forward ultimatums about the need to stop trade with Iran, including deliveries to certain products, including the purchase of Iranian oil," Lavrov stated.
However, according to Russian economist and Sputnik contributor Ivan Danilov, Washington's European allies are seeking ways to get around sanctions.
"The thing is that the [US] threats to impose fines and disconnect from the dollar system would have made sense for European companies involved in business with Iran… if there were no alternatives to the US currency and the US financial system," Danilov explained.
On May 14, Reuters reported that Washington's decision to re-impose sanctions on Iran had bolstered investor interest in trading crude in yuan instead of US dollars. As a result, Shanghai crude oil futures ISCc1 have seen a steady rise in trading reaching a record 250,000 lots on May 9, a day after Trump's pullout from the JCPOA.
The crux of the matter is that the yuan-denominated transactions are non-transparent for US financial regulators, the economist pointed out, assuming that Chinese and European consumers could use Shanghai as a "black box" to evade US sanctions while buying Iranian crude.
According to Irina Fyodorova, a senior researcher at the Institute of Oriental Studies of the Russian Academy of Sciences (RAS), China has experience circumventing US sanctions through various "workarounds."
For its part, the EU is harboring plan to switch from US dollars to euros when purchasing oil from Iran, a diplomatic source told Sputnik.
The Financial Times pointed out that while US regulators are transacting in dollars, European envoys are mulling over setting up state credit lines in euros to get around the dollar finance restrictions with the European Investment Bank as a possible source of funding.
As Javier Blas, a chief energy correspondent at Bloomberg News, noted in his tweet, "France is floating European financing tools to bypass US sanctions on Iran (including ideas to use the European Investment Bank, the European Central Bank or ad-hoc instruments to trade)."
According to France 24 news agency, some European countries have been working out measures to bypass US anti-Iranian sanctions since January 2018. Thus, France's state-owned investment bank Bpifrance offered a plan of providing Iranian purchasers of French goods and services with euro-denominated export guarantees.
"It's up to us to decide in the end if we really want to accept this extraterritoriality of US law…. It can be a real shift in the balance of power," Caroline Galacteros, a geopolitics and strategic intelligence expert, said on the France 24 Debate show.
Earlier, in response to Trump's withdrawal from the deal, France, the UK and Germany pledged their commitment to the Iran nuclear accord.
Danilov highlighted that both yuan-denominated oil trade and euro-denominated transactions could eventually diminish the world's dependence on the US dollar.
He suggested that a scheme of using the yuan, euro, yen and ruble for external trade through state-owned or specialized banks could spell the end of US sanctions being a stick to beat other nations with.
"In case an effective parallel system of international trade, bypassing Americans, is created, [the US] financial system and currency, the dollar, will not only be unnecessary — it will become toxic to participants in international trade," Danilov opined, wondering why American policymakers do not see that they are shooting themselves in the foot.
The views of the contributors do not necessarily reflect those of Sputnik.
The views and opinions expressed in the article do not necessarily reflect those of Sputnik.