Despite sanctions placed by the US, EU members who initially signed a nuclear deal with Iran are now creating individual payment channels to conduct business with the controversial nation, according to European Union foreign affairs chief Federica Mogherini.
The deal (called the Joint Comprehensive Plan of Action, or ‘JCPOA’) involved lifting sanctions that were designed to cut oil sales from Iran in exchange for the country toning down the development of its nuclear program.
Russia, the UK, Germany, China, France, and the US were all initially signed on the deal. However, the US withdrew from the agreement in recent May and began re-imposing their sanctions on Iran. Besides, the US issued warnings to other European countries to stop engaging in business dealings with Iran, or they could face secondary sanctions.
So far, European countries have not responded positively to America’s stance, with European officials stating that they are working on “the preservation and maintenance of effective financial channels with Iran, and the continuation of Iran’s export of oil and gas” despite potential repercussions.
Could these ‘financial channels’ be cryptographic?
European countries are faced with a tough choice; they can either go along with the US and cut off all business ties with Iran, or presume their relationship with Iran and potentially harm portions of their economy through secondary US sanctions. The latter option is particularly dangerous at a time where the EU’s economy is looking more unstable, and Brexit remains a significant issue that could also cause further damage.
A possible alternative would be for European nations to embrace Iran’s new cryptocurrency as a medium exchange (or ‘special payment channel’) that could allow them to conduct business without triggering any backlash from the US.
Iran is the world’s third-largest oil producer within OPEC and largely depends on Oil revenue to fuel its economy. Therefore, the country is in desperate need to offset the costs of the sanctions through the launch of its cryptocurrency, which like the Venezuelan Petro is presumably backed by the nation’s oil reserves.
Whether or not European countries would embrace cryptocurrencies as a way to circumvent US sanctions remains to be seen. However, such a unique action could set a dangerous precedent for future economic deals, allowing trade between nations to occur behind closed doors (through particular payment channels) despite publicly imposing sanctions and declaring an unwillingness to trade.