The European Union wants to challenge the longstanding dominance of the U.S. dollar in oil trade, the French broadcaster EuroNews reported. Brussels has created a working group comprising of representatives from European trade and industry to “challenge the dominance of the dollar” in energy trade and promote the use of euro to price oil imports, the broadcaster said.
The move is directly connected to the U.S. sanctions on Iran’s energy, shipping, and banking sectors, the news report confirmed. The U.S. decision to withdraw from the 2015 nuclear deal and hit Iran with wide-ranging sanctions had irked German Chancellor Angela Merkel and other EU leaders, who remain committed to keeping the Obama-era agreement alive.
In the post-war era, the dollar established itself as world’s pre-eminent reserve currency chiefly because of the central role played by the U.S. economy. Most oil exporting nations still prefer trading in U.S. dollar. Out of 300 billion euros worth of oil imported by the EU countries since 2014, 85 percent was paid in the dollar, the official EU statistics say.
The EuroNews reported the details of the EU’s latest initiative:
The European Union has convened a wide-ranging industrial group to work on promoting the euro and fighting the monopoly of the U.S. dollar in oil and commodities trading, reflecting broader tensions with Washington over trade and sanctions.
The group, which involves executives from European oil firms such as OMV and Eni and gas and power firms such as Fluxys and Engie , will meet behind closed doors in Brussels under the auspices of the European Commission on Thursday.
The workshop is part of an EU push to challenge the dominance of the dollar, with an EU official saying such a shift must be market-led.
Participants are invited to dig into “constraints on (market-initiated) alternatives to the use of U.S. dollar through wider use of the euro, in spite of the benefits of such a change”, the Commission said in materials prepared for the meeting.
The meeting, part of a consultation process until mid-2019, is expected to provide new input to EU plans for promoting the euro in energy trading.
The initiative coincides with the EU’s efforts to set up a special-purpose vehicle (SPV), a non-dollar trading mechanism, to bypass U.S. sanctions. The SPV, essentially a bartering system, seeks to trade goods made in EU countries in exchange for Iranian oil, thereby shielding the sanction-busting European firms and banks from prosecution in the United States.
Despite the impending British exit from the union, the EU is redoubling its efforts to position itself as a major power player on the global stage. Last month, German Chancellor Merkel and French President Emmanuel Macron signed a “friendship pact” calling for the creation of a “common military culture” that will “contribute to the creation of a European army.” A German-led EU army will inevitably rival the U.S.-led NATO alliance, much to the dismay of the eastern European countries.
In August, German Foreign Minister Heiko Maas called for the creation of a “new financial infrastructures to free [the EU countries] from US domination.” Maas proposed the formation of a “European” SWIFT to rival the existing world-wide payments system. Writing for the German business daily Hendelsblatt, the minister justified his ambitious plans by claiming that “it was right to protect European companies legally from [U.S.] sanctions. It is therefore essential that we strengthen European autonomy by establishing payment channels independent of the US, a European monetary fund and an independent SWIFT [payments] system.”
While the EU throws a lifeline to the faltering regime in Tehran, the Iranian oil trade continues to finance Lebanon’s Hezbollah and Iran’s Islamic Revolutionary Guard Corps (IRGC), both designated as terrorist organizations by the United States and other western countries. Instead of putting pressure on the Mullah regime or standing with the freedom-loving people of Iran, the European political class is standing firmly on the side of Islamic fanaticism and terrorism.
European Union steps up plans to circumvent US Iran sanctions
[Cover image via YouTube]
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