Friday, February 10, 2012

Iran looks to overcome sanctions through international barter

As the US and European nations seek to force Iran to the negotiating table over their nuclear program through economic sanctions, the Middle Eastern nation appears to have created a contingency plan in dealing with this.

The barter system... which has been in the works for months between Iran, China, and India.

Yet going back to the Reuters story, it would be quite dramatic, if only it was not the case that Iran has been laying the groundwork for a barter economy for many months now, something which various other analysts perceive as the basis for the destruction of the petrodollar system. Perhaps regular readers will recall that back in July, we wrote an article titled "China And Iran To Bypass Dollar, Plan Oil Barter System." Specifically, we wrote that "according to the FT, China has decided to commence a barter system in which Iranian oil is exchanged directly for Chinese exports. The net result: not only a slap for the US Dollar, but implicitly for all fiat intermediaries, as Iran and China are about to prove that when it comes to exchanging hard resources for critical Chinese goods and services, the world's so called reserve currency is completely irrelevant." Seen in this light the fact that Iran is actually proceeding with a barter system, something that had been in the works for quite a while, actually puts the Reuters story in a totally different light: instead of one predicting the imminent demise of the Iranian economy, the conclusion is inverted, and underscores the culmination of what may have been an extended barter preparation period, has finally gone from beta to (pardon the pun) gold, and Iran is now successfully engaging in global trade without the use of the historical reserve currency. - Zerohedge

While the US continues to putt around playing checkers in foreign policy, China, India, and the land that actually invented the game (Persia/Iran) play chess.  Economic sanctions may actually be more the detriment to the US as it could quickly force the hand of Iran and China to bypass the dollar and petro-dollar, and open up oil sales in a much different currency.

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