Brussels, 18/12/2006 (Agence Europe) - The decision by the Iranian government to replace the dollar by the Euro in its foreign trade and foreign assets, as announced by a government spokesman on Monday, has so far received no official comment by the European Central Bank (ECB), where it was revealed that the subject had already been raised with Gulf Cooperation Council (GCC) countries and many other regional economic operators.
The Iranian reference does not make any clear reference to a change in currency when setting oil prices. The measure taken, aims to affect transactions made by the country alone. Minister Elham indicated that, “sources from abroad and oil revenues will be calculated in Euro. We will also receive them in Euro to put an end to our dependency on the dollar”. A spokesperson declared that Iran “will also proceed to this change with regard to Iranian assets abroad” but did not explain the nature of these “foreign sources”, which could include export revenue as well as sources from international finance. The measure is a reminder of the measure already taken by the United Arab Emirates during the high point of the crisis in 2003 when the UAE opposed Washington's decision to refuse access to Emirates investors in the capital of the British P&O Ferries group by the Emirates firm, Dubai Port World. 10% of reserves from the country have already been transformed into Euro. Syria did the same more than a year ago with a “preventive measure”, when the country, after Iraq, faced the threat of US intervention. Damascus indicated at the time that all ministers and public companies should henceforward adopt the Euro instead of the dollar for repaying amounts owed by state bodies to foreign parties.
Without making any overt proclamation, the GCC as a whole, shares the concerns of its Emirates member but has not yet decided whether in the long term its reference currency will be the Euro or its own common currency, which is still an issue included in the regional integration projects even if the process has suffered some significant delays to carrying it being out. The only official trace can be found in the request made in October 2002 by governors of the GCC central banks that call on the European Central Bank to provide advice for the successful adoption of the single currency by the GCC in 2010. The ECB promised to carry out a study on this subject and organised seminars for GCC experts.
So far the ECB is keen to monitor how this development evolves but no information or additional comments were made on this subject or Iran's decision made on Monday. Frankfurt pointed out that the ECB did not want to encourage or put any brake on moves to replace the dollar with the Euro.
Caution reigned at the Commission too. Joaquin Almunia the European Commissioner for economic and monetary affairs pointed out that at this stage the announcement made by the Iranian government was “not very clear”, and would not provide any comment as to the consequences of such an initiative. On Monday he simply informed the press that, “We are not encouraging the use of the Euro by economic agents outside the EU but the decision is up to them”.
Sources from the ECB HQ indicated that this action, if it takes place, should be freely allowed. The ECB was keen to point out that for the instant it was providing the benefits of its experience and know-how to the integration zones, as it was doing last year, with African countries, which have, to a large extent, a common currency. This subject is part of all cooperation areas with third countries, sources explained. The Institute of Euro-Mediterranean Studies (FEMISE) is structurally linked to the Barcelona Process, and is encouraging the EU and Euromed zones to make more concrete commitment to heading down this road. In its 2005 report, it indicated that monetary policy that adopted a common currency and which closely anchored MED currencies to the Euro and not the dollar could help the “draw on” the monetary credibility of the European Central Bank (ECB), reduce inflation and interest rates I the MED region and contribute to attracting direct investment from abroad. (fb)