We noticed a few weeks ago Iran was shut out of SWIFT, the global payments system. We may assume this happened after America had put pressure on this private Belgian company. SWIFT, The Society for Worldwide Interbank Financial Telecommunication, is the keystone of the international payments system. SWIFT said it took the action in response to EU regulations issued against Iran. This has all been part of the ratchetting up of pressure on Iran. Obama is in an election year and he faces many pressures to be decisive and proactive.
In economic terms this is a bold act. SWIFT has very much been used as the West’s weapon that they have decided to use in an apparent act of economic war.
SWIFT, gold and barter
SWIFT’s reputation as an independent mechanism for facilitating and settling global trade has been sullied by this act. The SWIFT system enables large trade deals to be settled instantaneously, usually in dollars, the world’s reserve currency. As a result of this act nations such as China and India wishing to buy Iranian oil have had to find other means of settling oil trades outside of the SWIFT system, and thus outside of the petro-dollar.
China has continued to buy Iranian oil, and India mooted buying oil with gold. Subsequently India was told by Washington in no uncertain terms that “you’re either with us or against us” and not to do business with Iranian institutions. The Chinese and Indian authorities are not compelled; this has not been well received in Asia. China has once more issued comments about its abhorrence for unilateral behaviour, coercive actions and general bully boy tactics. Nations wanting to trade with Iran for valuable resources have been impacted by Western politics.
Washington trips over gold
What freezing Iran out of the global payments system has effectively done though is encourage barter deals around the world for settling trade. This may be a foolhardy endeavour for the managers of the world’s increasingly questioned reserve currency. In a recent interview with
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