Hello, this is Bella!
This post is about Trump's sanctions on Iran and Iran issuing national cryptocurrency as an antidote.
As of 7th of August, the US sanctions reinstated against Iran. Trump declared the landmark 2015 agreement had been "horrible," leaving the Iranian government flush with cash to fuel conflict in the Middle East, and the US government had to reimpose sanctions on Iran for 'world peace' (quoted from his tweet: 'I am asking for WORLD PEACE, nothing less!), and for a better deal.
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Summary of the Iran Nuclear Deal, 2015
What you should know about the deal the Trump administration withdrew
Yonhap News
JCPOA: what countries are involved and what key requirements are in it
The Joint Comprehensive Plan of Action (JCPOA) was reached by Iran and the United States, China, France, Germany, Russia and the United Kingdom in 2015. Check The Joint Comprehensive Plan of Action (JCPOA) at a Glance / Arms Control Association for the key requirements and actions mandated by the JCPOA.
Other parties' stance on the US sanctions restored
Federica Mogherini, the EU's high representative for foreign affairs, stated that the 2015 agreement is essential for 'the world peace'. The EU, China and Russia remain signatories to the JCPOA under which economic sanctions on Iran have been lifted in return for the regime curtailing its nuclear aspirations. Furthermore, once the US economic sanctions against Iran came into force, a blocking statute was brought into force in an attempt to insulate European firms by threatening legal repercussions they should comply with Washington's diktats and offering them a chance to stand against the US interference. (a blocking statute allows EU operators to recover damages arising from extraterritorial sanctions and nullifies the effect in the EU of any foreign court rullings based on them.)
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2 Steps of the Sanctions on Iranian Economy
Despite the EU, China and Russia's opposition to its action, the Trump administration will not retract the imposed sanctions. The sanctions will come in two phases.
The first phase
efffective as of August 7
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The second phase
effective as of November 5
It restricts sales of oil and petrochemical products, financial transactions with the central bank of Iran and others.
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The Iranian Government's Stance
Hassan Rouhani / VOA Korea
According to Reuters, the exchange rate from USD to IRR slightly decreased - IRR 98,000 for 1 USD, after the Iranian government announced a new exchange rate policy.
Abdul Nasser Hemmati, the head of the central bank of Iran, said that the decreased exchange rate reflects Iran's confidence in handling the current sanctions, and there is no reason to be worried about them.Iranian President Rouhani
President Hassan Rouhani, criticized the US government for their unilateralism over the nuclear deal.
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Iran-US Relations
Tensions between the two countries have been magnified since the Trump administration declared the withdrawal from the agreement and restored sanctions. However, their conflictual relationship is not a brand-new issue.
How the Iranian nuclear program started (the 1950s ~ 1970s)
Their relations were not always hostile. In the 1950s, under the rule of the Pahlavi dynasty, Iran was one of the beneficiaries of the US supporting nuclear program: The United States and Iran signed a civil nuclear cooperation agreement as part of the U.S. Atoms for Peace program.
What made their relations belligerent (the late 1970s ~ 2013)
After the Iranian Revolution, the Iran hostage crisis, the Iran-Iraq War, the US government regarded the Iranian regime as a great menace to their national security, and their relations went exacerbated.
Moreover, the hostile stance of the US government to Iran accompanying Operation Ajax and "Axis of evil" speech by George W. Bush led Iran to believe their national security had put in danger, which led to being eager to equip their nuclear capability.Two parties back to the table and negotiation established (2013 ~ 2016)
Boan NewsPresident Barack Obama proceeded and finalized nuclear negotiations with Iranian president Hassan Rouhani, from Moderation and Development Party, of which presidency started since 2013. The deal-JCPOA- with Iran and the P5+1 surprised the world considering the past 30 years of dispute between the two countries.
Iran-US relations with the presidency of Donald Trump (2016 ~ )
Yonhap NewsTrump declared the withdrawal from JCPOA even before his presidency and deemed Iran one of their enemies. During his presidency, when Trump visited Saudi Arabia and Israel in 2017, he urged cooperation upon the two countries in constraining on Iran's terror acts. Under these circumstances, Iran launched a ballistic missile, which led the US administration reactivated and enlarged their regulations on the country. And in May 2018, the Trump administration declared their withdrawal from JCOPA and sanctions against Iran have been reinstated.
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Iran seeking for a new antidote with cryptocurrency
How far Iran has come with its national cryptocurrency?
TokenPost
Iran’s National Cyberspace center is under their national cryptocurrency project.
According to Financial Tribune's report on 25th of August, they embarked on the project directed by Rouhani.
According to Press TV, Alireza Daliri, the department's deputy head in charge of investment affairs, stated that they are trying to prepare the grounds to use a domestic digital currency in the country, and the goal is to guarantee the success of those entering this field and conclude contracts in this field. The cryptocurrency would back and tokenize Iran's national fiat currency, the rial, in order to facilitate domestic and cross-border transactions ahead of the U.S. sanctions.
Saeed Mahdiyoun, the deputy director in charge of drafting regulations for Iran's Supreme Cyberspace Council, said that idea of introducing a national cryptocurrency is being actively pursued by Iran's High Council for Cyberspace, and the state authorities will soon remove the existing uncertainty around cryptocurrencies, since the Central Bank of Iran is set to introduce its official stance on the issue at the end of September.
Iranian government's stance on cryptocurrency before the issue
Iran's Financial Supervisory Commision was against public blockchain and cryptocurrency, and cryptocurrency transactions were forbidden for all domestic banks and financial institutions.
Nonetheless, Iran retracted its prohibition of cryptocurrency and have been making progress in issuing their national cryptocurrency as an antidote to the US sanctions on their economy; to minimize the impact of US sanctions on their economy and to facilitate international financial transactions.
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Conclusion (3 Things to Consider)
Opinions differ as to the effectiveness of economic sanctions.
The Bank of KoreaRegulations on the production and export of oil would have a great influence on Iran's economy since its economy mainly relies on oil exports, being the world's top five oil producing country (2015). On the other hand, the impact of sanctions against a single country in a few fields may not be as significant as intended in today's age of globalization.
Will their plan of issuing national cryptocurrency be a safeguard to protect Iran's economy from the US sanctions? How will their brand-new solution 'cryptocurrency' affect on US-Iran relations and other countries' foreign policies towards Iran?
PCWorld.alLast but not least, it is necessary to consider whether the US withdrawal from JCPOA and reinstation of Iran sanctions will bring a better negotiation- or a table for it, at least - to the Trump administration.
ChosunFrench President Emmanuel Macron indicated France and the U.S. want to aim, for a new deal, in April 2018, saying "I think we are overcoming it by deciding to work towards a deal, an overall deal that will enable us to deal with the nuclear issue, but also treat it together with another three issues which were not being dealt with so far." quoted from CNN Politics.
However, Iran turned down the possibility of a new deal, and some experts have pointed out there will be no incentive for Iran participating in a new agreement if the existing agreement (JCPOA) is abrogated.
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I wanted to cover the issue because it seems an intriguing combination of two of my main interests: international relations I studied for one year, back in university, and blockchain in which I currently work. However, this writing might not be covering the complicated issue enough, thus, I would like to have more opinions on the issue!
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Sources
전은주(2015), 『이란 핵 협상의 주요 내용 및 시사점』. 한국원자력연구원 정책연구부. Brief Report 2015-2호.
양의석, 신보람(2017).『이란의 석유 생산 수출 변화와 미국의 對이란 경제제재 동향』. 에너지경제연구원. 세계 에너지시장 인사이트 제17-35호.
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블록인프레스(2018.8.27), "미국과 이란의 경제분쟁, 이란 국영 암호화폐 발행으로 이어지나"
조선일보(2018.8.6), "美, 대이란 경제 제재 7일 시행…이란 ‘금 사재기’ 등 혼란"
토큰포스트(2018.07.27), "이란 美 제재 대비해 국영 암호화폐 발행... 제2의 페트로 될까"
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Bloomberg(2018.8.8), "Why Trump's Sanctions on Iran Carry So Much Force"
Coindesk(2018.7.26), "Iran Plans National Cryptocurrency as New US Sanctions Loom"
European Commisin Press Release Database(2018.8.6), "Updated Blocking Statute in support of Iran nuclear deal enters into force"
Opalesoue(2018.8.27), "Iranian government to roll out state-owned cryptocurrency soon
The Guardian(2018.8.7), "EU foreign policy chief calls on firms to defy Trump over Iran"