Iran and Russia are making significant strides towards establishing a single currency for the BRICS group, according to Iranian Ambassador to Russia, Kazem Jalali. Jalali revealed this development during a recent press conference at the 15th International Economic Forum ‘Russia-Islamic World: KazanForum,’ held in Kazan, southwest Russia.
A Strategic Economic Partnership
Jalali highlighted that Iran is actively participating in various initiatives organized under Russia’s chairmanship of BRICS. “The creation of a new single currency within the framework of the association is what Russia and Iran are working on,” Jalali stated. This initiative is seen as a strategic move to counter the economic restrictions imposed by the United States, which often leverages the dollar to exert influence globally.
Moving Away from the Dollar
The ambassador emphasized the importance of using national currencies for mutual settlements between countries, noting that it is a critical agenda item for both Iran and Russia. This shift aims to reduce dependency on the dollar, thereby mitigating the impact of U.S. sanctions. “As the United States uses the dollar to create restrictions, the use of national currencies in mutual settlements is on the agenda,” Jalali was quoted saying by a Russian news outlet.
Enhancing Bilateral Trade
Jalali pointed out that over 60 percent of bilateral trade between Iran and Russia is already conducted in rubles and rials, illustrating the deepening economic ties between the two nations. He described the current phase of Russia-Iran relations as a “golden stage,” marked by robust cooperation and mutual benefits.
The KazanForum: A Platform for Collaboration
The KazanForum serves as a crucial platform for fostering cooperation between Russian regions and countries within the Organisation of Islamic Cooperation (OIC). The forum’s primary aim is to bolster trade and economic relationships, advance scientific and technical collaboration, and enhance social and cultural ties. It also plays a pivotal role in promoting the development of Islamic financial system institutions in Russia.
Broader Implications for BRICS
The efforts by Iran and Russia to create a single currency could have far-reaching implications for the BRICS group, which comprises Brazil, Russia, India, China, and South Africa. A unified currency could facilitate smoother trade among member countries, reduce transaction costs, and strengthen economic integration. It could also provide a viable alternative to the dollar-dominated global financial system, offering BRICS countries greater financial autonomy.
Russia’s Leadership in BRICS
Under Russia’s current chairmanship, the BRICS group has been exploring various avenues to enhance economic cooperation and reduce dependency on Western financial systems. The initiative to establish a single BRICS currency is part of a broader strategy to create a more balanced and multipolar global economy. This approach resonates with the goals of many BRICS nations, which seek to diminish their vulnerability to external economic pressures and promote sustainable growth through mutual cooperation.
Iran’s Active Participation
Iran’s active role in these initiatives underscores its commitment to fostering closer ties with BRICS countries. By aligning with Russia on the currency project, Iran not only strengthens its bilateral relations with Russia but also positions itself as a proactive member of the broader BRICS economic community. This alignment is particularly significant given the economic challenges Iran faces due to international sanctions and economic isolation.
The Role of National Currencies
The increasing use of national currencies in bilateral trade between Iran and Russia is a testament to their efforts to bypass the U.S. dollar. This practice not only facilitates trade but also shields their economies from the volatility associated with the global dominance of the dollar. By conducting trade in rubles and rials, Iran and Russia are laying the groundwork for a more resilient economic partnership that can withstand external shocks.
Potential Challenges
While the creation of a single BRICS currency presents numerous opportunities, it also poses significant challenges. Coordinating monetary policies among diverse economies with different levels of development, inflation rates, and fiscal policies requires meticulous planning and cooperation. Moreover, gaining acceptance for a new currency in the international market would necessitate building trust and demonstrating the stability and reliability of the new financial system.
Future Prospects
Despite these challenges, the initiative by Iran and Russia signals a bold move towards greater economic sovereignty for BRICS nations. If successful, the single currency could enhance the group’s bargaining power in the global market and reduce their collective dependency on Western financial institutions. It could also pave the way for other regional groups to consider similar measures, potentially leading to a more diversified and balanced global financial system.
Conclusion
Iran and Russia’s collaboration on creating a single currency for BRICS marks a significant development in the quest for economic independence and resilience. By actively participating in initiatives under Russia’s chairmanship of BRICS, Iran is not only strengthening its bilateral ties with Russia but also contributing to a broader effort to reshape the global economic landscape. The KazanForum highlights the importance of such collaborations and the potential for transformative changes in international trade and finance
