Source: Global Times    Published: 2018-9-26

China fully supports the EU's proposal to set up a "special payments system" to facilitate trade with Iran and safeguard the Iranian nuclear deal, a move experts say will reduce reliance on the US dollar in global trade and further isolate it from the international community.

If the US continues to push isolationism and unilateralism, and impose "long-arm jurisdiction" to sanction other countries who are paying efforts to preserve the Iranian nuclear deal and keep trade ties with Iran, it will force the EU to stand closer with China, Russia and Iran, Chinese experts noted on Wednesday, adding that the Iranian nuclear issue might become another "conflict point" between China and the US apart from current trade frictions and the Taiwan question.

At UN Headquarters in New York during the ongoing 73rd session of UN General Assembly, Chinese State Councilor and Foreign Minister Wang Yi attended a ministerial meeting on Monday among senior foreign affairs officials from Iran, China, Russia, France, the UK, the EU and Germany - the remaining powers of the 2015 agreement after the US' withdrawal.

Chinese Foreign Ministry spokesperson Geng Shuang said at Wednesday's routine press conference that safeguarding and implementing the Iranian nuclear deal is safeguarding the authority of the UN Security Council, the basic norms of international law, the international non-proliferation regime and the peace and stability of the Middle East.

"All participants of the meeting are working to establish a settlement channel for Iran, and allow Iran to continue to export oil," Geng noted.

Special payment system

The EU will set up a legal entity to facilitate legitimate financial transactions with Iran in light of the US withdrawal from the international agreement on Tehran's nuclear program and the re-imposition of unilateral sanctions, the EU's foreign and security policy chief Federica Mogherini said on Monday after the meeting, the Xinhua News Agency reported Tuesday.

The legal entity will allow European companies to continue to trade with Iran in accordance with EU law and could be open to other partners in the world, Mogherini told the reporters at the UN Headquarters.

As the euro is the second largest currency for international payments, the EU is most qualified to propose a special payment system to counter US sanctions, Cui Hongjian, director of the Department of European Studies at the China Institute of International Studies, told the Global Times on Wednesday.

"Before the EU made this proposal, China and Russia were already using their own methods to sidestep US sanctions and continue trading with Iran. They used their own currencies or did barter trade with Iran, to avoid difficulties using US dollars," Hua Liming, a former Chinese ambassador to Iran, told the Global Times.

Geng said that as long as it [the EU proposal] safeguards the whole [nuclear] deal, China will support it. Russia has also vowed support to the EU plan, Russia's TASS news agency reported on Tuesday.

The special payment system proposed by the EU is only a stopgap that helps sidestep US sanctions, said Cui. Iran still needs to find a way to trade with the three currencies it has on hand, he said.

Not only China, Russia and the EU, other countries including India and Turkey might also participate in this system, as they too have significant trade ties with Iran, Hua noted. "US unilateralism could be an opportunity for the major powers around the globe to end their reliance on US dollar hegemony."

The US could retaliate against Chinese State-own energy companies and banks that skirt US sanctions, said Hua. "The Iranian issue could become another conflict point between China and the US," he said.

Hua Liming is a senior fellow of Chongyang Institute for Financial Studies, Renmin University of China.