The European Commission took another step toward making Europe less dependent on the United States on foreign trade. Recently, the E.C revealed the group is developing plans that will greatly reduce the bloc’s dependence on the US dollar. The proposal aims to boost euro’s global role and achieve its full potential.
The plan was disclosed by E.U Economic Affairs Commissioner Pierre Moscovici:
“A wider use of the euro in the global economy yields important potential for better protecting European citizens and companies against external shocks and making the international finance and monetary system more resilient.”
The commission clarified that the plans were created “at a time where the recent global trends, the emergence of new economic powers along with the development of new technologies are supporting a potential shift towards a more diversified and multipolar system of several global currencies”.
The E.C plans to use the euro as the default currency in the bloc’s trade with third countries in the energy sector and as benchmark for crude oil.
The EC stated the bloc must create “a full range of trustworthy interest rate benchmarks” in financial markets, and “a fully integrated instant payment system”.
In their proposal, it was obvious that the decision to slowly move away from the U.S. Dollar was influenced by the United States’ shifts in foreign policy particularly toward Iran:
“The proposal was drafted due to recent extraterritorial unilateral actions by third country jurisdictions like in the case of re-imposed sanctions on Iran, together with recent challenges to the international rules-based governance and trade are a wake-up call regarding Europe’s economic and monetary sovereignty”.
Unlike the U.S, Europe wants to maintain its trade relations with Iran particularly the nuclear deal which was signed in 2015.
President Donald Trump withdrew from the Joint Comprehensive Plan of Action (JCPOA), commonly known as the Iran nuclear deal and resumed sanctions against the Islamic Republic, which adversely affected EU businesses.
In the short term, Europe seeks to protect its trade relations with Iran via a Special Purpose Vehicle (SPV).
Iran’s Foreign Minister, Mohammad Zarif, announced that he had been assured by the E.U on the final arrangements for the SPV.