An Islamic cryptocurrency to help the Muslim world avoid American economic hegemony? One could be coming, that is if Iranian President Hassan Rouhani can convince other Muslim leaders to join the effort.
President Rouhani called such leaders to action at the Kuala Lumpur Summit in the Malaysian capital on December 19th, telling those gathered — which included representatives from 52 countries — that Islamic nations should actively work together to boost and entrench trade relations among themselves by, among other things, creating a Muslim cryptocurrency.
“The Muslim world should be designing measures to save themselves from the domination of the United States dollar and the American financial regime,” Rouhani said.
The Iranian president went on to argue that as Muslim countries increasingly faced the inter-linked threats of poverty, corruption, and extremism, then the U.S. and other Western nations will continue to have pretexts to intervene in Muslim-majority states.
To that end, Rouhani said improved trade relations and collaborations between these states would help ensure their own sphere of influence. Accordingly, the Iranian president called for the creation of a “joint fund” and a “joint research center” so that Islamic states can more effectively pursue technological collaborations.
A Geopolitical Opt-Out for the Ages?
To be sure, it comes as no surprise that Iran would be wanting to rally support for disengaging from America’s economic might.
Since 1980, the U.S. and Iran have severed formal diplomatic relations, and last year Iranian Supreme Leader Ali Khamenei even officially illegalized the opening of direct communications with the U.S.
America has had an economic embargo against Iran in place since the mid 1990s, and the associated sanctions were suspended in 2016 as part of a diplomatic deal that entailed Iran winding down its nuclear program. The Trump administration reimposed those sanctions within two years’ time, and Iran has been increasingly keen on finding ways to avoid the bite of the economic conflict ever since.
With that said, there have been reports in recent months that Iran’s leadership has been considering the use of cryptocurrencies for mitigating the effects of economic sanctions. President Rouhani’s new comments mark the clearest and loudest indication yet that Iran is not only seriously considering the topic but also angling toward further related research.
Theoretically speaking, if a Muslim crypto like Rouhani has proposed does actualize and gain adoption among other Islamic states, such a development would likely cause an even bigger political backlash in Washington D.C. than Venezuela’s recent purportedly oil-backed “Petro” token efforts have.
It remains to be seen what will happen next for the proposal for now, but it’s clear in zooming out that there’s a growing geopolitical trend toward “dedollarization” on the world stage, and cryptocurrencies seem increasingly poised to play a role in this trend.
Just last month, the BRICS bloc of nations — China, Russia, India, Brazil, and South Africa — revealed they had participated in initial discussions around the potential development of a shared digital currency that could be used for trade among member states.
The move marked only the latest wrinkle in Russia’s and China’s explorations of escaping — or at least minimizing — the importance of the U.S. dollar in their affairs.
For example, several proposals for a state-supported crypto have been put forth by influential Russian officials in recent times, all against the backdrop of being useful for getting around U.S. sanctions.
“[A]n oil-backed cryptocurrency would allow oil producing countries to avoid any financial and trade restrictions that have become excessive in recent years,” former Russian energy minister Igor Yusufov proposed last fall.
In China, sentiments have been similar, as top Chinese central bankers have characterized the nation’s ongoing digital yuan efforts as being centered around ensuring the Asian superpower’s economic sovereignty.
“It is to protect our monetary sovereignty and legal currency status,” Mu Changchun, current head of the government-backed Digital Currency Research Lab, has previously explained of the project.