Editor’s note: Abhishek G Bhaya is a veteran journalist and international affairs commentator. The article reflects the opinions of the author and not necessarily the views of CGTN.

Iran has approached the Shanghai Cooperation Organization (SCO) with a proposal to create a new single currency to conduct trade between members of the Eurasian bloc which includes China, India and Russia – three of the world’s largest emerging economies – in a push to counter the growing militarization of the US dollar-dominated global financial system.

Iranian Deputy Foreign Minister for Economic Diplomacy Mehdi Safari told media earlier this month that the proposal was sent to the SCO nearly two months ago. Iran hopes the Eurasian bloc which it sees as a “concert of non-Western great powers” will react to the ever-changing geopolitical landscape and agree to its proposal in due course.

Tehran’s proposal for a single SCO currency, modeled on the euro, came around the same time as the United States and its Western allies announced a series of tough financial and economic sanctions against Russia. because of its military conflict with Ukraine.

These harsh measures are a prime example of how the West uses its monetary hegemony and dominance in international financial institutions to target nations it sees as adversaries or enemies. Russian banks have been removed from SWIFT international payment platforms. While the European Union banned global transactions with Russian entities using euro-denominated banknotes, the United States blocked Russia from accessing the US dollar for international trade.

The latest round of sanctions against Russia has only confirmed the rest of the developing and emerging world’s long-standing apprehensions about the potential risks of their reliance on US and Western financial mechanisms and a system international trade dominated by the dollar. The fear that no nation is safe from the wrath of the West, which can quickly ignite the heat of “sanctions” if a country ends up on the wrong side of the geopolitical fence – a fence designed, designed and built by the West.

“If you’re not with us, you’re against us,” the American adage goes today. This has repeatedly manifested itself in the erratic and irrational use of US sanctions as a tool of foreign policy.

Iran has been the victim of continuous US sanctions for nearly four decades, not being allowed to participate in global trade largely dominated by dollar transactions. In recent years, the United States has not only imposed a trade war on China, but imposed a series of economic sanctions.

Surprisingly, the United States did not even spare India, one of its strategic partners and member of the Quad, as Washington threatened New Delhi with sanctions for its decision to adopt an independent position on the Russian-Russian conflict. Ukrainian and maintain its commercial ties with Moscow.

Towards a dedollarization

The weaponization of the US dollar against Russia has sparked speculation that other emerging countries like China and India will step up their dedollarization efforts, to protect against similar financial sanctions in the future.

In this light, Iran’s proposal for a new SCO currency is gaining momentum. A single, long-term Eurasian currency could pose a serious challenge to the dollar’s hegemony in international trade while protecting SCO members from unilateral US and Western economic sanctions.

For Iran and Russia, the currency will have immediate benefits – both countries will be able to circumvent illegal Western sanctions to trade more openly with their SCO partner countries, which make up 44% of the world’s population and about a quarter of world population. World GDP.

The Eurasian bloc prides itself on being the largest international organization in the world and currently comprises eight member states: China, Russia, India, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan and Uzbekistan. In addition, Afghanistan, Belarus, Iran and Mongolia have observer status while there are six dialogue partners: Armenia, Azerbaijan, Cambodia, Nepal, Sri Lanka and Turkey.

Last July, the SCO announced the decision to induct two Middle Eastern countries – Saudi Arabia and Egypt – as dialogue partners, bringing the total number of countries in the bloc to 20. Later in September, Iran’s application for full membership was also unanimously approved.

Reduce reliance on Western platforms

In addition to the single currency proposal, the Eurasian economic and political bloc has long considered reducing its dependence on American and Western financial platforms. He has led serious discussions on the establishment of a regional bank to synchronize digital payment gateways using local currencies with the aim of boosting e-commerce and trade between SCO countries and reducing the use of external platforms such as Mastercard and Visa. Proposals to establish an SCO development bank and an SCO development fund are also on the table.

While many SCO countries have already begun to trade with each other in local currencies and in doing so minimize the use of the US dollar as a medium of exchange, these transactions are mostly bilateral in nature. There is a need for either a common currency or a common payment platform that could be automatically used by each of the SCO members when transacting with each other.

According to one estimate, SCO countries lose around $10-20 billion a year just on transaction and conversion fees while using external payment gateways. It has been proposed in previous SCO meetings that payment gateways from SCO countries such as UnionPay (China), RazorPay (Russia), RuPay (India), etc. must take precedence over their Western counterparts such as Mastercard and Visa.

Russia and China have separately launched several measures such as cross-border interbank payment systems parallel to SWIFT. India and Russia have also set up a rupee-ruble trade mechanism to circumvent US and Western sanctions. Iran has long had a mechanism for exchanging local currencies with China and India.

With a push on increased financial synergy among SCO members, the time seems to have come for a single common currency for the region as a foil against dollar hegemony and the illegal American and Western practice of twisting and weaponizing global financial systems to adapt to their own geo-economic circumstances. and geopolitical interests. The world cannot afford to be hostage to a discriminatory financial system that helps perpetuate an economic order led by the US dollar.

(If you would like to contribute and have specific expertise, please contact us at [email protected] Follow @thouse_opinions on Twitter for the latest comments on CGTN’s Opinion section.)