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Shafaq News/ The Israeli newspaper "Jerusalem Post" stated in an economic report that the countries of the Middle East, including Iraq, are trying to explore alternatives to the dominance of the dollar, but although fewer transactions are recorded in dollars, the US currency is still at the forefront of international markets. in the area.
And in the Israeli report, which was translated by Shafak News Agency; He pointed out that the Iraqi Ministry of Interior recently announced the ban on using the dollar in personal and commercial transactions, a step aimed at strengthening the strength of the Iraqi dinar.
He pointed out that such an Iraqi step is in line with the growing trend in various Middle Eastern countries that seek to reduce their dependence on the dollar. Despite this, the report stated that it would be misleading to consider that the Middle East is witnessing a process of "de-dollarization", but on the other hand, the countries of the region are looking, for various reasons, for alternatives to reduce their dependence on the US dollar.
The report quoted the director of the Middle East at the "OCO" economic consulting company, Joe Hepworth, as saying that the declared ban in Iraq on the use of the dollar may be aimed at preventing the Iraqi dinar from becoming a secondary currency in transactions, similar to what happened in Turkey.
However, Hepworth warns that this approach could create problems in the long term. It actually leads to the emergence of two economies."
With regard to Iran, after the report indicated that it can be said that it is the country that has the largest number of financial transactions in currencies other than the dollar in the region, Hepworth was quoted as saying that this "sounds on the surface as a geopolitical move, but in reality it is born of necessity."
He explained that given the severe sanctions imposed on Iran, it is largely prohibited from trading in dollars, which prompted it to search for alternatives.
The report quoted the report from the head of the Middle East and North Africa office for country risks, "S&P Global Market Intelligence," Jack Kennedy, as saying that it is expected that Iran's dealings in commercial settlements in local currencies in the region, including the UAE dirham, will gradually increase, adding that this would allow Iran can "circumvent sanctions and clearing houses in US dollars, and recover from seizures of its assets in regional banks, through conversion from hard currencies, due to these sanctions."
In addition, the Gulf states show interest in trading their oil in currencies other than the dollar. The report quoted Kennedy as saying that the China National Offshore Oil Corporation and the French company Total Energy completed, in March 2023, the first operation of its kind for Emirati liquefied natural gas, in exchange for the Chinese yuan.
According to Kennedy, the motives of the Gulf may stem from the economic effects suffered by the countries subject to sanctions, explaining that "it is likely that the Gulf oil and gas exporters will have an interest in diversifying some currency payments with their trading partners, especially after they have seen how financial sanctions have affected Russia and Iran." ".
For his part, India, as Kennedy says, is showing its keenness to "pursue some commercial dealings with the countries of the Middle East and North Africa in Indian rupees," which reflects a political desire for this step in view of the large sanctions that the West led against Russia after its invasion of Ukraine.
But Kennedy considered that the scope of this movement is currently limited, explaining that although there is a political intention to gradually boost trade by relying on currencies other than the dollar in the region, the US dollar is likely to remain "dominant in cross-border settlements and the Gulf countries are likely to continue pricing hydrocarbon exports." in US dollars as long as their currencies are pegged to it.”
Thus, Kennedy believes that these moves do not refer to the process of "de-dollarization" in the Middle East, but rather reflect attempts by the countries of the region to explore alternatives to dependence on the dollar.
And while Hepworth supports this idea, he says that the deep-rooted relationship between the dollar and global oil prices means that getting rid of the dollar in the Middle East is a "distant and unlikely" possibility, as long as the economies of the Middle East depend mainly on energy production and exports.
After the report drew attention to Egypt as an example, Kennedy was quoted as saying that the country might consider buying important commodities such as wheat in currencies other than the dollar, indicating that this may have been reflected in its recent decision to withdraw from the grain trade agreement related to Russian and Ukrainian grain exports.
Translation: Shafak News Agency
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