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Aurora, Il USA
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From FT.com:
Tehran and Beijing are in talks about using a barter system to exchange Iranian oil for Chinese goods and services, as US financial sanctions have blocked China from paying at least $20bn for oil imports.
The [COLOR=#2e6e9e]US sanctions against Iran[/COLOR], which make it extremely difficult to conduct dollar-denominated business, mean that China could owe the oil-rich nation as much as $30bn, according to people familiar with the problem.
They said the unpaid oil bills had built up over the past two years and the governments, which are in early-stage talks, were looking at how to “offset” the debt.
Some Iranian officials are growing increasingly angry about the inability of the country’s largest oil customers to pay cash, a problem that has contributed to [COLOR=#2e6e9e]a shortage of hard currency [/COLOR]and has hindered the central bank from defending the Iranian rial, which has been sharply devalued over the past month.
China and India together buy about one-third of Iran’s oil, the country’s economic lifeblood. China’s oil imports from Iran have risen 49 per cent this year, according to Reuters.
[COLOR=#2e6e9e]Iran last week threatened to cut off oil exports to India[/COLOR], which owes $5bn for oil but has not been able to move the money out of an escrow account to Tehran.
Unlike India, which exports almost nothing to Iran, China is dominant in Iranian business and could use a barter system to balance trade between the two countries. Beijing is involved in everything from building tunnels to exporting toys and has been expanding into Iran’s oil sector, where European companies such as Shell and Total have been deterred by the difficulties of operating without contravening sanctions.
China and Iran’s bilateral trade totalled $29.3bn last year, up almost 40 per cent from 2009. The two countries this month signed several infrastructure and trade collaboration agreements that would see Chinese companies invest in big infrastructure projects in Iran, while Iran would export large quantities of chrome ore to China, according to local reports.
“Both China and India are happy to keep Iran’s money in their banks and try to get Iran involved in barter deals to sell their junk, or give yuan and rupees instead of hard currencies,” said one Iranian former official, on condition of anonymity. Iran had not yet accepted the alternatives, he added.
Repeated sets of US financial sanctions, imposed in response to Iran’s continued defiance over its nuclear programme, have had a crippling effect on the country’s banking sector, limiting its ability to do business with other banks around the world. Another former official said that Iran was holding up adequately, thanks in no small part to high oil prices.
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