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The War for Raw Materials

Gagliano Giuseppe

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The war for raw materials amounts to a reshuffling of the power relations among Western nations, on one hand, and the emerging and/or developing nations, on the other. The rise of China, BRICS, and the growing strength of the sovereign wealth funds of Arab nations, which are oil exporters, provides the evidence. Resources are powerful weapons in economic warfare, and everything suggests that the conflict will only intensify. The International Energy Agency estimates that world demand for energy will increase by 50% from now until 2030,especially owing to the growth of India and China. Ensuring ready procurement of materials, therefore, assumes crucial importance for nations. In 2007, the Committee on Critical Mineral Impacts of the U.S. Economy published a report with a list of eleven minerals that were particularly important for the leading industrial sectors of the U.S. Economy, due to their rarity and value. The list includes rhodium, used primarily in the manufacture of catalytic converters, which is particularly abundant in Russia but also in South Africa.

As guarantor of its national economy, every nation has, in fact, drawn up a list of the resources that it considers necessary and on which a significant number of current geo-economic conflicts depends.

As Liberalist logic goes, trade should produce closer and closer integration among the economic operators in various nations, which are linked less and less to specific reference territories, while reducing the risks of conflict and the role played by the nation at the same time.

This highly ideological vision is losing credibility. Territories have resisted and, along with them, the notion of control. The financial crisis that began in 2008 seriously undermined their citizens’ trust in the market’s capacity for self-regulation. The various factors that contribute to a nation’s power include its possession and exploitation of the riches of its subsoil, sea bottoms, and arable land. In a world expected to reach a population of 9 billion by 2050,the logic of self-sufficiency or lesser dependence now drives nations to compete in guaranteeing their supply of raw materials more than ever before. Competition for the control of raw materials – which has never stopped structuring international relations – has demonstrated a particularly significant intensification in recent years. The surge in agricultural raw material prices triggered a wave of arable land-grabbing by foreign investors in 2008, predominant among which, the United States, China, Saudi Arabia, and Arab Emirates. Most of their purchases were made in the continents of Africa and Latin America, where – by no coincidence – 90% of the world’s as-yet unutilized arable land is located. Appetites like these generate tension and rivalry. Hydrocarbons, of course, remain the center of strategic interests. After acquiring the possibility to intensely exploit its reserves of shale gas, the United States has become self-sufficient. As a result, its former supplier, Saudi Arabia, has witnessed a weakening of its bonds with the U.S., its protector against Iran. Its febrile behavior during the crises in Iraq and Syria is due in part to this evolution of international relations. The case of Greenland – whose oil reserves are now estimated as being half of those of Saudi Arabia –is also exemplary. Combined with the results of the referendum regarding autonomy (75% in favor), this new circumstance will now give greater force to the movement for independence as the larger powers are already jockeying for the best bargaining positions.

One sector that will apparently be particularly significant for international tensions in the future is that of mineral resources: more and more often nations with large mineral deposits are opting for state control. Well-known documented examples are offered by China, Russia, and Bolivia, and the list might soon include Madagascar, which, after being long subjected to crushing passive exploitation by foreign mining companies, announced in 2014 the creation of a public mining company to exploit its resources at a national level.

One vital mineral resource that is indispensable to aeronautics, given that it represents between 15 and 20% of the metal used in the construction of a modern airplane, is titanium. It is no wonder that the Boeing Company and the United Technologies Corporation have decided to stockpile it.

The world’s leading titanium supplier is the Russian VSMPO group. Will these two American companies, whose decision was revealed last August, suffer retaliation in the context of the crisis in Ukraine? It must be recalled that U.S. law prohibits companies that work for its Defense Department from purchasing titanium abroad. However, the two groups produce for both the civil and the military sector.

In addition to Ukraine, another area of international tension created by resource grabbing is the China Seas, where the level of interdependence between the leading powers (South Korea, Japan, People’s Republic of China, and Taiwan) is certainly growing, and in the opinion of Paul Tourret, Director of the Higher Institute of Maritime Economics, such a mesh of interests should have reduced the risk of conflict even if – as the expert himself seems to imply – the sharing of the same geo-economic interests is of little use in guaranteeing stability in the region.

The dispute between China and Japan over the Senkaku Islands that began in 2010 and flared up again in 2012 and 2013 even led Beijing to lower its exports of rare metals to Japan. This group of 17metals, whose leading producer is unquestionably China, is indispensible to the production of products with high-technological content, one of the mainstays of the Japanese economy. Acknowledging that this reduction in exports had effectively weakened its economy, Japan wasted no time in reacting: on March 13, 2012, supported by the U.S. and the EU, Japan denounced China to the WTO, which in fact reprimanded the conduct of the Chinese government. This did not prompt Beijing to change its tune, however. In addition to putting its faith in procedures at this level, Japan recently set up the Japan Oil, Gas and Metals National Corporation (JOGMEC) and funds it with 15 billion euros annually. The entity operates on three levels: supporting Japanese mining companies abroad (particularly in their purchases or entry into foreign company shareholding structures), providing a diplomatic channel in the stipulation of long-term contracts between nations, and supporting national research in the energy and mining sector. In 2012, Japan’s Minister of Industry announced that new trading partners like Kazakhstan and Australia would help reduce its dependence on Chinese rare metals. The private sector supports the national effort: through its branches, auto manufacturer Toyota has become one of the prime investors in mining sectors in Canada and Australia as another way of weaning Japan from Chinese supplies. Nations take different approaches to the geo-economic problems posed by the procurement of metals and minerals. The first is to get back into the markets, which, as reported by certain experts, are impenetrable, fragmented, and do not offer sufficient information.

Some industrial societies resort to the expedient of financial insurance that guarantees the purchase of substances at a fixed price for a certain amount of time. However, this sometimes turns out to be a blunt instrument, however, given that nations often and willingly ignore the guarantees granted in defense of their own best interests. The second option nations take is when they become aware of the geopolitical necessities for territorial control and implement a long-term purchasing diversification strategy. Not all nations vaunt the same strategic prowess as Japan, however; Europe, in particular, demonstrates a deficit of awareness in this field.

The rising demand for metals and/or minerals stems from the arrival of a new tier of industrialized nations that includes China, India, and Brazil, which all have benefitted from the delocalization of certain European heavy industries and manufacturing companies.

In the end, future tensions regarding the availability of certain materials entail the question of national security in procuring the resources indispensible to strategic industry chains (nuclear, defense, aeronautics, electronics, the automobile sector, etc.). Nature has permitted the creation of monopolies over certain resources: China supplies 93% of the world’s magnesium and 90% of its antimony. Brazil meets 90% of the international demand for niobium, while the U.S. provides 88% of its beryllium. In order to hedge the risk of economic dependence on the holders of these raw materials, other world powers have already laid out specific strategies to ensure themselves resources deemed strategic by establishing closer diplomatic relations with the nations that have what they need. The United States, Russia, and China have implemented policies for stockpile management and flow control while taking steps to secure production areas, especially through the purchase of mineral deposits and companies operating there. The volume of investments for the mining of rare substances in Greece has grown since 2014. At the start of the same year, the NBC news network revealed that the government’s scientific agency, the U.S. Geological Survey, had conducted an aerial study of the soil in Afghanistan in 2006 that permitted the mapping of the mineral resources that the nation possesses in abundance. The American researchers estimated quantities of 2.2 billion tons of ferrous material, 1.4 million tons of rare materials (such as lanthanum, neodymium, and cerium), also aluminum, gold, zinc, mercury, and lithium. The crisis in the Ukraine has allegedly driven Russia to seriously consider the idea of establishing a rare materials cartel with China, with Russia having the largest holdings after China. Unlike most others, however, Russia has deposits of all 17such materials. Therefore, Russia would have every reason to exploit these resources, also bearing in mind that Chinese production in this sector is instead currently tailing off, obliging Beijing to import them. Russia’s idea of closer links to China is also fed by its desire for retaliation against the United States and the European Union.

Owing to their use in industrial processes, the so-called platinoids or platinum group metals (PGM) are the object of much contention among the world’s industrial powers owing to their use in industrial processes. Utilized not only in traditional petrochemical, arms, aeronautic, medical, and agrifood sectors and costume jewelry, they are also crucial to the telecommunications and information technology industries, especially in the production of cell phones and computers. Palladium, for example, is used in nearly every type of electronic device, primarily as a part of high-performance capacitors or microchips. Ruthenium and platinum instead play important roles in increasing data storage capacity on hard disks but also in producing liquid crystal displays. Platinum is also the key component of various types of fuel cell. Associated with rhodium (diesel vehicles), it plays a key role in the production of the catalytic converters that reduce exhaust gas toxicity.

In addition to their growing importance in a variety of industrial processes, these materials are rare and concentrated in only a few specific geographical areas in which a sort of semi-monopoly is held, such as South Africa and Zimbabwe. Southern Africa’s platinum-rich areas have become authentic theaters of national and international battle for the control of these materials that often degenerate into armed struggle. The fact is that no alternatives to their use have yet been found.

Competition between Anglo˗American, the world’s leading producer of PGM, and Asian, primarily Chinese competitors, in Zimbabwe’s Grand Dyke mines, is just one episode in an economic war of much wider scope. This battle is part of the long-term duel between Western nations and China for the control of Africa’s strategic resources that began with the fall of Mobutu in the Congo. After gaining control of a considerable part of the Central African Copperbelt that contains over half of the world’s reserves and mines for cobalt, an indispensable element in the production of electric batteries, China is making a similar attempt to corner the world’s supply of platinum, an essential metal for oil refineries that is mined above all in Angola.

Zimbabwe’s PGM are essential for China, which possesses only 1.1%of the world’s reserves, and play a dual role in ensuring its economic security by enabling it to set up its own complete petrochemical production chain, in this way gaining independence from Anglo˗American suppliers and by allowing Beijing to produce the catalytic converters it needs to reduce air pollution, a campaign that has turned into a national priority now that China has become the largest motor vehicle market in the world. It therefore comes as no surprise that PGM refining constituted the pivotal role of the agreement signed between China, Angola, and Zimbabwe in 2009.

This agreement poses a threat to Anglo˗American, which had until then had held a monopoly over Zimbabwe’s PGM mining. The British company continues to control the deposits in Southern Africa, which are more abundant than those of Zimbabwe, but those of the latter are distinguished in a way that makes them almost unique in their rare combination of both platinum and palladium, the two most highly desired PGM in the world.

This loss of part of the Zimbabwe reserves might spell the future end of the worldwide control of the PGM market by the Anglo˗American company, which has been the leading economic operator in Southern Africa for around two centuries.

Political instability and insecurity reign in the part of Africa that runs from Merensky Rift to Grand Dyke, where local political leaders wage wars in their attempts to gain control of the income derived from platinoid sales, basing their right to do so on their past as “freedom fighters”. In Zimbabwe, this operation is conducted by the former hero of the nation’s independence, Robert Mugabe, who adopts nationalistic, anti-imperialist rhetoric to accuse foreign companies of implementing neo-colonialism policies with support from Great Britain. He goes on to claim that the Anglo-American company has stoked political opposition against him, abetted by both the United States and the European Union. The leader of the opposition movement is Morgan Tsvangirai, formerly a company employee.

Robert Mugabe’s use of nationalist rhetoric to instrumentalize the question of international monopoly over the nation’s economy had served to both masquerade his less than exalting results in running the country and to sidestep demands for more political freedom. The fact that Mugabe’s nationalism amounted to mere rhetoric is clear from his scarcely coherent political conduct: following a hike in mineral product prices, in 2007 he proposed an Empowerment and Indigenization Bill for the economy in general and the mining sector in particular, and had it passed. Just one year later, Mugabe sold the mineral rights to an American hedge fund in exchange for a loan of around one hundred million dollars, which he then used to finance his election campaign. He proceeded in the same way in privatizing a mineral deposit that had become public property after he had previously expropriated it from Anglo˗American.

In short, Mugabe uses the nation’s mineral resources as if they were an automatic teller machine for the funding of his own political career. Also in South Africa, the ruling class that had come to power on the merits of its struggle against the previous apartheid regime has since displayed remarkable nonchalance in channeling the nation’s mineral wealth to its own advantage by stipulating agreements with foreign multinationals.

The massacre by police of miners in Marikana striking for higher wages in 2012 demonstrates the degree to which the miracle of South Africa is only a mirage for a large part of the nation’s black population.

Economy

Russian-Nigerian Business Council Reviews Performance

Kester Kenn Klomegah

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The Russian-Nigerian Business Council, with participation of a delegation from Abuja Chamber of Commerce and Industry and the Nigerians in the Diaspora in Europe (NIDOE), held its annual meeting, pledged to strengthen cooperation in various economic sectors after reviewing the performance for the year 2018.

The Russian-Nigerian Business Council was established to facilitate a constructive dialogue between Russian and Nigerian entrepreneurs interested in developing business cooperation between the two countries, and to enhance the role of the Russian business community in implementing state policy concerning the Russian-Nigerian economic ties.

The primary objective of the organization is to establish contacts and cooperation with non-governmental associations of Russia and Nigeria that have an active position on trade and economic cooperation between the two countries, and to provide information services and consulting support to Russian and Nigerian businesses. At present, the Business Council unites more than 30 Russian companies from various sectors of industry and trade.

The Vice-President of the Russian Chamber of Commerce and Industry, Vladimir Padalko, noted in his welcoming speech, that Nigeria is one of the three largest trade partners of Russia among sub-Saharan African countries and the positive trends emerging in Russian-Nigerian relations need to be developed.

And for developing this, it is necessary to give the domestic business a factual information, especially on business safety and profitability in Nigeria. By the end of 2018, trade with Nigeria reached almost US$600 million, but still seen as far below the full potential of trade and economic cooperation between the two countries.

Padalko, however, pointed to prospective areas including the exploration and production of hydrocarbons and solid minerals, the supply of engineering and chemical products, aircraft technology, cooperation in the nuclear industry, energy, and others.

Dmitry Osipov, Chairman of the Russian-Nigerian Business Council, General Director of PJSC Uralkali (this company is one of the world’s largest producers of potash fertilizers) stressed that the Council regards Africa in general and Nigeria in particular as a promising market.

“The Business Council provides the companies from both countries, regardless of their form of incorporation, with an additional opportunity to expand and diversify business cooperation, including joint investment and business projects. Uralkali is no exception. We see Africa as a whole and Nigeria in particular as a very promising market where we could implement several projects within the framework of ensuring global food security,” he said.

In this case, the interests of the Russian business and the Nigerian leadership coincided as both chose agriculture as one of the pivotal points of growth of the country’s economy.

Dmitry Osipov further informed the meeting that the Business Council includes representatives made of thirty-four Russian companies and practically each of them has its own business interests in Nigeria.

RUSAL is the largest Russian investor in this African country. LUKOIL investments in Nigeria now exceed US$450 million, and the company plans to bring them up to US$6 billion. Other well-known companies work in this market, including the largest Russian producer of agricultural machinery, Rostselmash.

However, the range of economic spheres can be extended. And here, the Russian-Nigerian Business Council should play its role, among them identifying the most important tasks, analyzing the existing problems and the development of a consolidated position of domestic business in the areas of trade and economic cooperation between the two countries. It also sees as important the organization of business interaction with representatives of Nigerian authorities, the establishment and expansion of business contacts with Nigerian entrepreneurs.

Abuja Chamber of Commerce President, Adetokunbo Kayode, traced the history of Russian-Nigerian trade relations, and objectively noted that much has changed. He said that the Federal Government of Nigeria has created a favorable business climate to attract foreign investors to Nigeria. Nigeria is developing rapidly. Now it is the largest market of the continent. The population growth presents a large market for consumer products. Therefore, the presence of Russian business in the heart of Africa is welcomed.

Mercy Haruna, Minister-Counsellor of the Nigerian Embassy in Russia; Rex Essenowo, Chairman of the Russian Branch of Nigerians in the Diaspora in Europe (NIDOE); Kirill Aleshin from the Institute of African Studies; Oleg Svistonov from Rusal Company in Nigeria and other speakers noted the importance of intensifying development of trade and economic relations between Russia and Nigeria.

The NIDOE-Russia was established as a forum for Nigerian professionals residing in Russian Federation to participate in the development of Nigeria. It works closely with the Presidency, the Federal Ministry of Foreign Affairs, the Senate’s Committee on Diaspora Affairs and the Embassy of the Federal Republic of Nigeria in Moscow.

The meeting finally made specific proposals on the work of the Business Council. An agreement on cooperation (that aimed at expanding and developing business cooperation between Russian and Nigerian entrepreneurs) was signed between the Russian Chamber of Commerce and Industry and the Abuja Chamber of Commerce and Industry.

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Economy

E-commerce: Helping Djiboutian Women Entrepreneurs Reach the World

MD Staff

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Djiboutian women entrepreneurs attended the launch of We-Fi MENA e-commerce, November 13, 2018. Photo: World Bank

Look around any café, bus, doctor’s waiting room or university campus and you will see heads down, fingers tapping as people immerse themselves into their screens. Increasingly, people are using their devices for shopping, with retail sales via e-commerce set to triple between 2004-2021.

Although significant gender gaps exist with internet use, and although online sales are currently dominated by US-based tech giants, this growing e-commerce trend presents an interesting opportunity for small businesses, and more specifically women’s businesses in the Middle East and North Africa (MENA).

This is a region where women’s economic empowerment is a significant challenge. With a female labor force participation rate of 19 percent, women’s participation in firm ownership at only 23 percent, and a rate of only 5 percent women top managers of firms across MENA’s non-high-income countries, there is significant scope for improving women’s participation in business and employment.

Access to finance also remains a problem, where 53 percent of women-led small and medium enterprises (SMEs) do not have access to credit and 70 percent of surveyed MENA female entrepreneurs agree that lending conditions in their economy are too restrictive and do not allow them to secure the financing needed for growth.

Several obstacles stand in the way of women’s entrepreneurship and access to markets, such as social norms, family care duties, and transportation issues. Not being able to physically access markets to sell their goods or to participate in international trade fairs to market their products is also a challenge.

This is where e-commerce can play a role, allowing women to circumvent these obstacles and sell their products online. For this, they need to rely on e-commerce platforms connecting them to clients around the world, on performant and affordable logistics, and on reliable payment systems. Building the e-commerce ecosystem will be key to allowing women entrepreneurs to access markets and grow their business, thereby employing more women, as data shows that firms run by women tend to employ more women.

The situation for women in Djibouti is no different. Gender inequality in the labor market remains substantial, with less than a third of women between the ages of 15 to 64 active in the labor market. Unemployment among both genders is high, with a rate of 34 percent for men but it is considerably higher for women at close to 50 percent.

Djiboutian women are also at a disadvantage in terms of education and skills to access economic opportunities. Women in Djibouti typically run small and informal firms in lower value-added sectors, which are less attractive to creditors, thus impeding their access to finance. Women entrepreneurs face difficulties accessing finance and launching formal enterprises.

There are, however, opportunities to increase women’s economic empowerment. Over 57 percent of inactive women in Djibouti say that they do not work because of family and household responsibilities. However, they also indicated they are generally not discouraged or prevented from accessing training or work opportunities by male family members, and there are no legal barriers against women’s entrepreneurship.

Years of research have shown, that when women do well, everyone benefits. Research has found women tend to spend more of the income they earn on child welfare, school fees, health care, and food for their families. Empowering women is an important path to ending poverty.

It’s vital to enable women to participate constructively in economic activities in Djibouti. More entrepreneurship will allow Djibouti to benefit from the talents, energy, and ideas that women bring to the labor market.

To help address this issue, on November 13, 2018, the World Bank launched a $3.82 million regional project called “E-commerce for Women-led SMEs.”  The project targets small and medium enterprises run or managed by women that produce goods marketable via e-commerce.

This project is at the crossroads of women’s entrepreneurship and the digital economy, which are two levers for the economic transformation of the region, and that it was very opportune to be able to launch it at the digital economy days of Djibouti.

The launch event took place with the participation of the Minister of Women and Family, the Minister of Economy, the Minister of Communication, the Head of the Women Business Association, and several Djiboutian women entrepreneurs.

The project will contribute to development of women’s entrepreneurship, digital commerce, and the economy in Djibouti and across the region. It will facilitate access for women-led SMEs to domestic and export markets through better access to e-commerce platforms. This will be done by training e-commerce consultants who, in turn, will train and help women-led SME’s access e-commerce platforms.

The project will also aim to ease access to finance for these SMEs by connecting them to financial institutions lending to women, particularly the IFC’s Banking on Women network. It will also work to create an ecosystem conducive to e-commerce by diagnosing regulatory, logistical, and e-payment constraints and supporting governments to lift them.

This launch comes following a successful pilot program in Tunisia, Morocco, and Jordan where women entrepreneurs were enabled to export handicrafts, organic cosmetics, and garments to several overseas destinations including Australia, Europe, and the United States.

The development of women’s entrepreneurship and the digital economy—including better access to domestic markets and exports—are essential levers for the development and economic diversification of the MENA region that the Women Entrepreneurs and Finance Initiative (We-Fi) e-commerce project strives to support. The Women Entrepreneurs Finance Initiative (We-Fi) is a collaborative partnership launched in October 2017 that seeks to unlock billions of dollars in financing to tackle the full range of barriers facing women entrepreneurs.

World Bank

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Economy

Getting around sanctions with crypto-rial

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In April 2018, the Central Bank of Iran banned domestic banks and people from dealing in foreign cryptocurrency because of money laundering and financing risks.

However, the CBI decided to take a more moderate stance toward the digital money and blockchain technology following the imposition of a new round of U.S. sanctions, hoping that the digital technology would facilitate Iran’s international money transfers and let the country evade the sanctions.

Meanwhile, as an oil producer with an oil-reliant economy dominated by petrodollars, Iran settled on the plan to utilize cryptocurrencies and blockchain technology to make up for any drop in oil revenues due to the economic sanctions designed to cut its oil sales.

Moving on the same track as China, Russia and Venezuela, Iran also hopes that blockchainization of state-backed fiats would lead to the demise of the dollar and put an end to the tyrant U.S. policies.

Under the toughest U.S. sanctions ever and blacklisting of Iran from the Belgium-based international financial messaging system (SWIFT), the country’s plan to create an indigenous cryptocurrency is improving incrementally and thanks to highly dynamic nature of the cryptocurrency, it can act as a good means for Iran to skirt certain sanctions through untraceable banking operations.

The CBI has been working with domestic knowledge-based companies to develop a digital currency, called crypto-rial, supported by HyperLedger Fabric technology.

As reported, the Informatics Services Corporation, affiliated to the CBI but run by the private sector, has accomplished development of rial-based national cryptocurrency and when the CBI approves the uses of national cryptocurrency, it will be issued to financial institutions such as banks to test payments and internal and interbank settlements.

Transactions at the state-backed virtual currency are carried out on an online ledger called a blockchain, just the same as Bitcoin, but since the infrastructure is privately-owned it will not be possible for people to mine it.

In fact, Iran is mainly aimed at testing the potentials of blockchain and crypto technology in running its financial system, making banks able to use the tokens as a payment instrument in transactions and banking settlement at the first phase of the blockchain banking infrastructure. The country seems inclined to enjoy the new virtual currency businesses which includes little notice or footprint and has also prepared the required infrastructure for trading cryptocurrency in its stock exchange.

However, in spite of the CBI’s prohibition from trading cryptocurrencies, Iranians had commenced using cryptocurrency and Bitcoin mining for transactions with the rest of the world before its use was banned by the CBI in the country.

Individuals and businesses in Iran have had access to virtual currency platforms through “Iran-located, internet-based virtual currency exchanges; U.S. or other third country-based virtual currency exchanges; and peer-to-peer (P2P) exchangers,” according to reports.

But the U.S. embargo on a number of cryptocurrency exchange platforms, including Binance and Bittrex, restricted Iran from receiving services, however, no assets belonging to Iranians were blocked. U.S. sanctions have also ensnared Iranian bitcoin traders.

Furthermore, in December, the U.S. Financial Crimes Enforcement Network, known as Fincen, issued a warning in an advisory to assist U.S. banks and other financial actors such as cryptocurrency exchanges in identifying “potentially illicit transactions related to the Islamic Republic of Iran,” Bitcoin.com reported.

Fincen claimed that since 2013 Iran’s use of virtual currency includes at least $3.8 million worth of bitcoin-denominated transactions per year. The organization noted that “while the use of virtual currency in Iran is comparatively small, virtual currency is an emerging payment system that may provide potential avenues for individuals and entities to evade sanctions.”

Fincen believes that P2P cryptocurrency exchangers are a significant means through which Iran can dodge economic sanctions.
Following the Fincen’s announcement, the United States lawmakers introduced a bill (HR 7321) to impose more sanctions on Iranian financial institutions and the development and use of the national digital currency, Cointelegeraph reported.

The act prohibits transactions, financing or other dealings related to an Iranian digital currency, and introduces sanctions on foreign individuals engaged in the sale, supply, holding or transfer of the digital currency.

In the wake of the U.S. restrictions, thus, cryptocurrency trades are limited into Iran’s domestic market and not possible at the international level and Bitcoin is sold at a significant premium relative to the global average price in Iran.

Unfortunately, the basic and premier regulations of using cryptocurrencies have not been ratified in Iran and Iranians are obliged to refer to stock exchange shops abroad to do their crypto-transactions, most of which are American obedient to U.S. regulations and of course, sanctions.

To make using cryptocurrency and blockchain technology legal and official in the country, the Iranian government is drafting a policy framework by the help of the CBI and the Stock Exchange Organization which clarifies all its regulations and policies over cryptocurrency and mining.

Being legislated, it is believed that SWIFT can be replaced by the digital money, i.e. the rial-pegged national currency, and transactions would be done faster and at lower prices.

Due to a lack of required regulations, cargos of equipment for mining cryptocurrency are seized by the customs administration. They are said to be released as soon as the government legalizes cryptocurrency use in the country.

First published in our partner Tehran Times

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