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Context of 'September 22, 2009: Iran to Switch Reserve Currency from Dollar to Euro'

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Mahmoud Ahmadinejad.Mahmoud Ahmadinejad. [Source: Associated Press]Tehran Mayor Mahmoud Ahmadinejad is declared the winner of Iran’s presidential run-off election (see also June 24, 2005), winning 62 percent of the vote and beating President Akbar Hashemi Rafsanjani, who garners just 35.3 percent. An estimated 50 percent of eligible Iranian voters vote. Ahmadinejad wins the election with 62 percent of the vote. [CNN, 6/25/2005; Islamic Republic News Agency, 7/9/2005] Ahmadinejad ran on a humble anti-corruption platform based on embracing the founding principles of the 1979 Islamic Revolution. Ahmadinejad calls for encouraging foreign investment and partnership with Iran, modernizing industry, promoting a peaceful nuclear energy alternative while shunning reconciliation with the US. He had the support of many popular militia groups, as well as much of the poor. [CNN, 6/25/2005]

Entity Tags: Hashemi Rafsanjani, Mahmoud Ahmadinejad

Timeline Tags: US confrontation with Iran

Iranian President Mahmoud Ahmadinejad orders that his country’s foreign exchange reserves be moved from the dollar to the euro, setting the stage for the Iranian Central Bank to cut its foreign currency reserve interests rates from 12 percent to 5 percent. The estimated rate cut makes it cheaper for the bank to acquire foreign currency. “They have been talking about switching their foreign currency reserve from the dollar to the euro for a while now, but it makes them more dependent on the euro and the European Union,” says Dr. Ali Ansari, director of Scotland’s St. Andrews University Iranian Studies Centre.
Followed Call Addressed to OPEC - Ahmadinejad’s decision comes shortly after he called for the Organization of Petroleum Exporting Countries (OPEC) to discard the dollar as the currency standard for oil-related deals. Despite recent declines in dollar value and the fact that most major oil producing countries are outside the US, the dollar remains the prevailing currency for pricing a barrel of oil. The dollar also remains the most frequently used international trade currency.
Possible Motivation - Some analysts believe that exchanging the dollar for the euro may be Iran’s attempt to lessen the effects of US economic sanctions in force since the 1979 Islamic revolution when the US backed the overthrown Shah of Iran, who was replaced by an Islamic republic. US sanctions include prohibiting US involvement with Iran’s petroleum development, as well as prohibiting all trade and investment activities by US citizens around the globe. Sanctions were softened somewhat in 2000, when the US Treasury amended its prohibition edict by allowing US citizens to buy and import carpets and food products like dried fruits, nuts, and caviar produced in Iran. Recent media reports suggest, however, that President Obama is considering an increase in sanctions if Iran persists in its alleged development of nuclear weapons. Iran maintains that its nuclear program is solely for power production. [Media Line, 9/22/2009]

Entity Tags: Iran, Organization of Petroleum Exporting Countries, Mahmoud Ahmadinejad, Ali Ansari

Timeline Tags: Global Economic Crises

Iran’s President Mahmoud Ahmadinejad rejects the US government’s account of the 9/11 attacks for the second time (see April 17, 2008), this time calling the attacks a “fabrication” during a meeting with Iranian intelligence officials. “The September 11 incident was a big fabrication as a pretext for the campaign against terrorism and a prelude for staging an invasion against Afghanistan,” says Ahmadinejad. [New York Times, 3/6/2010; Reuters, 3/6/2010]

Entity Tags: Mahmoud Ahmadinejad

Timeline Tags: Complete 911 Timeline

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