Real currency
Having visited Iran a dozen times since 2004, I now receive maybe five times more Iranian currency for €1.00 than I did then. In the meantime while the € cost of gasoline per litre has risen several times more than the Riyal cost, gasoline remains as useful in Europe and Iran as it was then.
It is self-evident that a currency which can be spent on useful energy (fuel for heat/cooling or transport) is valuable in exchange. Now I don't know about you, but I do not have my own oil refinery, so a currency which may only be exchanged for crude oil is not a great deal of use to me, even if I trust the issuer to supply oil for which I may pay using this credit. Venezuela's oil-backed Petro currency failed firstly because oil cannot be used by the average Venezuelan, and secondly because few Venezuelans trust the government to supply oil, even if the Petro legally required delivery, which it did not.
But Euro 5 gasoline is another matter: a credit which I may spend on a litre of this standard quality of fuel would be acceptable anywhere in Europe and across much of Eurasia.
ECO
The first part of my proposal to Iran is an Energy Credit Obligation (ECO), which is a credit (or promise) issued by gasoline suppliers and acceptable in payment for a litre of Euro 5 gasoline. Other types of gasoline or fuels could easily be priced against the ECO. It is important to note that an ECO does not entitle the holder to demand delivery of gasoline: what it does is to enable the holder to pay for Euro 5 gasoline instead of using Riyals, Euros or even Dollars.
Since the US has excluded itself from dealing with Iran, let's turn to Europe instead. The ECO could conveniently be issued at a valuation of €1.00 since that is currently the price (including excise duty but not VAT) of a litre of Euro 5 gasoline in much of Europe. The problem with using this valuation is that it multiplies the price of gasoline in Riyals leading to political crisis. The solution is to distribute an energy dividend in ECO equally to all qualifying Iranians. In this way, Iranians would be encouraged to cooperate to reduce gasoline use in every possible way, because to do so is to save ECOs, which Iran may then support internationally through Crude Oil Swaps.
Crude oil swaps
The second part of the ECO proposal is to expand the innovative oil & gas swap innovations pioneered by Iran in the Caspian and elsewhere to a new range of swaps, commencing with oil for products. So Iran would no longer need to participate in an oil market subject to US energy dominance and settled in dollars, but could simply enter into oil swaps in exchange for ECO gasoline credits issued by foreign refineries and, which could then be exchanged for goods and services in those countries and in adjacent countries with access to the products of these refineries.
An Energy Revolution
The outcome of re-basing Iran's economy on energy through the ECO would be an Energy Revolution. Iran has organisations, systems, experts and expertise available to implement such an ECO with no change in the law, through suitable collaborative risk, cost, surplus and data sharing agreements entirely consistent with Iran's cultural and ethical values.
My Iranian colleagues and I outlined the correct strategy and policies to achieve such an Energy Revolution over a decade ago, and assembled an international team of experts willing and able to advise Iran on implementation – the Wimpole Consortium. Unfortunately those who were willing to implement the proposal were not able, and those who were able to implement it were not only not willing, but actively resisted it since they misunderstood it.
President Trump's achievement has been to unite Iranians against the US, which is a unity of purpose previously not seen outside war-time. In dealing with President Trump, the ECO is central to a constructive strategy with which Iran may engage the US in energy diplomacy towards a global Energy Revolution.
MNA/TT
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