Iran and SWIFT

[evoorhees]

"SWIFT is a banking hub crucial to oil, financial transactions and other trades and global financial transactions are impossible to conduct without using it."

...oh yeah? Wanna bet? I must say I've completed some global financial transactions using nothing but Bitcoin I feel bad for all these countries living with antiquated financial technology.

http://m.apnews.mobi/ap/db_6776/contentdetail.htm?contentguid=K1QOpiCo

[Phinnaeus Gage]

"SWIFT is a banking hub crucial to oil, financial transactions and other trades and global financial transactions are impossible to conduct without using it."

...oh yeah? Wanna bet? I must say I've completed some global financial transactions using nothing but Bitcoin I feel bad for all these countries living with antiquated financial technology.

http://m.apnews.mobi/ap/db_6776/contentdetail.htm?contentguid=K1QOpiCo

Because of its reach, SWIFT's decision to cut off some 30 Iranian banks and subsidiaries could hinder not only banking but also the country's lucrative crude oil industry and possibly hurt Iranian households that depend on remittances from relatives living abroad.

If I were an Irani living outside of Iran with family back home, coupled with knowing about Bitcoin, I would start now and educate my family about Bitcoin. I would have them tell others, then have those people tell others, etc., thereby opening up a free market of sorts in their soon to be cash strapped country.

Are there any Iranis on this forum who can shed light on this subject?

[genjix]

http://bitcoinmedia.com/irans-dire-straits/

[GideonGono]

"SWIFT is a banking hub crucial to oil, financial transactions and other trades and global financial transactions are impossible to conduct without using it."

...oh yeah? Wanna bet? I must say I've completed some global financial transactions using nothing but Bitcoin I feel bad for all these countries living with antiquated financial technology.

http://m.apnews.mobi/ap/db_6776/contentdetail.htm?contentguid=K1QOpiCo

Because of its reach, SWIFT's decision to cut off some 30 Iranian banks and subsidiaries could hinder not only banking but also the country's lucrative crude oil industry and possibly hurt Iranian households that depend on remittances from relatives living abroad.

If I were an Irani living outside of Iran with family back home, coupled with knowing about Bitcoin, I would start now and educate my family about Bitcoin. I would have them tell others, then have those people tell others, etc., thereby opening up a free market of sorts in their soon to be cash strapped country.

Are there any Iranis on this forum who can shed light on this subject?

I know many Iranians and I've told one close iranian friend about it. However, I don't really see how it would be helpful to them seeing as it is not widely accepted yet. In the future, maybe but that is hardly convincing to someone in a country whose economy is under seige. It needs to provide utility now. Question is how?

[BubbleBoy]

Ah yes, threads like these make it all worthwhile: let's push a shady internet currency onto a poor nation who experiences one of the worst internet censorship in the world, severe currency control, impending war and subsequent communication blackout.

As for the economics of it, the first poster in the "Dire straits" link above has it just right:

The people in Iran currently have IRR. Your long story short: IRR is useless to people outside Iran: there is no way to get it out of the country.

From the perspective of someone physically outside Iran, that means Iranian people have no money. Thus, they can’t /buy/ Bitcoin from someone abroad directly.

[ptshamrock]

If SWIFT actually pulls the plug, I’d consider the fuse to be lit. Also, if SWIFT does it before 20 March, this is probably the real reason:

Last week, the Tehran Times noted that the Iranian oil bourse will start trading oil in currencies other than the dollar from March 20. This long-planned move is part of President Mahmoud Ahmadinejad’s vision of "economic war" with the west.

“The dispute over Iran’s nuclear programme is nothing more than a convenient excuse for the US to use threats to protect the ‘reserve currency’ status of the dollar,” the newspaper, which calls itself the voice of the Islamic Revolution, said.
---------------------------------------------------------------------------------------------------

SWIFT is going to pull the plug on Iran on 17 March, three days before the opening of the oil bourse.

aha 

[MacRohard]

If SWIFT actually pulls the plug, I’d consider the fuse to be lit. Also, if SWIFT does it before 20 March, this is probably the real reason:

Last week, the Tehran Times noted that the Iranian oil bourse will start trading oil in currencies other than the dollar from March 20. This long-planned move is part of President Mahmoud Ahmadinejad’s vision of "economic war" with the west.

“The dispute over Iran’s nuclear programme is nothing more than a convenient excuse for the US to use threats to protect the ‘reserve currency’ status of the dollar,” the newspaper, which calls itself the voice of the Islamic Revolution, said.
---------------------------------------------------------------------------------------------------

SWIFT is going to pull the plug on Iran on 17 March, three days before the opening of the oil bourse.

aha 

All SWIFT does is allows secure communication between two banks. I expect Iranian banks have already setup other ways to communicate with their correspondent banks. With the internet, banks don't really need this middleman inferfering with their communication. A simple SSL tunnel over the internet is more secure and has the added benefit that the US doesn't get a feed of all the transactions. It's also much much cheaper.

[Steve]

All SWIFT does is allows secure communication between two banks. I expect Iranian banks have already setup other ways to communicate with their correspondent banks. With the internet, banks don't really need this middleman inferfering with their communication. A simple SSL tunnel over the internet is more secure and has the added benefit that the US doesn't get a feed of all the transactions. It's also much much cheaper.

This is quite an interesting thought.  When you realize that money is nothing but information, then you realize that to wage an economic war, you have to wage an information war.  Iran will need to exchange oil for money of some form.  And since the money part of that transaction is just information and information is very difficult to control, it would seem that blocking the physical part of that transaction would be far easier.  It will be interesting to see if there is an overt attempt to block Iran's oil shipments.  Since that is more obviously an overt act of war in the minds of most people, I suspect they'll first limit themselves to trying to disrupt the monetary side of the transactions from taking place, even though it's more difficult and in reality no less of an act of war.

[Yankee (BitInstant)]

All SWIFT does is allows secure communication between two banks. I expect Iranian banks have already setup other ways to communicate with their correspondent banks. With the internet, banks don't really need this middleman inferfering with their communication. A simple SSL tunnel over the internet is more secure and has the added benefit that the US doesn't get a feed of all the transactions. It's also much much cheaper.

This is quite an interesting thought.  When you realize that money is nothing but information, then you realize that to wage an economic war, you have to wage an information war.  Iran will need to exchange oil for money of some form.  And since the money part of that transaction is just information and information is very difficult to control, it would seem that blocking the physical part of that transaction would be far easier.  It will be interesting to see if there is an overt attempt to block Iran's oil shipments.  Since that is more obviously an overt act of war in the minds of most people, I suspect they'll first limit themselves to trying to disrupt the monetary side of the transactions from taking place, even though it's more difficult and in reality no less of an act of war.

One thing to note, SWIFT does not only act as a middleman. It also facilitates debt differentials between banks.

Iran will be severely cut off if this happens.

I dont care about the gov't, but why should the people suffer?

[3phase]

If SWIFT actually pulls the plug, I’d consider the fuse to be lit. Also, if SWIFT does it before 20 March, this is probably the real reason:

Last week, the Tehran Times noted that the Iranian oil bourse will start trading oil in currencies other than the dollar from March 20. This long-planned move is part of President Mahmoud Ahmadinejad’s vision of "economic war" with the west.

“The dispute over Iran’s nuclear programme is nothing more than a convenient excuse for the US to use threats to protect the ‘reserve currency’ status of the dollar,” the newspaper, which calls itself the voice of the Islamic Revolution, said.
---------------------------------------------------------------------------------------------------

SWIFT is going to pull the plug on Iran on 17 March, three days before the opening of the oil bourse.

aha 

All SWIFT does is allows secure communication between two banks. I expect Iranian banks have already setup other ways to communicate with their correspondent banks. With the internet, banks don't really need this middleman inferfering with their communication. A simple SSL tunnel over the internet is more secure and has the added benefit that the US doesn't get a feed of all the transactions. It's also much much cheaper.

Sure, they can use Paypal.

Seriously now, no bank is able to transfer money if they don't go through SWIFT. There are no bank information systems that work without SWIFT clearance when the transfers are international. No bank manager would take the offer of his IT staff to do transfers through "SSH tunnels" or any other tunnels for that matter.

It's a little known but most powerful monopoly, and it's no wonder that central banks would want it to be there in the first place. There is no other structure or organization who can take the responsibility to ensure that 100M$ credit/debit will get from A to B to pay for filling up Panamax carriers. Therefore no bank would trust any alternative. Full circle.

Bitcoins might be a solution, but not until you can get at least 2 banks agreeing to use them for transactions between them.

It might be a better idea to lobby the Iranian government, instead of the Iranian people, as was suggested earlier in the thread. However, this will probably be much more difficult to do, as Bitcoin will meet direct competition from gold. And Bitcoin will lose, at least for the foreseeable future.  

[markm]

They should have set up mining farms as well as maybe buying bitcoin on the quiet, so that on March 20th they could start selling oil for bitcoins, driving up the price of bitcoins thus multiplying their secret bitcoin holdings...

Why does it seem unlikely "they" would have that much foresight, I wonder?

Maybe they figure the U.S. would start attacking the bitcoin network as well as the oil shipments?

-MarkM-

[3phase]

Why does it seem unlikely "they" would have that much foresight, I wonder?

Maybe they figure the U.S. would start attacking the bitcoin network as well as the oil shipments?

I'll repeat what I said above in other words.

When someone thinks about the answer to the question "What kind of money should I use, if I find myself without a fiat money system?", the answer for the past few thousand years at least has been "Gold". Hence no foresight, but rather "backsight" in that sense. No need to reinvent the wheel.

This is what Bitcoin will have to compete with, and it should better focus on the advantages it has in that battle, instead of trying to dominate.

[benjamindees]

This is what Bitcoin will have to compete with, and it should better focus on the advantages it has in that battle, instead of trying to dominate.

It doesn't have to be a battle.  Bitcoin and precious metals are complementary.

[paraipan]

They should have set up mining farms as well as maybe buying bitcoin on the quiet, so that on March 20th they could start selling oil for bitcoins, driving up the price of bitcoins thus multiplying their secret bitcoin holdings...

Why does it seem unlikely "they" would have that much foresight, I wonder?

Maybe they figure the U.S. would start attacking the bitcoin network as well as the oil shipments?

-MarkM-

Ehem, they would need to understand it and get the "bitcoin rush" first then it will all come with ease. I don't think they have to buy bitcoins or mine them in advance, given they sell a product other nations need, only accept "digital gold" in exchange.

[MacRohard]

If SWIFT actually pulls the plug, I’d consider the fuse to be lit. Also, if SWIFT does it before 20 March, this is probably the real reason:

Last week, the Tehran Times noted that the Iranian oil bourse will start trading oil in currencies other than the dollar from March 20. This long-planned move is part of President Mahmoud Ahmadinejad’s vision of "economic war" with the west.

“The dispute over Iran’s nuclear programme is nothing more than a convenient excuse for the US to use threats to protect the ‘reserve currency’ status of the dollar,” the newspaper, which calls itself the voice of the Islamic Revolution, said.
---------------------------------------------------------------------------------------------------

SWIFT is going to pull the plug on Iran on 17 March, three days before the opening of the oil bourse.

aha 

All SWIFT does is allows secure communication between two banks. I expect Iranian banks have already setup other ways to communicate with their correspondent banks. With the internet, banks don't really need this middleman interfering with their communication. A simple SSL tunnel over the internet is more secure and has the added benefit that the US doesn't get a feed of all the transactions. It's also much much cheaper.

Sure, they can use Paypal.

Seriously now, no bank is able to transfer money if they don't go through SWIFT.
[/qupte]

Not true. Anybody can instruct their bank to pay an Iranian bank by paying via the Iranian bank's account at some other bank. Similar to how you deposit money into your mtgox account by paying mtgox at mtgox's bank account, even though mtgox accounts are not on the SWIFT system.

Iranian banks (as all banks do) maintain bank accounts with other banks. They use them to process payments on behalf of their customers. These accounts at other banks are not being cut off even from SWIFT (and even if they were the same method can be used to hop through multiple banks instead of just one). If they need to transfer additional information about what payments are for or where they should go next, they can just as easily use the phone, fax or custom new software running over the Internet.

There are no bank information systems that work without SWIFT clearance when the transfers are international. No bank manager would take the offer of his IT staff to do transfers through "SSH tunnels" or any other tunnels for that matter.

I have seen the stunnel program (SSL, not SSH) in use at several banks to facilitate inter bank as well as bank <-> client financial communications. I've also seen socat in use as well. It's actually not a bad way to do things.. more secure than some of the traditional ways. I don't really see any problem with two banks exchanging SWIFT formated messages directly between themselves over a tunnel - it might not even require too much modification of the end systems.

It's a little known but most powerful monopoly, and it's no wonder that central banks would want it to be there in the first place. There is no other structure or organization who can take the responsibility to ensure that 100M$ credit/debit will get from A to B to pay for filling up Panamax carriers. Therefore no bank would trust any alternative. Full circle.

Banks mostly operate on bilateral contracts. Using swift is really just a convenience and not being able to use it doesn't in any way stop two banks from contracting with each other or providing each other with correspondent services.

Bitcoins might be a solution, but not until you can get at least 2 banks agreeing to use them for transactions between them.

Right.. even that is possible.. but more likely is that they'll use turkish lira, chinese yuan, russian rubles, indian rupees and venezuelan bolivars or even US dollars held in a friendly country's banking system.

It might be a better idea to lobby the Iranian government, instead of the Iranian people, as was suggested earlier in the thread. However, this will probably be much more difficult to do, as Bitcoin will meet direct competition from gold. And Bitcoin will lose, at least for the foreseeable future.

I guess all that's really needed is for someone to setup a bitcoin exchange in Iran. I don't know if it would be illegal, but frankly I don't know if any of the bitcoin exchanges are legal anyway and that didn't stop anyone

[Immanual Go]

Ah yes, threads like these make it all worthwhile: let's push a shady internet currency onto a poor nation who experiences one of the worst internet censorship in the world, severe currency control, impending war and subsequent communication blackout.

As for the economics of it, the first poster in the "Dire straits" link above has it just right:

The people in Iran currently have IRR. Your long story short: IRR is useless to people outside Iran: there is no way to get it out of the country.

From the perspective of someone physically outside Iran, that means Iranian people have no money. Thus, they can’t /buy/ Bitcoin from someone abroad directly.

Exactly. Bitcoin doesn't do a thing for anyone there.

[Stephen Gornick]

Below is a list of the 12 countries that buy Iranian oil and could be subject to U.S. sanctions unless they significantly cut purchases.

Top buyers of Iranian crude.  (Rank)

China 1
India 2
Indonesia NA
Malaysia NA
Pakistan NA
Philippines NA
Singapore NA
South Africa 9
South Korea 4
Sri Lanka NA
Taiwan NA
Turkey NA

 - http://uk.news.yahoo.com/iranian-oil-buyers-could-subject-u-sanctions-033320844.html

[cbeast]

Below is a list of the 12 countries that buy Iranian oil and could be subject to U.S. sanctions unless they significantly cut purchases.

Top buyers of Iranian crude.  (Rank)

China 1
India 2
Indonesia NA
Malaysia NA
Pakistan NA
Philippines NA
Singapore NA
South Africa 9
South Korea 4
Sri Lanka NA
Taiwan NA
Turkey NA

 - http://uk.news.yahoo.com/iranian-oil-buyers-could-subject-u-sanctions-033320844.html

The paper tiger meows.

[the founder]

before there were so many discussions on bitcoins being backed by something...  these guys can back it with a barrel of oil.

The problem is that they would get paid with bitcoin,  but the nation that sent those btc for the oil will have to accept them for some sort of products they produce like Wheat...

It's kind of a barter (which they are doing now with India)  but you can "keep track of it" via bitcoin....

Again I don't like sanctions,  because I believe it hurts the family on the street and not the people in power... that being stated however the Iranians could technically cause serious problems for the USD if they decided to back something like this...  because they have something that they can back it with.