MONTEVIDEO, Uruguay, April 2 (UPI) -- Uruguay is considering offering Iran rice shipments in return for oil in apparent disregard of U.S.-led sanctions regarding Iran's disputed nuclear program.
Uruguayan officials said they expected Iran to consider the offer that would save the Latin American country hard-earned cash from commodity exports.
Analysts said Uruguay's moves would run counter to the sanctions but could also undermine the U.S. dollar, days after a New Delhi summit announced leading emerging markets' pledge to trade in local currencies and shun the dollar.
Rice is part of staple diet for Iran's population of an estimated 74 million and Uruguayan rice is popular in the Middle East country, which bought 90,000 tons of it last year. Uruguay is Latin America's biggest and the world's seventh largest rice exporter and has exported the commodity to Iran for more than three decades.
Uruguayan President Jose Mujica unveiled plans for the proposed barter at the same time as leaders of the BRICS countries -- Brazil, China, India, Russia and South Africa -- met in New Delhi to agree on ways of trading in their own currencies without recourse to the dollar.
Uruguayan Agriculture Minister Tabare Aguerre called Iran Uruguay's best rice client and hoped a proposed barter would go through.
"If Iran is willing to barter oil for rice we will do it and we will take out currency from (the operation)," Aguerre told news media.
Uruguay hasn't made public any U.S. and European reaction to its intention to defy the sanctions. Several similar commodity exchange deals have seen Iran securing clients for its oil in return for gold and other alternative financial arrangements.
Iran is facing EU sanctions on its oil exports to Europe from July but has pre-empted those curbs by stopping exports and finding other customers. Iran is also reported seeking similar arrangements with traditional Latin American friends Nicaragua and Venezuela and possibly other countries in the region.
It isn't clear how many of the five BRICS nations intend to follow the U.S.-European line on sanctions against Iran. At least three of them -- China, India and Russia -- have ignored the sanctions in various deals with Iran.
The Obama administration wants the sanctions to work toward Iran abandoning its nuclear program before it leads to weapons manufacture. Iran says its nuclear program seeks only peaceful uses in medicine and science and electricity generation.
The result of the sanctions and the dollar's weakness on the world markets has been to prompt China, India and Russia to find ways of circumventing the sanctions against Iran as well as doing without dollar transactions, thus undermining the U.S. currency's role as a globally convertible currency.
Even outside the Iran context, the trend shows how rapidly major emerging markets are moving away from the dollar.
Trading in local currencies will allow the BRICS nations to hedge their foreign exchange reserves against the uncertainties facing both the dollar and the euro. Many countries began hedging last year by purchasing gold. World Gold Council data indicated central banks worldwide bought a net total of 440 tons of gold in 2011, compared to 77 tons in 2010.
