Tehran has limited options with the clock ticking on more US sanctions

Rouhani has been put on notice as Iranians prepare for a hard collapse as US sanctions bite

Iran needs hard currency to pay for its imports and the less oil it sells the fewer dollars it has to pay for goods and services. AFP

The clock is ticking on a countdown to November 4, when the final round of US sanctions turf Iran out of the global financial system.
Beyond the fate of the relatively small Iranian economy, there is much at stake in the coming weeks.
It is very important that Iran does not become the thread that unravels the tapestry of a well-designed international system of financial regulation.
The solid progress against terror financing, money laundering and opaque financial flows over a decade or more is threatened.
In particular, Europe is showing interest in constructing an alternative international payments system to Swift (Society for Worldwide Interbank Financial Telecommunication). Swift is the shared platform for interbank transfers across borders. Breaking up its near-monopoly opens an appalling vista of balkanised monetary systems, making supervision and law enforcement impossible.
Europe's dogmatic response to US President Donald Trump's decision to pull out of the 2015 nuclear deal has allowed Iran to put the continent over a barrel. The deal effectively allowed Iran to maximise its global oil sales in return for mothballing parts of its nuclear programme.
US sanctions target this by excluding international firms trading with Iran from the dollar-based financial system.
The latest global operator to pull out of the Iranian economy rather than lose access to US markets was Siemens, which said it could not trust European assurances its trade could be ringfenced.
According to Heiko Maas, the German foreign minister, the desperate hunt for alternatives means Europe needs a system autonomous from Swift.
A statement from the Belgian headquartered network acknowledged it was caught between the changing US policy and European attempts to stand up to Washington. The organisation, which excluded Iran between 2012 and 2016, said it hoped to preserve its positioning as a technical platform.

"As a neutral utility with a global systemic character, Swift acts in the interests of the entire member community and plays a pivotal role in supporting the global economy through its provision of secure financial messaging services," it said. "Our mission remains a global and neutral service provider to the financial industry."
If that is not good enough for Europe, the continent could attempt to build its own payments system. Bruno Le Maire, the French finance minister, sounded tough last week, declaring he wanted a "sovereign continent, not a vassal". 
Ultimately this path would see European states follow the Chinese and provide a pathway for the Russians. Beijing went as far as launching its own payments system, Cross-Border Interbank Payment System, or Cips, in 2015. That has, so far, been a paper tiger.

Many of the Bric countries would dearly love a more credible alternative backed by an international exchange currency as big as the euro.
Iran has already threatened to follow that other international pariah, Venezuela, in creating a state-backed cryptocurrency. Tehran could, like the Maduro regime, tie the cryptocurrency to its petroleum resources for stability and credibility. But not being able to access a global payments system would still cripple any initiative from Tehran.  
Compounding the challenge for Europe is Iran's failure to meet international standards on terror financing. Iran faces a separate October deadline to get off the blacklist of the Financial Action Task Force (FATF), the body that certifies government anti-money laundering and counter-terrorism financing efforts.
There are steps Europe could take that fall short of rivalling Swift. It is doubtful though that these would do enough to salvage the nuclear deal.
One expert called Alex Hellman, at the European Leadership Network think tank, thinks there could be a reversion to informal payment arrangements last used under the previous sanctions. Some European banks without great exposure to US market were then willing to channel their rivals Iranian trade transactions.
Or special intermediary companies could be created by the EU itself to deal in Iranian oil. Private European companies would then deal with those companies as halfway houses for European trade with Iran.
An alternative mooted is that the European central banks would simply establish special accounts for Iran.
The Europeans are still unlikely to find a system to withstand ethical scrutiny. Among the proposals is a suggestion Europe sets up its own equivalent of the US Treasury Office of Foreign Assets Control to provide oversight of the new systems.
The proliferation of ideas is itself an indication that Britain, France and Germany are unlikely to pull a rabbit out of the hat by early November.
That is why Iran's hardline leaders have put president Hassan Rouhani on notice. His hopes of preserving his signature policy are fantastical. All the signs are the Iranians who really pull the strings are ready for a hard collapse as US sanctions bite. And the regime is determined to defend itself from the fallout.