Iran, Russia link banking systems amid sanction
Iran and Russia have connected their interbank communication and transfer systems to help boost trade and financial transactions, a senior Iranian official said, as both Tehran and Moscow are chafing under Western sanctions.
Since the 2018 reimposition of U.S. sanctions on Iran after Washington ditched Tehran's 2015 nuclear deal with world powers, the Islamic Republic has been disconnected from the Belgiumbased SWIFT financial messaging service, which is a key international banking access point. Similar limitations have been slapped on some Russian banks since Moscow's invasion of Ukraine last year.
"Iranian banks no longer need to use SWIFT … with Russian banks, which can be for the opening of Letters of Credit and transfers or warranties," Deputy Governor of Iran's Central Bank, Mohsen Karimi, told the semiofficial Fars news agency.
While Russia's central bank declined to comment on the deal signed, Karimi said "about 700 Russian banks and 106 non-Russian banks from 13 different countries will be connected to this system", without elaborating on the names of the foreign banks.
Iran's Central Bank chief Mohammad Farzin welcomed the move. "The financial channel between Iran and the world is being repaired," he tweeted.
Since the start of the Ukraine war, Tehran and Moscow have acted to forge close bilateral ties as both capitals attempt to build new economic and diplomatic partnerships elsewhere.
With deepening economic misery, largely because of U.S. sanctions over Tehran's disputed nuclear work, many Iranians are feeling the pain of galloping inflation and rising joblessness.
Inflation has soared to over 50 percent, the highest level in decades. Youth unemployment remains high with more than 50 percent of Iranians being pushed below the poverty line, according to reports by Iran's Statistics Centre.
Facing their worst legitimacy crisis amid months of anti-government protests sparked by the death in custody of a young woman, Iranian authorities fear economic isolation and lack of economic improvement could lead to more unrest.
Iran's top authority, Supreme Leader Ali Khamenei, said that the establishment faced "a tangible welfare and livelihood problem" that could not be cured without economic growth. "In today's world, a country's status is largely related to its economic power … We need economic growth to maintain our regional and global position," Khamenei said in a televised speech.
With connecting financial messaging infrastructures of Iran and Russia, the banking exchanges of the country with 100 world banks became unsanctionable, an official said. Deputy CBI governor for International Affairs said that 52 branches of Iranian banks and 4 foreign banks in the SEPAM platform from Iran and 106 banks via SPFS from the Russian side are connected.
Bank Shahr and VTB Bank were selected for the pilot stage by the Iranian and Russian sides, Mohsen Karimi pointed out. More banks will join the platform in the near future, he further noted. SEPAM, an electronic financial messaging system, has been implemented for computerizing the banking message interchanges and for the creation of an integrated infrastructure for banking services.
SEPAM is not only considered the first national financial messaging infrastructure which handles major banking transactions such as Rial and foreign exchange documentary credits, bank guarantees, foreign exchange remittances, correspondence, inquiries, and negotiations on a single platform, but it is also capable of being connected to cross-border foreign banks for financial interchanges with a common language and supported by the latest