Iran and Russia signed an agreement on Sunday to integrate their banking systems to help them circumvent Western sanctions.
Mohen Karimi, deputy governor of the Central Bank of Iran, signed a memorandum of understanding with his Russian counterpart in Tehran on Sunday.
FILE: An exchange house displays the rates of various currencies in central Tehran, Iran, Tuesday, Oct. 2, 2018.
(AP Photo/Vahid Salemi, File)
“From now on, the financial messengers of all Iranian banks and all Russian banks are linked to each other,” Karimi told Iran’s state-run Mehr news agency.
He said the memorandum of understanding includes more than 100 banks in an additional 13 countries, but did not name them.
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It was not clear whether those links would allow the transfer of funds, and the services were not yet available to the bank’s customers.
Western countries banned major Russian banks from using the SWIFT financial messaging system after Russia invaded Ukraine in late February 2022. The Belgium-based system moves billions of dollars around the world daily between more than 11 000 banks and financial institutions.
The SWIFT (Society for Worldwide Interbank Financial Telecommunication) logo displayed on a phone screen and coins are seen in this illustrative photo taken in Krakow, Poland on January 23, 2022.
(The SWIFT (Society for Worldwide Interbank Financial Telecommunication) logo displayed on a phone screen and coins are seen in this illustrative photo taken in Krakow, Poland on January 23, 2022.)
Cutting banks from the SWIFT system severely limits a country’s ability to acquire foreign capital and trade internationally and is one of the harshest financial sanctions available.
The Trump administration took similar steps against Iranian banks when it reimposed crippling sanctions after withdrawing the United States from a nuclear deal with world powers in 2018.
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Iran and Russia have strengthened ties following the invasion of Russia, with Iran supplying attack drones that have bombed infrastructure and other civilian targets across Ukraine. After initially denying that it had armed Russia, Iran in November acknowledged the drone transfer, saying it took place before the war started.
Russia’s vast oil reserves and trade ties with China and India have so far largely shielded it from Western sanctions.
Iran has struggled for years with similar sanctions linked to its disputed nuclear program. Its currency fell to a record low late last year, further hurting the economy, depleting people’s life savings and adding fuel to anti-government protests across the country.
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Efforts to revive the 2015 deal, which lifted sanctions against Iran in exchange for strict limits and increased surveillance of its nuclear activities, came to a standstill several months ago.
Associated Press contributed to this report.
