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Iran and Russia are linking ‘banking systems’ to combat western sanctions

Iran Nuclear

Under pressure from western sanctions, Iran and Russia have increased their monetary relationship. Reuters reports the two regimes have connected their “interbank communication and transfer systems to help boost trade and financial transactions, a senior Iranian official said.”

“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 semi-official Fars news agency.

Reuters reports:

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 Belgium-based SWIFT financial messaging service, which is a key international banking access point.

Karimi added, “about 700 Russian banks and 106 non-Russian banks from 13 different countries will be connected to this system.” Iran’s Central Bank chief Mohammad Farzin announced his support for the plan tweeting, “The financial channel between Iran and the world is being repaired.”

Reportedly the deal was signed Sunday, although Russia’s central bank has declined to comment. Russia has also been the recipient of increased sanctions since its invasion of Ukraine began last year.

“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” adds Reuters.

“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.”

Iran’s top authority, Supreme Leader Ali Khamenei, said on Monday Iran faced “a tangible welfare and livelihood problem” that could not be cured without economic growth as inflation has soared to over 50%, the highest level in decades.

“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. Reuters notes that according to reports by Iran’s Statistics Centre, over 50% of Iranians have been pushed below the poverty line.

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