Iran and Russia move to link banks to evade Western sanctions

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Iran and Russia have taken a key step to link their banking systems in a move that further boosts their cooperation in the face of Western sanctions, an Iranian official said.

At a signing ceremony on Sunday, Mohsen Karami, deputy governor of the central bank, said the two countries’ banks had connected their messaging networks following deals reached over the past year, according to state news agency IRNA.

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. Karami said 100 banks in 13 other countries were connected to the network, without naming them.

There was no immediate comment from Russia or the United States, which has worked with its allies to isolate both countries.

In response to Russia’s invasion of Ukraine nearly a year ago, Western countries have banned major Russian banks from using the Belgium-based financial messaging system SWIFT, which daily moves billions of dollars around the world between more than 11,000 banks and financial institutions.

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.

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.

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.

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.

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