Since the 2018 reimposition of sanctions, Iran has been disconnected from the western-based Swift financial messaging system, while many Russian banks were kicked off the platform following Moscow’s invasion of Ukraine.
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.
Swift is a Belgium-based financial messaging platform that allows trillions of dollars’ worth of money to cross borders daily and be transferred into bank accounts. It’s also used for foreign exchange settlement and trade. US banks often act as intermediaries in the transactions.
Tehran has already emerged as one of Russia’s key foreign arms suppliers with drone shipments, but the two are also deepening economic cooperation in the face of western sanctions.
Both countries have attacked the dominance of the US dollar in the global financial system. US sanctions carry heft because the bulk of global trade is conducted in the greenback.
The countries face mounting economic challenges, however, and western sanctions have forced them to compete over oil and petroleum product sales.