By Pishtaz | 2024-11-14

Faced with international sanctions that have curbed the growth of their respective economies, the Iranian regime and the Kremlin have circled the wagons by linking the banking systems of both countries.

Iranian bank cards can now be used in Russia, state television channel IRINN reported November 11.

The SWIFT banking network -- the most widely used network for transferring money globally -- suspended a number of Iranian banks from its service in November 2018. This made it more difficult for Iranian banks to do business with any client prepared to brave sanctions and maintain ties with Tehran.

But Russia, now under sanctions itself for its assault on Ukraine in 2022, has sought to move closer to its fellow pariah state.

The Kremlin has been pushing for the creation of an international payment platform as an alternative to the SWIFT service, from which key Russian banks also have been excluded since 2022.

The bank card development was made possible by connecting Iran's interbank network Shetab to its Russian equivalent Mir, according to IRINN, which showed rubles being withdrawn from an ATM in Russia with an Iranian bank card.

Iranians can now withdraw rubles in Russia, it added, and will in the future be able to use their cards to pay for in-store purchases.

"The plan is also going to be implemented in other countries that have a wide range of financial and social interactions with Iran," it claimed, noting that in the future, Russians also will be able to use their bank cards in Iran.

It did not give a date for when this might happen.

"Regarding other work, we should focus on attracting Russian tourists," Iranian Ambassador to Russia Kazem Jalali told bne IntelliNews.

Global isolation

Analysts say the expanded cultural, military and economic relations between Russia and Iran are emblematic of their isolation from the global community.

In January 2023, the Central Bank of Iran reached an agreement with the Central Bank of Russia to establish interbank communications and transfer systems, to boost trade and ease mutual bank transactions.

Iran's Shahr Bank and Russia's VTB Bank were to pioneer the program, enabling 700 Russian banks to interact with Iranian banks, circumventing the SWIFT system, with other banks to join at a later date.

The two interbank systems cannot be sanctioned and "their infrastructure is not controlled by Western governments," CBI deputy governor for international affairs Mohsen Karimi said at the time.

In June, Tehran and Moscow signed an agreement to strengthen their cooperation in the banking sector, AFP reported.

And in July, Central Bank of Iran governor Mohammad Reza Farzin announced that the two countries would connect their ATM networks, per bne IntelliNews.