Instead of SWIFT, a system that facilitates cross-border
payments between 11,000 financial institutions in more than 200 countries
worldwide, the two countries will use their own domestically developed
financial messaging systems – Iran’s SEPAM and Russia’s SPFS.
“Using this system for trade and business exchanges between
EAEU (Eurasian Economic Union) member states can help develop and expand trade
exchanges between the member states as well,” Abdolnaser Hemmati said.
Tehran is set to officially join the Russia-led free-trade
zone, the EAEU shortly. The document on Iran’s participation was ratified in
June by the nation’s parliament (Majlis) and President Hassan Rouhani has
already ordered that the free trade zone agreement be implemented.
Earlier this month, Russian presidential aide Yury Ushakov
said that Tehran and Moscow are developing an alternative to SWIFT. Russia
began development of SPFS in 2014 amid Washington’s threats to disconnect the
country from SWIFT.
The first transaction on the SPFS network involving a
non-bank enterprise was made in December 2017. Around 500 participants,
including major Russian financial institutions and companies, have already
joined the payment channel, while some foreign banks have shown interest in
joining.
Last year, Belgium-based SWIFT cut off some Iranian banks
from its messaging system. It came after US President Donald Trump abandoned
the landmark nuclear deal with the Islamic Republic and resumed US sanctions
against Tehran.
Moscow and Tehran have essentially turned away from the
greenback in bilateral trade, and are using the Ruble and Rial for payments. Turning
to cross-currency trade was a vital issue for both Russia and Iran, and
the two countries are planning to use all available means to boost these efforts.
“We have already essentially dropped the dollar in
cooperation with the Iranians, we will rely on the Russian Ruble and the
Iranian Rial, [and] in case of urgent need, on the Euro, if we have no other
options,” the diplomat said. He added that banking structures in both countries
have the potential to cope with this “difficult” task.
Despite efforts by European countries to keep trading with
the Islamic Republic after the US pulled out of the nuclear agreement, their
efforts still do not fully address Tehran’s interests, Dzhagaryan believes.
The diplomat said that the payment system recently created
by France, Germany and the UK to facilitate trade with Iran raises “more
questions than it answers,” claiming that it does not change the state of
affairs for Tehran.
He explained that the Instrument in Support of Trade
Exchanges (INSTEX) covers only items not blacklisted by the US, but does not
apply to vital sectors of trade for Iran.
“Oil is the most important [sector] for Iran. It is a huge
question if Europe can allow the proper volume of oil exports and flow of
revenue to the Iranian budget,” Dzhagaryan stated. “EU countries
should show that they can carry independent foreign policy without fearing any
warnings from overseas partners.”
Russia along with several other countries, including India,
China and Turkey – has been accelerating efforts to fight the dominance of the
US currency in global trade amid rising tensions with Washington. Last year,
Russian President Vladimir Putin called on the member states of the
Eurasian Economic Union (EEU) to create a common dollar-less payment system for boosting
economic sovereignty. The bloc, which consists of Russia, Kazakhstan,
Belarus, Kyrgyzstan and Armenia, has free trade agreements with multiple
partners across the globe, including Iran and China.
