Iran, Russia catch their breath with new banking deal: Expert

A senior international sanction expert says a recent banking deal between Iran and Russia could be a major opportunity for the two countries to fight off the financial risks posed by foreign sanctions on their bilateral and international trade ties.

Sebastiaan Bennink told the RailFreight website on Monday that the official agreement signed between Iran and Russia last week to connect their interbank payment systems will facilitate investment and other shared projects between two countries as they struggle with some of the toughest sanctions ever imposed by the West.

“If this works in practice, the two countries will catch their breath since both are cornered” said Bennink, adding, “The two countries have found new and very interesting markets for their combined efforts, and easier transactions will be beneficial for all.”

The analyst said the new deal will enable an Iranian bank and a Russian counterpart to lead a project to link 158 banks.

He said facilitated interbank payments will boost Iran and Russia’s trade ties with other countries, including with India.

Bennink said transport projects between the two countries, including the well-known International North-South Transport Corridor (INSTC) that enables cargo transport between Russia to India via Iran, will greatly benefit from the new banking deal.

He said Iranian and Russian logistics companies will no longer be bothered by headaches caused by international payments and their processing because of  the sanctions.

The expert said the deal could also lead to increased investment of Russian companies in the Iranian infrastructure projects.

“Apart from easier payments, a connected interbank system could pave the way for easier Russian investments in Iran,” he said.

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