Russia and Iran Set Up Sanctions-Busting Finance Deal
Iran and Russia signed an agreement to connect their banks in order to facilitate independent financial transactions, Reuters reported on January 30, citing several Iranian central bank officials. Iran and Russia have both been targets of sanctions from the United States. By avoiding the use of the dollar and Western financial plumbing, they not only avoid the sanctions but also administer a strike against the U.S.
United against sanctions: Iran was cut off from the Western swift banking system in 2018 and major Russian banks were banned in 2022. The two are now avoiding this payment system by linking Russia’s spfs financial transfer system to Iran’s sepam, which connects to 106 other foreign banks, according to the head of the Central Bank of Iran.
A wider trend: More and more countries are seeking to break away from the dollar to either avoid sanctions or to better compete against the U.S. This means America is not only losing its power to enforce sanctions but also its economic strength. These trends, along with the development of modern technologies, are leading to a new financial system—independent of and detrimental to the U.S. To learn more, read “Will Blockchain Block Out America?”