Move will accelerate Iran’s regional trade and bypass US sanctions
The Iranian Central Bank of Iran is negotiating to join Russia’s MIR payment card system to facilitate financial transfers and trade, according to Hadi Tizhoush Taban, the Chairman of the Iran Russia Joint Chamber of Commerce.
MIR is supported by Russia’s SPFS payment system and operates as its alternative to SWIFT.
Taban said that the first stage of cooperation would be to enable financial transactions between Iran and Russia via MIR, adding that it is possible that Iran could transfer money with other member countries via this system in coming steps. That will include members of the Eurasian Economic Union (EAEU), which Iran has a Free Trade Agreement with, and includes Armenia, Belarus, Kazakhstan, and Kyrgyzstan in addition to Russia. All are connected to MIR.
It will also have a positive effect on Iran’s trade with Tajikistan, Turkiye and Uzbekistan, who also use MIR, in addition to Vietnam which also has an EAEU FTA and accepts MIR. Venezuela and Cuba also use MIR card systems and the network can be expected to grow. Russia recently approached the Shanghai Cooperation Organisation, which has a strong Central Asian and Arabic membership base, to consider joining its SPFS system. Should that happen, MIR payment card facilities will follow.
Taban pointed out the recent trilateral agreement between Iran, Russia, and Azerbaijan for accelerating transit will increase trade between the three countries and includes digital data exchange. According to the Russian Federal Customs Service, trade turnover between Iran and Russia reached US$4.035 billion in 2021, an 81.7% increase over the previous year.
In 2022 to date, Russia’s exports to Iran hit US$3.068 billion, recording a 2.2% increase while Russian imports from Iran reached US$967.3 million, a 21.4% increase.
Iran is taking steps to normalize its relations with the West as its geo-strategic position between Europe and Asia has helped it reach importance in goods transit. The EU is keen to develop ties, while the United States is less so. However, given the Abraham Accords and the relative liberalization of Israel’s trade relations in the Middle East, things may start to ease up. In which case, trade and investment will accelerate into Iran, and not just from Russia.