Central Bank Governor Announces Connection of Iran's Shetab Banking Network to Russian ATMs

The Governor of the Central Bank of Iran announced the signing of the "first bilateral monetary agreement" between Tehran and Moscow for trade exchanges between the two countries. Mohammad Reza Farzin told reporters on Saturday, July 7, that all agreed-upon joint actions were finalized during a bilateral meeting of the central bank governors of Iran and Russia on the sidelines of the Russian Financial Congress, thus entering the operational phase. This meeting took place last Thursday in St. Petersburg. According to the Central Bank Governor of Iran, the first phase of this agreement will be usable for Iranian citizens by the end of next month (early September). Iran and Russia have increased their cooperation, especially after the start of the Ukraine war. Vladimir Putin emphasized the coordination between Tehran and Moscow to address "current international issues" in a congratulatory message to Masoud Pezeshkian and called for strengthening the bilateral relations of the two countries. The issue of monetary cooperation between Iran and Russia has been raised in recent years, especially after the U.S. withdrawal from the JCPOA. In 2018, Abdolnaser Hemmati, the then Governor of the Central Bank of Iran, mentioned initial agreements with Russia and Turkey to eliminate the dollar and conduct economic exchanges using the national currencies of the three countries without providing details. In August 2022, Mehdi Safari, Deputy for Economic Diplomacy at the Iranian Foreign Ministry, told the Russian news agency Sputnik that "the two countries, Iran and Russia, need a system like SWIFT to de-dollarize their exchanges." He also reported an agreement to use the Russian Mir banking card in Iran, stating that this system would soon be launched in Iran. However, due to U.S. sanctions against Russia, major global companies such as Samsung, Apple, and Google cut their ties with Mir in 2022. Now, the Central Bank Governor of Iran did not mention such a connection but added that in the first phase of the bilateral agreement, Iran's Shetab banking network cards will be usable in all ATMs across Russia under the smart banking card plan (Kahraba). According to Farzin, Iranian citizens will be able to withdraw rubles from Russian ATMs using their banking cards. He added: "The second phase of this connection will benefit Russian citizens in Iran, and in the third phase, Shetab cards will be processed at retail outlets in Russia." At the end of last year, U.S. President Joe Biden signed an order imposing secondary sanctions on any entity that violates sanctions against Russia. Outside of Russia, the Mir card is accepted by a handful of former Soviet countries and a few countries in South America and Asia, although the Kremlin claims this number is increasing. Some banks in Turkey stopped supporting this card in 2022 due to Western sanctions, creating problems for Russians residing in this popular tourist destination. The monetary agreement is a new method for transferring money between countries compared to other methods of money transfer. With this method, traders conduct their business without relying on common international currencies like the dollar and euro. Iran has tried in recent years to reduce its need for dollars in some cases by trading goods for goods or goods for gold to circumvent some sanctions. However, some economic experts believe that the economies of Iran and Russia are not strong enough, and exchanging goods with the currencies of the two countries may not be very effective.