Inauguration of the First 'Russian Bank' in Iran; Users: They Have Brought a Sanctioned and Loss-Making Bank

The head of the Iranian government agency 'Trade Promotion Organization of Iran' has announced the commencement of operations of the first 'Russian Bank' in Iran, calling it an 'important' achievement, a claim that has faced challenges from social media users and experts. Alireza Payman Pak, Deputy Minister of Industry, Mine and Trade of the Islamic Republic, who simultaneously heads the Trade Promotion Organization of Iran, announced via a tweet on his personal account that the Russian 'VTB' Bank has become operational in Iran. This official of the Ministry of Industry, Mine and Trade of Ebrahim Raisi's government claimed that the 'VTB' Bank, which has established a 'representative office' in Iran, is the 'second largest Russian bank.' Both Iran and Russia's governments, as well as the monetary and banking systems of both countries, are under severe international sanctions that have made conventional money and currency transfers impossible or fraught with difficulties. On January 29, 2023, Mohsen Karimi, Deputy for International Affairs of the Central Bank of the Islamic Republic, announced the signing of a 'cooperation memorandum' between Iran and Russia regarding the 'connection of financial messaging systems of the two countries' to facilitate 'financial and banking exchanges' between the two countries. While the Deputy Minister of Industry, Mine and Trade of the Islamic Republic and the head of the Trade Promotion Organization of Iran consider the start of this Russian bank's operations in Iran as significant and a result of 'continuous efforts and follow-ups' by Tehran, some social media users assess it as a type of 'loss.' One user, referring to the proverb 'the blind leads the blind,' wrote: 'A bank that is [itself] sanctioned, has no access to SWIFT, and incurred a loss of $7.7 billion in 2022,' has become operational in Iran. The Deputy Minister of Industry, Mine and Trade of the Islamic Republic stated that the reason for the 'direct presence' of this Russian bank in Iran is the 'transfer' of part of the 'foreign exchange revenues' from the 'trust network' to the 'banking network.' Another user, recalling similar cases in previous Islamic Republic administrations and the failure of those banking experiences, addressed the head of the government agency of the Trade Promotion Organization of Iran in a tweet, asking: 'What is the plan to avoid the fate of Turkish, Indian, and Chinese banks during Ahmadinejad's time?' The 'Tasnim' news agency, close to the Iranian government's security institutions, published an image of the entrance to this Russian bank's building in Tehran, claiming that the value of this bank's 'assets' is '285 billion dollars,' which is '10 percent' more than 'the total value of the banking system's assets in the country.' In the first week of April, this Russian bank reported a loss of $7.7 billion due to international sanctions against Russia following its military invasion of Ukraine. This bank was one of the first Russian banks to be removed from the SWIFT system. Last week, finance ministers and central bank governors of the G7 countries expressed their 'deep concern' about 'the risk of illegal financial transactions originating from Iran' in a statement after the conclusion of their 23rd meeting in Niigata, Japan. The U.S. response to Politico's report: No change has occurred, and all options are on the table. With the connection to the SWIFT system, Iraq's economy separates from Iran. EU members agreed to ban oil imports from Russia. The G7 expanded the scope of sanctions against Russia. The leaders of the G7 in Japan will sanction Russia's energy and trade sectors.