Iran and Russia's Dollar-Free Trade: Mirage or Reality?

Global sanctions against the Islamic Republic and Russia have prompted both countries to seek the elimination of the dollar from their trade transactions. However, members of the Iran Chamber of Commerce have reported that this initiative has not been successful, stating that the volume of dollar-free trade through the banking system is only 5%. Meanwhile, Alexander Novak, the Deputy Prime Minister of Russia, recently claimed that the national currency plays an 80% role in trade between Iran and Russia. The head of the Iran-Russia Joint Chamber of Commerce emphasized that only 'five percent of transactions between Iran and Russia are conducted through the banking system using rial and ruble, while the rest is through currency exchanges.' The prevention of Iran's access to dollars is one of the U.S. sanctions policies that has intensified in recent months. On January 18, 2023, the Wall Street Journal published a detailed article stating that the U.S. is increasing pressure on Baghdad to prevent dollar transfers to Iran. According to the newspaper, American and Iraqi officials announced that the Federal Reserve has implemented stricter controls on dollar-denominated international transactions by Iraqi commercial banks since November. This report emphasized that these restrictions aim to reduce money laundering and the illegal transfer of dollars to Iran and other heavily sanctioned countries in the Middle East. At that time, American officials stated that a new system was implemented to limit the use of the Iraqi banking system for smuggling dollars to Tehran, Damascus, and other money laundering centers in the Middle East.