Iran, Russia Dealing in Local Currencies, Euro

"Trade with Russia is conducted in rial and ruble, but since both Russia and Iran are among exporters of crude oil, oil products and heavy industrial products and these goods are priced in dollars, both countries are under the influence of dollar," Qadir Qiafeh, the former vice chairman of Iran-Russia Chamber of Commerce, told Fars News Agency. 

Last year, during the visit of Iranian President Hassan Rouhani to Moscow, the two sides agreed to continue cooperation for stabilizing the global energy market and ensuring sustainable economic development. They said they will work out favorable conditions for using national currencies in settlements. 

"Russia and Iran have also launched an oil-for-goods exchange program seeking to eliminate bilateral payments in US dollars and plan to keep it going for five years," Russian Energy Minister Alexander Novak said in April, according to Financial Tribune. 

Iran has been actively looking for ways to drop the dollar as an international trade currency because of the lingering US sanctions and because of the possibility that more may be on the horizon.

In April, Tehran announced it will publish all its official financial reports in euro instead of the US dollar to encourage a switch to euros among state economic agencies.

Iran currently has a total of 10 "memoranda of understanding and protocols" pertaining to monetary agreements with other countries, according to Samad Karimi, the Central Bank of Iran's head of Exports Department.

Banking ties 

Qiafeh noted that banking relations between Iran and Russia are going unhindered, with several Russian banks such as Mir Business Bank, TransKapitalBank and Gazprom and Iranian lenders such as Bank Pasargad, Eghtesad Novin Bank, Mellat Bank and Bank Melli Iran handling the transactions. 

"Considering the fact that Russians are also in thrall to US and European sanctions, their banks deal with Iranian banks with more flexibility because they can use the valuable experience of Iranians in bypassing sanctions," the businessman said. 

Qiafeh said the way forward is to increase trade with Europe since this would encourage their banks to work with Iran.

US President Donald Trump last month withdrew from Iran's nuclear deal known as the Joint Comprehensive Plan of Action, which requires Tehran to put curbs on its nuclear program in exchange for sanctions relief. 

Along with the United States and Iran, the European Union, Russia, China, Germany, France and the United Kingdom are also signatories of the deal.

The US move has been criticized by other parties to  JCPOA, with the European Commission reactivating the 1996 law that allows companies to ignore rulings of any courts outside the European Union and to recover the damages caused by sanctions "from the natural or legal person or any other entity causing the damages".

Qiafeh described Iran's membership in regional trade agreements such as Eurasian Economic Union as both having pros and cons, without elaborating on them. 

Russian Prime Minister Dmitry Medvedev said in April he had signed a draft agreement to establish a free trade zone between Iran and the EAEU countries.

"The agreement provides for the formation of a free trade area on a limited range of goods between the EAEU and Iran,” Tass News Agency quoted him as saying at the time. 

The Eurasian Economic Union includes Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia. Iran and EAEU members started to develop the free trade agreement in 2015, though the signing has been postponed several times.