Iran has approved Russia’s proposal to launch a joint bank for investment in bilateral trade and economic projects, a deputy co-chair of the Russian-Iranian intergovernmental commission said Wednesday, Russia’s Sputnik News Agency reports.
“It [the establishment of the bank] could be done very soon, depending on technical issues and how they could be resolved,” Mehdi Mohtashemi told RIA Novosti.
“The initial capital will, probably, total $500 million. The capital could be increased when the cooperation in trade and joint projects grows,” Mohtashemi stressed, adding that the bank will initially focus on investment in bilateral trade and other joint economic projects.
Earlier in March, we reported that Iran and Russia had signed an agreement to create the joint regulation body that would oversee interbank financial transactions between the two nations.
In January, we reported that Iran’s Ambassador to Russia, Mehdi Sanaei, said that Tehran and Moscow were working on a plan to switch bilateral trade to their national currencies by creating the joint bank.
“Both sides plan to create a joint bank, or joint account, so that payments may be made in rubles and rials and there is an agreement to create a working group [for this],” Ambassador Sanaei said.
The bank could break the domination of Western currencies over the two nation’s bilateral exchanges and could eventually open a new chapter in trade relations between Tehran and Moscow, the Chairman of the Iran-Russia Joint Chamber of Commerce Assadollah Asgaroladi said earlier in the year.
“Such a bank would be able to exchange money between the two sides using rials and rubles and put aside dollars, euros and pounds,” Asgaroladi said.
Iran’s Central Bank announced in January that it was stopping mutual settlements in dollars with foreign countries and that bilateral swaps would be settled in local currencies.
In February, Russia’s Deputy Foreign Minister Sergei Ryabkov said that Russia would boost military-technical cooperation with Iran once international arms embargo on Tehran are lifted following successful talks on the Iranian nuclear deal.
On January 20, Russian Defense Minister Sergei Shoigu and Iranian Defense Minister Hossein Dehghan signed an intergovernmental agreement on “long term and multifaceted” military cooperation in Tehran. This was the first time in 15 years that a Russian defense minister had visited Iran.
Russia, who built Iran’s first nuclear power plant in its southern port of Bushehr, signed a deal last November to build two more nuclear reactors, which could be followed by another six reactors.
Also last November, the Russian State Railroads Company announced plans to build a railway link from Russia, across Azerbaijan, to Iran.
Iran’s Fars News Agency (FNA) earlier in the year emphasized that the joint bank — once operational — will help elevate economic ties between Iran and Russia to “significantly high records”.
Ties between the two nations are growing, and Washington certainly is not liking this. What lies ahead is yet to be seen. Stay tuned.