by Mish Shedlock, Mish Talk:
Russia and Iran developed a way to avoid the US dollar routing system known as SWIFT, Trade between the nations is booming.
What is the SWIFT Banking System?
Investopedia explains: The Society for Worldwide Interbank Financial Telecommunications (SWIFT) system powers most international money and security transfers. SWIFT is a vast messaging network used by financial institutions to quickly, accurately, and securely send and receive information, such as money transfer instructions.
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Most global transitions touch SWIFT in some way. The EU wanted to develop a way around SWIFT because the EU is sick (rightfully so) of the US setting sanction policy for the whole world.
Russia beat the China to secure SWIFT avoidance mechanism.
Russia’s Trade Routes to Iran
Eurointelligence discusses Russia’s Trade Routes to Iran
Business between the two most sanctioned countries in the world, Russia and Iran, is thriving. Iran’s exports to Russia have surpassed the $2bn mark last year according to Iran’s ambassador to Moscow. This is a considerable jump from the figures the previous years, and a 30% rise throughout the year, according to the Tehran Chamber of Commerce. The total value of bilateral trade between the two in volume reached $4.9bn in 2023 according to Iran’s official statistics. A Russian economic delegation with 170 representatives was in Tehran this week as the two countries held the 17th round of their joint economic commission. The two sides have pledged to increase trade tenfold over the coming years.
What facilitates their trade is their own banking solution, which the two countries set up last year to circumvent the dollar. The two central banks managed to connect Iran’s Sepam national financial messaging service to Russia’s SPFS messaging service, its equivalent to the Swift system. In connection with this new system, Russian banks started operating offices in Tehran, and offered credit lines to ease exports from Russia to Iran. There are similar plans in Iran for exports towards Russia. Intensifying trade with Russia is part of Iran’s Look to the East strategy that aims to neutralise the effects of US sanctions by expanding into new markets.
Lesson of the Day
Greek shipping oligarchs made lots of cash shipping Russian oil. Now they’re selling their ships to Putin for top Dollar. The EU must stop this. Tanker sales need to be prohibited and the G7 cap must be lowered to $50. Big thanks to @elisabethbraw. https://t.co/IWxyiqgXBD
— Robin Brooks (@robin_j_brooks) September 18, 2023
On September 19, 2023, my Lesson of the Day was Sanctions Don’t Work Because They Create New Markets
Lesson of the Day: Sanctions Create New Markets
Foreign Policy: “Since Russia’s invasion of Ukraine, Greece’s mighty shipping sector has continued to earn good money shipping Russian oil. But Greek shipowners have discovered an apparently even more lucrative source of revenue: selling the ships themselves to mysterious buyers linked to Russia. One publication has declared that a “Great Greek Tanker Sale” is taking place, and no price seems too high for a secondhand tanker. But the formerly Greek ships are entering a Hades-like shadow economy.”
Lesson Number Two
Countries, political leaders, and market makers act in their best interest.
It is in the best interest of Greek shippers to sell ships so they do. It is in the best interest of India and China to buy Russian oil and Greek ships so they do. It is in the best interest of Dubai middlemen to make a market in ships so they do.
What this boils down to is simple: It is the best interest of middlemen in Greece, Russia, India, China, and Dubai to tell Biden to go to hell, so they do.
How Russia Makes a Mockery of US Sanctions in One Picture
Unprecedented US and EU sanctions against Russia have had no impact on Russia’s oil exports or revenue. Who’s the beneficiary?
