Mitra Rahnejat, speaking in an interview with the website of the Strategic Council on Foreign Relations commented over the launching of the Chinese and Russian SWIFTs and said: Any country in the world can launch SWIFT, but what is important is to what extent it could use it around the world and other world banks could join it.

Russian SWIFT and its considerations

Saying that the Russian SWIFT project (SPFS) was launched in 2014 and reached its full operational stage in 2017, she added: This SWIFT was in fact a backup for the Russian banks against US sanctions.

The university professor explained: This system has four main functions, which include transferring messages in the SWIFT format, transferring messages in user-specific format, controlling financial messages of the SWIFT format, being able to determine the list of recipients and the type of financial messages received from them that can be operated.

Rahnejat underlined the need for paying attention to the weak points of this system, and said: The ban on transferring resources outside Russia, lack of possibility for sending many items with a message and difficult security requests are among the weak points of this system.

Noting that in the case of the Russian SWIFT attention should be paid to certain points, she continued: Although eight foreign banks have joined the system, Russia’s giant Gazprom, with huge volume of international financial transactions, has not yet joined the system. Also, in the Russian SWIFT over 5 million messages are transferred annually, while the SWIFT system, managed by the European Union and the United States, handles more than 2 billion messages.

The political economy analyst, referring to the published news about Turkey joining the system, said: US sanctions against Turkey have provided a suitable ground for the country to join the Russian SWIFT and in 1398 (2019-2020), negotiations between Turkey and Russia began in this regard.

Chinese SWIFT and its considerations

Rahnejat also reminded that the Chinese SWIFT (CIPS) was operational in 2015, adding: China, with an annual turnover of 4,500 billion dollars in global trade, controls more than 10% of the world economy, therefore, the country’s banking communications in the whole world is very wide. China is also involved with the ASEAN countries and Russia operates on the basis of the yuan. In 2019, an average of 135 billion yuan of transactions were made daily by this system and 96 countries and international organizations are using it.

She continued: In recent months, there have been whispers about the decision of  Russia, India and China to merge their financial messaging systems and abandon SWIFT’s international financial system; but the important thing is that in order to expand this SWIFT, China must make its currency convertible and removes investment control. The point is that such an issue could lead to the financial turmoil in the Chinese market.

She stressed: The important point about both Russian and Chinese SWIFT is that those SWIFT themselves can become the subject of US sanctions; therefore, the technology of both SWIFTs needs to be independent of American companies so that they cannot be brought under pressure.

Strong points of Russian and Chinese SWIFTs

Commenting over the strong points of the two systems, Rahnejat said: What could become the strong point of the Chinese and Russian SWIFT is that if the volume, number, and scope of US sanctions expands in the world; these could become the SWIFT of the US-sanctioned block, and they could gain tremendous maneuvering power in the world of economics.

Prospects of Iran’s case with Russian and Chinese SWIFTs

The professor at Allameh Tabatabaei University, regarding the prospect of Iran’s case with those systems, said: Iran has launched the SWIFT system itself. This system, called SEPAM, transmits financial electronic messages that are fully compliant with SWIFT protocols, and it should be noted that those Russian and Chinese SWIFT systems cannot help Iran in the face of sanctions.

She explained: On the one hand, according to the FATF rules and regulations, to the implementation of which many countries have committed themselves, the financial relationship with Iran is tightly controlled, and on the other hand, due to the secondary US sanctions, the banks themselves are not willing to cooperate.

What is the solution?

As for the options that can be considered under the status quo, Rahnejat said: Iran has entered into extensive economic cooperation and interaction with Russia in the form of the Eurasian Economic Union. Although Iran’s membership in the union is currently provisional and for a period of three years, and it must take several steps to become a permanent member of the union, it is possible that it should have an economic-financial agreement at the same time.

She added: In this agreement, the ground would be well provided for the presence of countries that have been subject to sanctions. This union can even have a common currency. However, this issue requires a serious determination not to be led to the fate of what has happened in ECO.