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Politico: Iran teaches Russia its tricks on beating oil sanctions

11-11-2022 |

The West has been unable to beat the smokescreens Tehran uses to rake in oil income. The danger is Putin will be equally successful.

Iran is preparing to hand the Kremlin the blueprints for its most effective weapon against the West: the underground financial network it relies on to evade sanctions.

For years, the Islamic Republic has frustrated American efforts to isolate it and starve its economy by constructing a parallel universe of front companies and foreign banks — including major financial institutions based in Europe and the U.S. — that Iranian companies use to evade international controls and conduct business abroad.

As Russia faces increasing international isolation over the war in Ukraine, Iran, which is already providing Moscow with weapons, has offered to share its expertise in the art of sanctions evasion, Western diplomats say. A series of recent meetings between senior Russian and Iranian officials, including Iranian central bank chief Ali Salehabadi and Deputy Economy Minister Ali Fekri, involved laying the groundwork for that collaboration, the diplomats argue. 

If Moscow manages to copy the Iranian system it could hope to blunt the impact of many of the sanctions it faces, especially in its oil and gas sector, which forms the backbone of its economy.

Such a system would give Russian President Vladimir Putin much more flexibility — and time — to continue to wage his war against Ukraine by keeping oil revenue flowing.

“Anyone interested in changing the Russian state of mind should understand that paralyzing the Russian-Iranian financial abilities is essential,” one of the Western officials said.

The diplomats who issued the warning on sanctions evasion techniques also noted that Western banks, such as Germany's Commerzbank and Deutsche Bank, as well as Citigroup in the U.S., played a role in helping Iran continue to rake in export earnings through underground transactions. The risk is that the same Western banks — either wittingly or unwittingly — could be sucked into the same style of trade by Russia.

Source: Politico