According to the Iranian government, the most recent important success was that on January 1, the country, along with Saudi Arabia, the United Arab Emirates (UAE), Egypt, and Ethiopia, officially became the BRICS+ group, which currently accounts for nearly half of the world's population and 27% of the world's GDP.
Tehran claims that joining BRICS is an opportunity to ease the economic crisis since 2018 due to US sanctions, reject the dominance of the US dollar and this is also an opportunity to bring huge economic potential. Iran International quoted many analysts as saying that joining BRICS also serves Iran's domestic policy to calm concerns among the people. Therefore, BRICS is promoted as a mechanism to challenge the US and stimulate trade.
The first area where Tehran expects to benefit from joining BRICS is energy, as Iran is a major oil and gas producer. Iran could potentially increase its exports, invest in energy infrastructure, and ease US sanctions by using each country’s local currency in energy purchases.
While waiting for the BRICS group to find a common currency, member countries, especially Russia (which has been removed from the SWIFT payment system) and Iran (which is subject to US sanctions), can pay in each other's local currencies in bilateral trade. According to Investing, Iran and Russia have signed many agreements to enhance trade and financial cooperation, including providing an important credit line and using each other's local currencies for trade. For example, Russia's Sberbank has provided a credit line worth more than $73 million to Bank Melli, one of Iran's main banks. This measure facilitates Iran's import of Russian goods. On the Iranian side, after some sanctions were eased, Bank Sepah, a major Iranian bank, issued a letter of credit worth more than $18 billion in Russia. In addition, bank officials from both countries have proposed improving bilateral financial transactions during Russia's leadership of the BRICS group.
Due to lack of access to the SWIFT system, Russia and Iran use two separate programs: SPFS managed by Russia and ACU managed by Iran. Many countries such as India, Bangladesh, Bhutan, Nepal, Maldives, Sri Lanka, Pakistan, Myanmar participate in Russia's SPFS system. The French daily Les Echos commented that the sanctions against Russia as well as the affirmation of the BRICS group have increased opposition to the USD. The trend of using each country's national currency is increasingly growing in bilateral trade agreements, in interbank payment systems and payments, at the initiative of Russia and China.
However, some observers remain skeptical about Iran’s ability to mitigate the impact of US sanctions by joining BRICS, given that its two key players, Russia and China, are also facing domestic economic challenges and disagreements with the West. In addition, given the volume of trade with the US, some BRICS members may be reluctant to consider the economic risks of strengthening ties with Iran.
PEARL
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