The push to settle bilateral trade outside the dollar has drawn renewed US scrutiny. Last month, the US Treasury imposed new sanctions on Russia’s VTB Bank, in part for its role in creating a ruble-rial settlement system.
On Thursday, Treasury also targeted the Russia-linked A7 Network, describing it as a “shadow banking network” used by Iran to evade sanctions. It said A7’s sub-agents formed a money-laundering and sanctions-evasion mechanism connected to Russian illicit finance that Iran used to move funds, including for oil sales and weapons procurement.
Both governments have spent years insisting they don’t need the dollar, but the amount of trade settled in each other’s currencies isn’t a number you need to announce unless you’re trying to convince people that sanctions aren’t working.
Sanctions leverage only works if people believe it is there. To convince people otherwise, Russia has since 2019 announced a rising share of its Iran trade settled in rubles and rials: from 40 percent to 50, 60, 80, until Putin himself claimed 95 percent in January 2025.
The Islamic Republic communicates in broad proclamations rather than Soviet-style quarterly statistical reports: its central bank governor said in November 2024 that Iran had “completely excluded the dollar” and traded only in rubles and rials.
But the internal plan, approved in September 2024, put it at 68 percent, with a goal of 71 by 2026.
The reality doesn’t fit the claim
The Kremlin’s claim of a working ruble-rial payment system is harder to sustain when the two sides have an imbalance in trade, because that can leave one side without enough of the other’s currency to meet demand. Russian figures put 2023 bilateral trade at about $4 billion, comprising $2.7 billion in Russian exports and $1.3 billion in Iranian exports.
The two countries also simply do not like holding each other’s currencies. Russia’s central bank described its problem with currencies like the rial in 2023: they are “often non-convertible or only partially convertible,” carry “higher volatility,” and trade in markets too thin to hedge.
Iranian exporters, according to Iran’s Resistance Economy Think Tank, refuse rubles when they can, and if they accept them sell them for dirhams as quickly as possible.
The usual fix for a shortage like this is a central bank swap line, which Iran and Russia signed in July 2024. Two years on, however, the only money either side has publicly put behind it was a 1 billion-ruble deposit, worth about $10 million at the time, at VTB to cover “possible ruble shortages,” and any further draw would leave Russia holding rials as collateral — a currency it cannot sell at home and that has lost 29 percent against the ruble since January.
An Iranian MP says Russia has offered a $20 billion ruble loan that Iran has not taken.
The trade goes around it
If the ruble-rial system worked as advertised, Iranian merchants wouldn’t be paying exchange houses in Dubai and Turkey to reach Russian suppliers.
Iranian MP Meysam Zohourian told Fars News in June that before the war even essential goods bought from Russia were routed through the UAE and settled in dirhams.
Fars asked in August why merchants still settle Russia trade through exchange houses and trustees in Turkey.
Iran’s central bank governor, Abdolnaser Hemmati, called his June trip to Moscow “an operational mission to untie the knots” in foreign trade, starting with letters of credit for Iranian merchants.
What the number counts
Whatever number is claimed, it doesn’t measure money moving between Russia and Iran — it’s a bookkeeping instrument, recording which currency left a Russian company’s account, not what currency reached the other side.
If a Russian importer’s bank takes rubles out of its account, converts them to dollars, and pays the seller in dollars, Russia’s Central Bank counts that as a ruble settlement, despite a contract priced in dollars and a seller that receives dollars.
The number also leaves out trade arranged without conventional cross-border payments. When countries are cut off from the international financial system, it’s easier to move goods than money, and Russia and Iran have increasingly turned to barter and swap arrangements.
Moscow has made barter official policy. The economy ministry issued a government manual for barter contracts in 2023, and a Russian economist says Iran is the one trading partner where barter accounts for a real share of the trade.
Russia and Iran have also pursued energy swaps. Swap deliveries of petroleum products had begun by late 2022, while the two sides were discussing a broader arrangement covering up to 5 million tons of oil and 10 billion cubic meters of gas a year. Trade conducted through such arrangements would not necessarily appear in the national-currency settlement percentage.
What the mismatch tells you
Russia and Iran’s coordination is real, but both countries overstate the impact. The public number, announced for propaganda value, doesn’t even match the government’s internal goal.
And the mechanism is in reality a cobbled-together assortment of poorly working, mismatched payment arrangements that don’t serve either side well except in their fight against the international financial system.