On April 8, the Iranian government publicly welcomed a Russian initiative to create a “green corridor” that would seek to streamline trade for sanctioned states. The “corridor” is being characterized by Russia as a necessary lifeline of needed goods and services amid the coronavirus pandemic. It remains unclear if this “corridor” would be in cooperation, or run parallel to, the EU-led INSTEX payment mechanism, the special purpose vehicle used to facilitate non‑U.S. dollar transactions between European countries and Iran.
On March 31, however, the INSTEX mechanism confirmed the completion of its first transaction to Iran. INSTEX was used to transfer medical equipment and supplies to Iran by France, Germany, and United Kingdom. Although not officially part of INSTEX, Russian authorities appear to be using the transaction as an impetus to push the payment system to expand beyond EU borders and facilitate the trade of sanctionable goods (presumably beyond those associated with coronavirus). Regarding the transaction, Russia’s Permanent Representative to the International Organizations in Vienna and the International Atomic Energy Agency, Mikhail Ulyanov, tweeted, “Congratulations! In view of #COVID-19 it would be great to move swiftly to transactions with sanctionable goods and enlargement of INSTEX beyond #EU borders”
At present, INSTEX only allows for the transaction of humanitarian goods for Iran, and does not facilitate the transaction of sanctioned commodities such as oil. Russia has publicly supported the EU-led mechanism and has vied for inclusion in the system since its inception in January 2019.
The Kremlin has been a vocal supporter of easing sanctions on Iran, and has taken steps to directly “de-dollarize” Russia’s economic interactions with the country. In September 2019, the two countries directly connected their financial messaging services to facilitate bilateral banking as an alternative payment system to the Belgium-based, Society for Worldwide Interbank Financial Telecommunication (SWIFT).