Mervat Zakaria‏‏

Iranian Central Bank Governor Abdolnaser Hemmati’s announcement in August 2026 that Iran was close to joining the New Development Bank (NDB), established by the BRICS countries in 2015, has raised questions about Tehran’s motivations for membership amid unprecedented domestic and external challenges. In this context, membership in the NDB is separate from membership in BRICS itself and is generally subject to separate technical and legal procedures. Although Iran’s central bank has not announced a specific timeline for completing the process, its pace will depend on the extent to which Iranian monetary institutions can meet the bank’s financial transparency standards. Iran also faces a number of other challenges that could complicate its accession.Key ObjectivesSeveral factors have prompted Iran to consider joining the NDB. The most significant include the following:1. Countering U.S. and Western Economic Pressure: Iran’s efforts to join the NDB come amid intensifying Western economic pressure, particularly from the United States. This pressure intensified with the reimposition of the U.S. naval blockade on Iran on July 14, 2026, followed by the extensive economic sanctions imposed by the Trump administration. These measures targeted the oil and defense sectors, as well as the foreign financial networks that support their continued operations.In the same context, on August 24, 2026, the Trump administration launched a broad economic campaign against Iran under the designation "Economic Outcast." Announced by U.S. Treasury Secretary Scott Bessent, the campaign aims to deepen Iran’s economic and financial isolation and cut off its financing channels, while expanding secondary sanctions to cover foreign entities dealing with sectors and networks linked to the Iranian economy. Since the campaign was launched, Washington has continued to broaden its sanctions, including measures targeting the aviation and shipping sectors as well as financial and banking networks linked to Iran.Against this backdrop, joining the BRICS-backed NDB would give Iran one avenue to expand its financing options and strengthen ties with the financial institutions of member states, thereby helping it adapt to mounting U.S. and international economic pressure.2. Supporting Iran’s Reconstruction: By seeking to join the NDB, whose mandate includes financing infrastructure and sustainable development projects, Iran aims to increase the likelihood that the bank will contribute to its postwar reconstruction. This comes after the expiration of the memorandum of understanding with Washington, which was intended to end the state of war and which provided for the establishment of a $300 billion reconstruction fund. It also reflects the lack of any apparent prospect of <a href="https://ir.voanews.com/a/8168297.html" rel="noopener noreferrer" target="_blank">Gulf countries</a> contributing to Iran’s reconstruction, particularly in light of Iran’s overt aggression against them.3. Expanding Trade in Local Currencies with BRICS Countries: Iran’s membership in the NDB could enable it to expand economic and trade relations with member states at both the bilateral and multilateral levels. Although membership would not necessarily remove the banking restrictions imposed on Iran, it could provide a new channel for settling commercial translations with economic partners, helping Tehran mitigate the effects of Western economic sanctions. Through such diversification, Iran seeks to reduce the risks associated with dependence on a single partner or a limited number of partners and build a more balanced <a href="https://charsoghnewspaper.com/.wgchallenge/challenge.cgi?return=/%DA%86%D8%B1%D8%A7-%D8%A7%DB%8C%D8%B1%D8%A7%D9%86-%D8%A8%D8%A7%DB%8C%D8%AF-%D9%87%D8%B1%DA%86%D9%87-%D8%B2%D9%88%D8%AF%D8%AA%D8%B1-%D8%A8%D9%87-%D8%A8%D8%A7%D9%86%DA%A9-%D8%AA%D9%88%D8%B3%D8%B9%D9%87/" rel="noopener noreferrer" target="_blank">portfolio</a> of financial resources and relationships.4. Supporting Efforts to Reduce Reliance on SWIFT: By seeking to join the NDB, Iran hopes to benefit from BRICS initiatives that aim to strengthen financial integration among member states and develop cross-border payment and financial messaging mechanisms that could reduce reliance on Western financial infrastructure, including SWIFT. BRICS countries have also proposed initiatives to expand the use of local currencies for commercial and financial settlements, while exploring digital payment instruments as part of broader efforts to reduce reliance on the U.S. dollar.The group’s agenda also includes proposals to establish independent credit rating and accreditation mechanisms aimed at <a href="https://charsoghnewspaper.com/%d9%86%d9%82%d8%b4-%d8%a8%d8%b1%db%8c%da%a9%d8%b3-%d8%af%d8%b1-%d9%86%d8%b8%d9%85-%d9%85%d8%a7%d9%84%db%8c-%da%86%d9%86%d8%af%d9%82%d8%b7%d8%a8%db%8c%d8%9b-%d8%a7%d8%b2-%d8%a7%d8%ba%d8%b1%d8%a7%d9%82/" rel="noopener noreferrer" target="_blank">reducing</a> reliance on Western rating agencies in assessing countries’ creditworthiness. Although the U.S. dollar continues to dominate global trade, foreign exchange reserves, energy markets, and the international financial system, BRICS efforts to diversify payment and settlement instruments and expand the use of local currencies reflect a growing push to reduce dependence on the Western-dominated financial system. For Iran, joining the NDB could therefore provide additional opportunities to diversify its financial and trade channels, although this would not necessarily allow it to fully bypass SWIFT or the existing international financial system.Key ChallengesDespite Iran’s efforts to join the NDB as a means of mitigating the impact of Western pressure, it could face several challenges, most notably the following:1. The Critical Role of Western Economic Sanctions: The <a href="https://otaghiranonline.ir/news/67126" rel="noopener noreferrer" target="_blank">Iran Chamber of Commerce</a> has indicated that Western sanctions could pose a major obstacle to Tehran fully benefiting from NDB membership. This is also illustrated by the limited support that BRICS provided to Russia prior to the outbreak of its war with Ukraine, which raised questions about the group’s capacity for collective action in the face of external pressure.Iran’s accession process is also likely to be lengthy and complex, given the relative lack of clarity surrounding membership procedures and the bank’s consensus-based decision-making structure. In this context, some Iranian economic circles have called for a balance to be sought between the obligations Iran would undertake as a member and the benefits it could derive from membership, particularly given the sanctions that it continues to&nbsp;face.2. New Development Bank Priorities: The NDB’s General <a href="https://rasadkhone.ir/%DA%AF%D8%B2%D8%A7%D8%B1%D8%B4-%D9%86%D8%B4%D8%B3%D8%AA-%D9%BE%DB%8C%D9%88%D8%B3%D8%AA%D9%86-%D8%A7%DB%8C%D8%B1%D8%A7%D9%86-%D8%A8%D9%87-%D8%A8%D8%B1%DB%8C%DA%A9%D8%B3%D8%9B-%D9%81%D8%B1%D8%B5%D8%AA/" rel="noopener noreferrer" target="_blank">Strategy</a>: 2022–2026 stipulates that at least 40% of total financing approvals should be allocated to projects related to climate change mitigation and adaptation. This gives priority to clean energy, energy efficiency, low-carbon transportation, water and sanitation, and digital infrastructure projects. These priorities might not align fully with Iran’s objectives for joining the bank, which focus more on developing infrastructure in key sectors, particularly oil, gas, and petrochemicals, as well as financing reconstruction. Moreover, the bank approved only a total of $30 billion in financing under this strategy, which may be insufficient to meet Iran’s financing needs in this regard.3. The Bank’s Transparency Standards: In securing NDB membership, Iran faces several challenges related to financial oversight and transparency. Obtaining approval from the bank’s committee responsible for project financing would require compliance with strict international financial reporting standards, acceptance of anti-money laundering oversight mechanisms—including Financial Action Task Force (FATF) requirements—and greater structural transparency in foreign exchange and banking transactions.Iran would also need to align the financial reporting of its central bank and banking system with the international standards used by the NDB. Other <a href="https://ipes.razi.ac.ir/article_3470.html" rel="noopener noreferrer" target="_blank">requirements</a> include full transparency regarding cross-border payment channels and mechanisms for securing Iranian liquidity, as well as payment of its committed contribution to the bank’s capital base. Meeting these requirements could prove difficult for Iran given its current economic circumstances.4. Internal Divisions Within BRICS: BRICS continues to face significant internal differences. Although its members share an ambition to expand their global influence, their geopolitical priorities often diverge. India and China, for example, cooperate economically, but they are often at odds strategically. Russia, meanwhile, finds itself in an international position that differs substantially from that of Brazil, South Africa, and several newer BRICS members, which maintain close economic and security ties with the United States.These <a href="https://rasadkhone.ir/%DA%AF%D8%B2%D8%A7%D8%B1%D8%B4-%D9%86%D8%B4%D8%B3%D8%AA-%D9%BE%DB%8C%D9%88%D8%B3%D8%AA%D9%86-%D8%A7%DB%8C%D8%B1%D8%A7%D9%86-%D8%A8%D9%87-%D8%A8%D8%B1%DB%8C%DA%A9%D8%B3%D8%9B-%D9%81%D8%B1%D8%B5%D8%AA/" rel="noopener noreferrer" target="_blank">differences</a> could limit BRICS’ ability to provide a fully coordinated alternative to the existing financial system. They could also constrain the capacity of the group’s institutions, particularly the NDB, to provide effective support for financing infrastructure and sustainable development projects in member countries.Overall, Iran’s efforts to join the New Development Bank appear closely linked to its broader attempt to expand its economic and financial room for maneuver amid mounting Western pressure and sanctions. However, the extent to which this potential membership will translate into tangible economic gains will depend on Tehran’s ability to overcome challenges related to sanctions, transparency, and financial compliance, as well as the limited financing capacity and divergent interests of BRICS members. Membership could therefore provide Iran with additional tools to adapt to economic isolation, but it would not eliminate the constraints imposed by sanctions. Given this dynamic, the move should be viewed primarily as an effort to mitigate the effects of isolation and diversify Iran’s economic partnerships, rather than as a strategy that could fundamentally redefine its position in the global economy.

Why Does Iran Want to Join the New Development Bank?