The Islamic Republic of Iran, for instance, is subject to the most extensive American financial and trade sanctions of any country. In 2025 and 2026, these were compounded by military campaigns. Earlier attempts to resolve the accumulated burden of problems through multilateral diplomacy came to nothing. Although Iran withstood the military strikes, it remains, to a considerable extent, in a state of economic isolation. The absence of normal financial links only makes matters worse.
Russia, since the onset of the Ukrainian crisis in 2014, has faced growing pressure from sanctions imposed by the United States and its allies. After 2022, these turned into a veritable “sanctions tsunami”. Today, more than 90 per cent of Russian banking assets are subject to American sanctions. Counterparties in friendly countries face the threat of secondary sanctions.
The use of American sanctions against China has also intensified. The financial sector has thus far barely been touched, but export controls are already fairly severe. To these are added sanctions on such politicised subjects as human rights in Hong Kong, Xinjiang, and Tibet. Sanctions against the PRC are a recurring theme in the agenda of restrictive-measures bills before the US Congress. Secondary sanctions affect China quite noticeably in connection with its trade with Russia and North Korea, although this effect is felt mainly at the level of smaller companies.
The Republic of Belarus has been under sanctions since 2004. At various points these have been eased. Despite the latest thaw, a number of key Belarusian enterprises remain under sanctions imposed by the United States and the EU.
To this list should be added the secondary sanctions imposed on enterprises from Belarus, Kyrgyzstan, Kazakhstan, Uzbekistan, and India for cooperating with Russia. Compared with China, their number is not great, but the very fact that such sanctions have been applied clearly points to the existence of a problem.
The countries targeted have each worked out their own ways of responding to American sanctions. China deters the United States with the threat of counter-sanctions, which would be painful given the sheer size of the Chinese economy. Russia has staked its bets on settlements in national currencies and new payment instruments, including digital currencies. Belarus has shifted part of its trade contacts away from the European Union and towards allied Russia and China. Iran, the most seasoned player of all, combines various approaches—from a modern-day version of the mediaeval hawala system to settlements in cash or cryptocurrency. Yet all these solutions remain isolated from one another. What is still lacking is a common algorithm at the level of the SCO that would allow member states to conduct unimpeded multilateral settlements on an ongoing basis.
Such an algorithm might include, among other things, the creation of a financial messaging system independent of SWIFT, the introduction of an SCO payment card system, and the use of digital currencies in settlements. The emergence of a universal, multilateral infrastructure for financial settlements within the SCO would amount to a genuine revolution, substantially strengthening the organisation’s practical potential.
There are, of course, risks here too. Any SCO financial institutions implementing such projects could quickly find themselves under American sanctions. This will require political will and resolve on the part of member states to press ahead with the project of a shared financial infrastructure. Another risk is the possible distancing of the private sector and private banks from the project. They may continue their policy of de-risking, regarding the retention of the dollar as the more advantageous option for their business—a policy that is, on the whole, characteristic of many SCO member states, even those under sanctions. There is thus little reason to expect quick successes on this front.
Nevertheless, even modest progress in this direction could turn the future SCO Development Bank into a serious institution standing at the forefront of tackling concrete problems of financial security. Its future functional direction will depend on the political will and effective cooperation of its member states.
The Valdai Discussion Club was established in 2004. It is named after Lake Valdai, which is located close to Veliky Novgorod, where the Club’s first meeting took place.
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