Named banks of friendly countries that can refuse cooperation with Russia

— How systemic can we call the problem with stopping payments from Russia in friendly jurisdictions? First Turkey, then China, and recently the UAE: all of these are economically and politically strong countries. It turns out that relations with the United States are still more valuable to them…

— It should be recalled that difficulties with making payments from counterparties from Russia have intensified in the last month and a half due to the signing on December 22, 2023 by US President Joe Biden of a decree regulating the disconnection of foreign banks from the American system and the blocking of their accounts if they directly or indirectly contribute to the Russian military industry. Banks suspected of helping our country in matters of circumventing sanctions may be prohibited by the Americans from opening correspondent accounts, as well as their property in America may be blocked. And these are not empty threats: in accordance with the decree of the US President, 42 companies from China, 29 from Turkey, and 56 from the UAE were included in the SDN list (the toughest, blocking sanctions). It should be noted that under the Russian “programs” not a single Chinese or Turkish bank has been subject to sanctions. But it’s not evening yet…

— That is, the United States is making cooperation with Russia dangerous for other countries?

– Exactly. Strengthening sanctions in the international financial system leads to the formation of blood clots, which is why an increasing number of friendly countries – Turkey, the UAE and even China – are having difficulties accepting payments from Russia. As they say, “friendship is friendship, but money is separate.” It’s not that the Turks or the Chinese are prejudiced against Russian money, but they are afraid to take it. Although money doesn’t smell, it leaves a trace.

Back in the mid-19th century, the Prime Minister of England, Lord Palmerston, “cast in granite” the famous principle of British foreign policy: “We have neither eternal allies nor constant enemies, but our interests are constant and eternal.” This statement is applicable for any country, including states friendly to Russia. Therefore, it is not surprising that when the Americans pressed lightly, threatening secondary sanctions, the banks of these countries began to refuse to serve our compatriots.

— And who is the next friendly country that can refuse relations with Russia?

— This is a two-sided story: we still need to look at who the United States will turn its wrath on. For now, they are primarily interested in large “opportunists” who violate the sanctions regime. Turkey, China, and the UAE are very large foreign trade “hubs” through which our country circumvented sanctions. It can be assumed that the Americans will further put pressure on the banks of India, Kazakhstan, Armenia, Thailand, Vietnam, and other countries that are more or less loyal to Russia.

“Indeed, in the last six months there has been a lot of talk about the importance of our country’s cooperation with India. What will happen if its banks refuse to conduct transactions with representatives of the Russian Federation?

— It is clear that when the Americans put proper pressure on India, Indian banks will also have problems with Russian payments. In addition, following the United States, the EU is also becoming more active, although the Europeans are more cautious and restrained. The latest, 13th package of sanctions was introduced by the EU on February 23. The European Union has expanded the list of goods prohibited for export to Russia, adding to it possible components for the development and production of drones, including electrical transformers, static converters and inductors, that is, the Europeans are trying to strike at supplies important to the Russian army. All restrictions are aimed at Russia’s trading partners from China and India. Restrictions have been imposed on 27 organizations on charges of supporting the military-industrial complex (MIC) of our country. So in the near future problems may arise with Indian banks.

— Are there those who are not afraid of US pressure and are ready to cooperate with Russia without regard to secondary sanctions?

— Of course, the world is far from unipolar; many countries are anti-American, although they do not refuse dollars. What you can be 100% sure of is that banks in Belarus, Iran, Syria and North Korea will not refuse to serve Russian clients.

— Could it happen that all countries at the same time (except for the four mentioned) refuse to cooperate with Russia?

— Look how companies in India have become rich in just two years of mutual trade. Many friendly countries will not want to lose such a source of profit, despite US pressure. If it is impossible to trade directly, then they will look for workarounds. Last week, interesting news appeared: Turkish exporters are asking the authorities to add Russia to the list of countries with which payments do not require transferring money through a bank and declaring the transaction. Currently there are 33 states on this list, including Iran, Belarus, North Korea, Cuba, Kyrgyzstan, and Moldova. This request is due to the fact that problems with payments from Russia continue to worsen. Against this background, exports to our country from Turkey in January decreased by 30.4% year-on-year to $551.1 million, so Turkish business is trying to find a way out. More precisely, a detour. Using the economic and political situation, Russia will not be left without allies and partners. It is impossible to isolate such a large country. There is not enough iron for a curtain.

— How can problems with conducting operations of this kind—when one or another country randomly refuses to make payments, even those on whom Russia rightly counted—can spoil the trade balance of our state?

— Blood clots in the financial system can lead to the collapse of foreign trade and the destruction of supply chains. Tighter sanctions are leading to the fact that transparent non-cash transactions, especially in dollars and euros, are being replaced by barter and payments in cash, gold and cryptocurrencies. Attempts are being made to create “closed circuits” for settlements between Russia and its trading partners so that information about financial transactions is not available to the US and EU.

Another option is to complicate the chains of financial transactions by including “lay-in” companies from third countries. All these measures lead to higher transaction costs: the more complex the transactions and the more intermediaries, the higher the costs.

— How will problems with conducting transactions in friendly jurisdictions affect the wallets of Russians?

— The reduction in exports and imports will affect all Russians. In the context of blocking banking transactions, the demand for yuan, Indian rupees and UAE dirhams from Russians may decrease. Russian banks may stop opening deposits in yuan and dirhams.