Russia has decided to create a common bank with another country for settlements and transfers

At the beginning of 2024, several private banks in Turkey closed the accounts of Russian firms due to the threat of secondary sanctions from the US and EU. At the same time, the requirements for individuals to open local bank cards were increased. Official Kremlin spokesman Dmitry Peskov indicated that the Russian authorities are conducting a dialogue with Ankara to resolve the situation.

Earlier, the Ekonomim newspaper reported that the Turkish Ministry of Trade had compiled a list of companies that have problems with payments from Russia. Turkish exporters are faced with bank refusals to accept money transfers from Russia to pay for goods: transactions have practically stopped since January 1. Ankara is currently taking measures to resolve the situation. It is noted that the problems are related to pressure on Turkey in connection with Western sanctions. At the same time, the local banking sector has not received evidence that the Turkish side is trying to circumvent sanctions from Western countries applying pressure.

Problems in the payment market of the two countries have been going on for several years. So, back in September 2022, Turkish banks suspended servicing Mir cards, which was a real blow for the Russian tourists who were there. But there are also business interests and government contracts. Let us recall that the state corporation Rosatom is building the Akkuyu nuclear power plant in Turkey, in addition, a gas hub is being created in this Islamic republic.

The authorities of both countries are well aware of the importance of a free payment market and immediately began discussing options to overcome the problems. At one time there was hope for cooperation with the local payment system Troy, whose cards Russian vacationers could issue to visit Turkey, but it remained at the level of good wishes. In 2022, the idea arose to allocate a separate bank for making payments, which, of course, would immediately fall under the sanctions of Western countries, but since payments there will be made in national currencies – lira and rubles – this fact should not affect its work. However, it was also not implemented.

And so, at the beginning of 2024, the idea appeared again in the public sphere: a discussion of problems with payments will be part of the upcoming meeting of the leaders of the two states on February 12, when Russian President Vladimir Putin arrives in Ankara for negotiations. True, there are still no specifics about the creation of a joint bank. It is not surprising that the experts interviewed by MK called for caution regarding such prospects, pointing to Turkey’s membership in NATO and its readiness, if necessary, to exchange cooperation with Russia for some more profitable contracts with the West, as has happened more than once in recent times. stories.

Daria Dinets, head of the Department of Finance and Credit, Faculty of Economics, RUDN University:

“Russia’s imports from Turkey over the past year, according to official data, are approaching $10 billion, the trade flow is estimated at $57-60 billion. It should be noted that the tourist flow in 2023 will grow to 6.31 million trips.

The pressure exerted by the United States on countries that are Russia’s trading partners, and the likelihood of their financial structures being included in sanctions lists, had a negative impact on the freedom of payments between the two states. In response to this, the Turkish side organized a flow of payments through the Emlak Katilim bank, but only for sensitive items of Turkish exports to Russia (food, textiles, clothing). In other words, the financial scheme is aimed at supporting Turkish industry and exports.

As for plans to establish a joint bank, this may be one of the elements of the strategy for creating a global gas hub in Turkey, including to support the export of Russian natural gas. Since the project is at the approval stage, the creation of a joint financial institution could be an instrument of Turkey’s negotiating power on this issue. Payments processed by such a financial structure will not require the opening of correspondent accounts, and with further movement of funds through the network of Turkish banks, it will be quite simple to disguise the source of money.

However, we should not forget that the operations of a joint financial institution with Russia could become a bargaining chip when resuming discussions on Turkey’s accession to the EU, especially if the gas hub project is successfully implemented and supplies are properly diversified.”

Sergey Solovykh, head of the department for working with wealthy clients at Fontvielle Investment Company:

“Turkey is one of Russia’s key foreign economic partners, playing an important role as a trade hub for the country. In 2022, it entered the top 3 in terms of trade turnover with Russia, in 2023 it entered the top 2, second only to China.

The situation in the economic partnership between the two countries that we are now observing is likely provoked by the decree of US President Joe Biden of December 22, 2023. But are these threats really that critical for Turkey? The country’s main trading partner is the European Union, with which trade turnover amounted to $210 billion at the end of 2023. Turkey’s trade turnover with Russia is about $56.5 billion, which is 3.7 times less than with the EU bloc as a whole. Trade turnover with the United States is less than with Russia, at around $30.6 billion.

So the numbers suggest that pressure on Turkey from the United States, if the European Union does not join it, is not so critical. However, the country’s ambitions to join the EU and significant economic ties with the region are obstacles that could prevent further cooperation between Moscow and Ankara.

As for the creation of a bank for bilateral settlements between the two countries, the idea has already been voiced in the fall of 2022. Such a structure, if created, will initially be focused on a narrow range of tasks and its sanctionability is predetermined. The only question is whether Ankara will be allowed to create such a structure in principle.”

Ilyas Zaripov, Associate Professor, Department of Global Financial Markets and Fintech, Russian Economic University. Plekhanov:

“The creation of a Russian-Turkish bank is an urgent need to ensure stable payments between neighboring countries. The volume of Russian-Turkish trade turnover in 2023 is estimated at $57 billion, and it decreased by approximately $11 billion compared to 2022. Despite the huge potential for increasing trade relations and mutual investments between Russia and Turkey, it cannot be fully realized due to for problems with calculations. Turkish banks were already very sensitive to the sanctions imposed against Russia (since the fall of 2022 they began to massively disconnect from the Russian Mir payment system), but after the December decree of US President Joe Biden, which established a simplified procedure for introducing secondary sanctions of the American government against financial institutions suspected of helping Russian companies circumvent sanctions, the problem with Turkish banks refusing to allow Russian counterparties to make payments has become systemic.

At the same time, Turkish banks began to force Russians to close their accounts: they refuse Russian companies any banking support for their business. This is explained not only by the Turks’ fears of falling under secondary US sanctions, losing their rating and business reputation in the eyes of Western counterparties, but also by the fact that some Turkish banks belong to Western businesses and therefore they are vulnerable and susceptible to political pressure from Western states, primarily the United States .

This does not mean that payments are completely frozen: they are simply carried out through banks in third countries with complete camouflage of the final purpose of the payment and the underlying contract. This leads to additional costs and an increase in the final price of the product or service. The creation of a special Russian-Turkish bank will make it possible to organize a system of mutual settlements in national currencies or popular currencies of friendly countries, for example, yuan, and not depend on dollars and euros, which are toxic for Russians.

It can be noted that the likelihood of introducing sanctions against a Russian-Turkish bank is high, but if we take into account the orientation of this financial institution mainly towards payments and settlements in national currencies, the effectiveness of possible sanctions will be low, since the Russian-Turkish bank needs to maintain correspondent relations with Western banks there is no bank. This bank is unlikely to be able to solve the problems of retail clients, that is, payments using Mir and Troy payment cards.”