Turkey bows to US pressure and cuts ties with Russian banks

Turkey’s booming war trade with Moscow took a big step back on Wednesday when it was confirmed the last three banks still processing Russian payments are pulling out under pressure from Washington.

The decision follows weeks of increased pressure from the United States on NATO member Turkey to curtail its booming economic ties with Russia.

The US Treasury Department warned last week that Turkish banks operating with Russian Mir bank cards “run the risk of supporting Russia’s efforts to circumvent US sanctions” and could face economic penalties themselves.

Two private Turkish lenders that began processing Mir after Turkish President Recep Tayyip Erdogan met Russian counterpart Vladimir Putin in August suspended transactions earlier this month.

But three state lenders – Halkbank, Vakifbank and Ziraatbank – were still working with the cards.

A senior Turkish official didn’t say when Russians won’t be able to access their maps in Turkey at all.

The three banks “are still processing (the pending) payments, but they have set a future date for the withdrawal,” the official said on condition of anonymity, as no formal decision was announced by the three state lenders.

The decision follows a meeting chaired by Erdogan last Friday, which officially discussed “alternatives” to the Russian cards.

– “Fear of sanctions” –

The explosion in Turkey’s trade with Russia during the seven-month war in Ukraine has raised concerns in Washington.

The value of the trade between the two increased by more than 50 percent. Turkey has also agreed to pay for a quarter of its Russian natural gas imports in rubles.

US Deputy Treasury Secretary Wally Adeyemo paid a rare visit to Ankara and Istanbul in June to express Washington’s concern that Russian oligarchs and big business are using Turkish facilities to evade Western sanctions.

The Treasury Ministry sent a follow-up letter to Turkish banks and companies in August, warning that they could not expect “access to the US dollar and other major currencies” when trading with sanctioned Russians.

Turkey has tried to remain neutral in the Ukraine conflict and has refused to sign Western sanctions against Russia.

She has used that status to sign a series of economic deals with Russia that have helped prop up the struggling economy ahead of June’s elections, in which Erdogan will struggle to extend his two-decade grip on power.

Mir cards offer millions of Russians who vacation in Turkey each year a way to access their rubles and pay for everything from restaurants to hotels.

They are also becoming increasingly important to Russians fleeing to Turkey as part of a new wave of migration of men trying to avoid conscription.

However, analysts are noting a shift in Turkey’s tone away from Russia in recent weeks.

Ankara last week sharply condemned the “illegitimate” polls the Kremlin is using as a pretext to annex four Ukrainian regions now partially under Russian control.

Prominent Russian sanctions supporter Bill Browder – a businessman who left Moscow after one of his employees died in prison – said the Turkish bank’s decision shows the “fears of secondary sanctions are starting to take hold”.

“Turkish banks have abandoned Putin’s Mir payment scheme for fear of US fines,” Browder tweeted.

“We need to roll this out far and wide. Chinese, Indian UAE and many other countries should understand that there will be consequences.”