Turkey’s booming wartime trade with Moscow took a giant leap on Wednesday with confirmation that the last three banks still processing Russian card payments were pulling out under pressure from Washington.
The decision follows weeks of increasingly blunt warnings from the United States to NATO member Turkey either to limit its economic relations with Russia or face the threat penalties itself.
The US Treasury said last week that Turkish banks working with Russian Mir bank cards “risk supporting Russia’s efforts to evade US sanctions”.
Two Turkish private lenders who began dealing with Mir after Turkish President Recep Tayyip Erdogan met his Russian counterpart Vladimir Putin in August suspended transactions earlier this month.
But three public lenders – Halkbank, Vakifbank and Ziraatbank – were still working with the cards.
A senior Turkish official did not say when Russians would no longer be able to access their cards in Turkey at all.
The three banks are “still processing (overdue payments), but they have set a future date” to withdraw, the official said on condition of anonymity because no formal decision from the three banks has been announced.
The decision follows an Erdogan-led meeting last Friday that formally focused on finding “alternatives” to Russian cards.
– Change of tone –
The explosion of Turkish trade with Russia during the seven-month war in Ukraine has been a growing source of irritation for Washington.
The value of trade between the two has increased by more than 50%. Turkey has also agreed to pay for a quarter of its Russian natural gas imports in roubles.
US Assistant Treasury Secretary Wally Adeyemo paid a rare visit to Ankara and Istanbul in June to voice Washington’s concerns that Russian oligarchs and big business are using Turkish entities to evade Western sanctions.
The Treasury sent a follow-up letter to Turkish banks and businesses in August warning them that they cannot expect to have “access to the US dollar and other major currencies” if they trade with sanctioned Russians.
Turkey tried to remain neutral in the Ukrainian conflict and refused to endorse Western sanctions against Russia.
He has used that status to seal a series of economic deals that have helped prop up the struggling economy ahead of June elections in which Erdogan will struggle to extend his two-decade grip on power.
Mir cards offer millions of Russians who vacation in Turkey every year a way to access their rubles and pay for everything from restaurants to hotels.
They are also increasingly important to Russians fleeing to Turkey as part of a new wave of male migration trying to avoid conscription.
But analysts note a change in Turkey’s tone vis-à-vis Russia in recent weeks.
Ankara strongly condemned last week the “illegitimate” polls that the Kremlin is using as a pretext to annex four Ukrainian regions now under partial Russian control.
– ‘Fear of secondary sanctions’ –
Prominent Russian sanctions activist Bill Browder – a businessman who left Moscow after one of his associates died in prison – said the Turkish bank’s decision showed that “fear of secondary sanctions is starting to creep in.” function”.
“Turkish banks abandoned Putin’s Mir payment system for fear of punishment by the US,” Browder tweeted.
“We need to deploy this far and wide. The Chinese, the Indian Arab Emirates and many other countries should understand that there will be consequences.
Russia developed Mir in 2015 to circumvent Western sanctions imposed following its annexation of Ukraine’s Crimean peninsula.
But the head of Russia’s central bank, Elvira Nabiullina, acknowledged earlier this month that Moscow was having “difficulties” in expanding its payments system around the world.
Uzbekistan suspended Mir transactions last Friday citing unspecified “technical procedures”.
The card still works in Belarus and a handful of Russia’s closest allies.
Visa and Mastercard no longer issue new cards in Russia or process foreign payments on cards acquired before the war.