Analyst Osadchiy: “It will not be possible to isolate such a large country as ours. There’s not enough iron for a curtain.”
Last week, banks in the United Arab Emirates (UAE), due to the risk of secondary sanctions from the United States, began to limit settlements with Russia and close accounts of companies and individuals from the Russian Federation. Since the beginning of the year, this is already the third friendly country where problems have arisen with our payments. Turkish banks did this in January, and Chinese banks did this in early February. Who is the next of Russia's allies who may also refuse banking operations and how this situation will affect the wallets of citizens, Maxim Osadchiy, head of the analytical department of the BKF bank, told MK.
— 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 Russian “programs” not a single Chinese or Turkish bank has been sanctioned. But it’s not evening yet…
— 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 slightly, threatening secondary sanctions, the banks of these countries began to refuse to serve our compatriots.
— 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.
— 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.
— 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.
— 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 the curtain.
— “Blood 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 loops” for settlements between Russia and its trading partners so that information about financial transactions is not available to the United States and the EU.
Another option is to complicate the chains of financial transactions by including companies «gaskets» from third countries. All these measures lead to higher prices for transactions: the more complex the transactions and the more intermediaries, the higher the costs.
— The reduction in exports and imports will affect all Russians. In the context of blocking banking transactions, demand for yuan, Indian rupees and UAE dirhams from Russians may decrease. Russian banks may stop opening deposits in yuan and dirhams.