Washington is increasing pressure on Moscow's allied countries
Russian securities turned out to be “persona non grata” in the Central Depository of Kazakhstan, to use diplomatic language. The financial organization asked clients — brokers, management companies — to withdraw these assets from their circuit by August 1. The motive is clear: official Astana, based on national interests, is trying to minimize the risks of secondary sanctions. For Russia, this is another unpleasant signal: sanctions pressure on it can be increased at any time, both directly and through third countries.
As a representative of the depository explained, the notifications were sent “to individual depositors,” and they are related to the introduction by the United States of blocking sanctions against the Russian National Settlement Depository (NSD) on June 12. The exact volume of Russian securities that may be stored in Kazakhstan is unknown. However, according to Bloomberg, from March to December 1, 2022, local brokers carried out transactions with Russian OFZs for a total amount of 641.1 billion tenge ($1.4 billion). According to the agency, operations were carried out in the interests of Kazakh (48.7% of OFZ purchases) and Russian clients (41.4%), as well as (to a very small extent) residents of the UAE and Slovakia.
The deadline until August 1 is consistent with the expiration of the OFAC (Office of Foreign Assets Control) general license to curtail operations with the Moscow Exchange. The Kazakhstan depository takes into account about 140 names of securities with the prefix RU in circulation, as follows from the statistics on its website. Among them are sovereign debt bonds, corporate bonds and shares.
“The measure applies to the assets of all Russian companies under sanctions,” says Nikita Maslennikov, a leading expert at the Center for Political Technologies. – The prospects are not yet entirely clear, it is too early to draw any panic conclusions, but in any case there is little good. We are talking about the most developed strategic site on the territory of one of the closest friendly countries to us. It could serve as an intermediate link between our exchanges and, above all, the Chinese ones. Naturally, we will look for other ways; Russian non-sanctioned companies will certainly be able to be present on this site and conduct transactions for the purchase and sale of shares.”
It is also obvious that if Russian securities are not withdrawn from the depository, Washington will increase pressure on Astana. Accordingly, additional complications will arise in trade settlements between two partners in the post-Soviet space, in the established practice of issuing payment cards for citizens of the Russian Federation by Kazakh banks. Kazakhstan’s motive is clear, Maslennikov notes: based on its national interests, it is trying to minimize the risks of secondary sanctions.
“Kazakhstan remains one of the key countries of the EAEU and the Customs Union, cooperation with Russia is developing in many areas,” says Alexander Shneiderman, head of the sales and customer support department at Alfa-Forex. — The most important thing is that the warning for clients appeared a month before the blocking. In general, this position is acceptable. Of course, investors will have to sell assets. However, there is an over-the-counter market where a variety of transactions are still possible, including trading in dollars and euros.»