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Turkiye's Erdogan to hold meeting on Russian MIR payments, possible sanctions

September 22, 2022 at 9:03 pm

A photo taken on March 14, 2022, shows a Russian ruble coin and the Russian Mir payment system logo on a bank card in Moscow [AFP via Getty Images]

Turkish President Tayyip Erdogan will convene a top tier economy-focused meeting on Friday at which Russian payment system, MIR, and possible Western sanctions will be discussed, two sources with information on the matter told Reuters.

The meeting with government officials and others will also address agreements with Russia, recent heavy volatility on the Istanbul stock exchange and the general economic situation, the sources said, requesting anonymity, Reuters reports.

Two private Turkish banks, Denizbank and Isbank, suspended use of MIR this week, after Washington expanded its sanctions on Russia over its invasion of Ukraine, which includes targeting the head of the entity that runs the payments system.

NATO member, Ankara, opposes Western sanctions on Russia on principal, and has close ties with both Moscow and Kyiv, its Black Sea neighbours. It also condemned Russia’s invasion and sent armed drones to Ukraine as part of its diplomatic balance.

Yet Western nations are growing concerned over increased economic ties between Turkiye and Russia, diplomats say, particularly after several meetings between Erdogan and President Vladimir Putin, including last week in Uzbekistan.

READ: Two Turkish banks suspend Russian MIR payments after US warning

The United States and European Union “will be following compliance developments with Turkish banks, large groups that do business in Russia, and of course banks using MIR,” said Hakan Akbas, Managing Director of Strategic Advisory Services, an Istanbul-based political and sanctions compliance advisory.

“We could see secondary sanctions from the EU, this time, toward Turkish individuals and companies … and the US will continue to distance itself from Ankara before the upcoming existential elections,” as was evident at the United Nations meetings this week in New York.

Earlier on Thursday, the head of Russia’s National Card Payments System said MIR bank cards continued to work in Turkiye, despite the two banks suspending them.

Russia’s Central Bank vowed last week to push ahead with expanding the number of countries that accept its MIR cards.

The US sanctions target people and entities accused of helping Moscow skirt financial sanctions. Last month, the US Treasury sent a letter to big Turkish businesses warning they risked penalties if they maintained commercial ties with sanctioned Russians.

Earlier this week, a senior US administration official said Washington expects more banks will cut off MIR over sanctions risk, and added that the suspension decisions by Isbank and Denizbank made a lot of sense.

Separately, on the Istanbul bourse, bank shares have tumbled sharply since last week after a strong rally since July, prompting the country’s clearinghouse to amend risk parameters to help ease pressure. Read full story