Collection problems deepen in the increasing trade between Turkey and Russia after the Ukraine War. The problem in money transfers from Russia, which started in December, is growing. Transfers came to a standstill in January. While there are serious disruptions in exports, companies are waiting anxiously…
Despite the Western sanctions, the increasing foreign trade between Turkey and Russia has been hit by obstacles in money transfers. According to the information obtained, after the visit of US Secretary of State Blinken, it was learned that exporters could not receive TL and ruble payments from Russia, transfers were sent directly back from some banks, and some banks started to reject transactions that they had previously accepted by defining them as ‘banned products’.
Sources close to EKONOMİ newspaper said that money transfers have almost come to a standstill as of January 1, and that this situation has started to disrupt exports and that a solution is urgently expected for the continuation of trade.
USD 9.4 billion of exports
After the Russia-Ukraine War that started in 2022, the US and the EU toughened their sanctions against Russia, while trade between Turkey and Russia continues to increase. In the whole of last year, Turkey’s exports to Russia increased by 23.2 percent, from USD 7.65 billion in 2022 to USD 9.42 billion. The 5 sectors that exported the most to this country were chemicals, machinery, automotive, fresh fruits and vegetables and electronics, respectively. Although the West was disturbed by the increasing trade relations between the two countries, it was expressing its reaction in a ‘moderate’ manner, especially due to Turkey’s role in the grain corridor. However, it has been learned that money transfers from Russia have recently become increasingly difficult and have come to a standstill.
It is also reported that the issue was brought up during US Secretary of State Antony J. Blinken’s recent visit to Ankara, and that many banks have been sending back transfers from Russia. Following Blinken’s visit to Ankara on January 6, the White House said in a statement, “Secretary Blinken emphasized the importance of completing the final steps to approve Sweden’s accession to NATO and addressing sanctions and export control avoidance.”
Collection worries grow
While it is learned that exporters in the automotive sector have not received their transfers since the beginning of the year, it is claimed that exports have come to a standstill due to unpaid collections. In addition, it was learned that Turkish manufacturers working for the Russian company that makes the most purchases from Turkey in the footwear sector could not receive any payments from their Russian customers this month. A senior sector representative we contacted about the issue stated that the producers who could not make collections could not export, so the Russian company shifted its purchases to China. A representative of the chemical industry also pointed out that there were companies that were able to receive payments from Russia in January, but that there were more difficulties than in the past. As is well known, the textile center Laleli, whose biggest customers are Russians, is also in great trouble. A representative of the sector we had the opportunity to talk to said that they have not been able to receive payments from Russia since January 1 and that they have been following the developments with uneasiness. In addition, local shipowners transporting to Russia also stated that money transfers have become increasingly difficult recently.
Ministry launches work
According to information obtained from sources close to the economy, it is stated that the recent money transfer problems may be due to the expansion of the scope of the EU’s latest sanctions list, the fact that the buyer is included in the sanctions list even if the exporter company in Turkey sells goods that are not covered by sanctions, and the fact that Turkish banks do not want it to appear on their balance sheets that they mediate ruble transactions or money transfers from Russia. It was learned that the Ministry of Trade has started a work on the issue and started to collect the demands of companies that could not collect.
It got harder to do business in Turkey for Russian firms
As is well known, not only foreign trade had improved in the developing relations with Russia, but also the number of companies established by Russians in Turkey had increased significantly. This upward trend ended in 2023. The number of companies with Russian capital established in the January-November period of last year decreased by 42.8 percent compared to the same period of 2022 and fell to 690. It is stated that Russian business people started to experience some difficulties at this point. According to the Russian newspaper Kommersant, Turkey, where business was relatively easy in the previous year, has turned into a more challenging market with the toughening of the sanctions regime. As the situation has changed with the EU’s 11th sanctions package, it has become much more difficult, and in some cases even impossible, for companies whose owners or general directors are Russian citizens to open bank accounts and transfer money from Turkey to other countries.
Gray list claim
While it is inevitable that the difficulties in money transfers from Russia will slow down trade with this country, the most striking claim in this regard is that Turkey is moving in this direction in order to get off the gray list. Turkey, which is on the Financial Action Task Force (FATF) Gray List, is known to have taken some steps for full compliance before the FATF’s general assembly in February. In fact, Treasury and Finance Minister Mehmet Şimşek said in November that only a regulation in the field of cryptocurrency should be made to exit the gray list. According to the news previously reported by EKONOMİ, although the regulation in question is described as ‘related to cryptocurrencies’, it actually includes regulations that facilitate the restriction of the financing movements of criminal organizations, especially money laundering and terrorist organizations, and the confiscation of the assets of those involved in such crimes.
Banks deny any new practice
Allegations suggest that the problem has increased on the participation banks’ side. In addition, it is claimed that many private banks, while carrying out transfer transactions in the past, now demand invoices for exports, claim that most of the declared goods are ‘banned products’ and do not make transactions. Companies whose transfers have been returned complain that they cannot get clear information from the banks and are waiting for clarity on how trade with Russia will continue. On the other hand, the banking sector organizations we reached on the subject said that they had no information about the practice.
