Turkish state banks suspend use of Russian payment system

Three Turkish state banks halted use of a Russian payment system after Washington pressured Ankara not to act as a middleman for Moscow to evade US sanctions.

Halkbank, VakıfBank and Ziraat Bank suspended payments under the Mir system on Tuesday evening, according to a Bloomberg report confirmed by the Financial Times with a person familiar with the matter.

The decision to stop using the system comes a week after its two other operators in Turkey – private banks İşbank and DenizBank – also announced they were stopping payments through the network, which is a Russian equivalent of Mastercard and Visa.

While Ankara had always insisted that Mir was used by Russian tourists to pay for shopping and hotels, Western officials had expressed concern that it could be used as a potential backdoor for financing. illicit.

US Treasury guidelines warned that banks outside the United States entering into new or expanded agreements with the payment network operator “would risk supporting Russia’s efforts to evade US sanctions”.

The warning came amid growing concern in Washington and Brussels over President Recep Tayyip Erdoğan’s promises to deepen economic cooperation with Moscow even as he condemned Russia’s invasion of Ukraine.

Erdoğan previously hailed “serious progress” in expanding the use of Mir cards in Turkey. Two Turkish banks – DenizBank and Halkbank – joined the program after Vladimir Putin ordered the military assault on Ukraine in February.

Turkey, which is the only NATO member state not to have signed Western sanctions against Moscow, has always stressed that its banks will continue to deal with entities or individuals under sanctions.

But growing pressure from Washington — and the risks to Turkish banks deeply integrated into the Western financial system — seemed to prompt a rethink.

The decision by state banks to suspend payments from Mir came on the heels of intense lobbying of the government by senior executives of Turkey’s state lenders, according to a person familiar with their discussions, who feared risking their relationships vital foreign banks.

They have faced resistance from the Tourism Ministry, which is seeking to attract as many foreign visitors as possible to support Turkey’s struggling economy.

Russians were the second largest foreign tourist group in Turkey in the first eight months of the year, with more than 3 million tourists flocking to the country’s cities and beaches. Turkey is one of the few countries in the region to offer direct flights from Russia.

The decision to stop using Mir comes as the summer tourist season draws to a close.

Still, it was not immediately clear how the move would affect Russian holidaymakers and other Russians who fled to Turkey in the wake of the war in Ukraine and Putin’s resulting crackdown on dissent at home.

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