Turkey faces risks acting as sanctions 'safe haven' for Russians
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[March 28, 2022]
By Jonathan Spicer
ISTANBUL (Reuters) - Since Russia's
invasion of Ukraine sparked a flurry of Western sanctions on Moscow, at
least one oligarch and thousands of other Russians have arrived in
Turkey, seen as a safe place to stay, invest and hold assets despite its
NATO membership.
Acting as a safe haven raises risks for Turkey's government, banks and
businesses that could face tough decisions and penalties if the United
States and others ramp up pressure on Moscow with broader "secondary"
sanctions.
Here is what is at stake:
WHY IS TURKEY ATTRACTIVE TO RUSSIANS?
Turkey has said Russian President Vladimir Putin's decision to invade
Ukraine is unacceptable but opposes the sanctions on principle and is
not enforcing them.
Turkey's economy, already battered by a currency crisis and soaring
inflation, relies heavily on Russian oil, gas, trade and tourism.
Some 14,000 Russians have reportedly arrived in Turkey since the war
began on Feb. 24, many carrying wads of cash due to blocks on their U.S.
credit cards and challenges in doing basic banking. Realtors say many
are using cash and converted crypto currencies to buy property as a safe
investment.
![](http://archives.lincolndailynews.com/2022/Mar/28/images/ads/current/atlantabank_lda_SFARM_2022.png)
Roman Abramovich, one of several Russian oligarchs blacklisted by the
West, has also visited Turkey and two of his superyachts worth a
combined $1.2 billion docked at Turkish resorts last week. Oligarchs
could invest more, sources familiar with private talks have told
Reuters.
Turkish Foreign Minister Mevlut Cavusoglu said on Saturday Russian
oligarchs and citizens were "of course" welcome and could do business in
Turkey according to international law.
CAN THE SAFE HAVEN LAST?
Western governments have already seized some oligarchs' assets, have
frozen Russia's reserves and ousted it from the SWIFT banking system,
and they could press Ankara to tighten loop holes. Analysts say they
could impose secondary sanctions on those doing business with the main
target, Russia.
"If the humanitarian tragedy persists and Putin has no intention of
backing down, I think secondary sanctions are inevitable," said Hakan
Akbas, founding partner of Istanbul-based Strategic Advisory Services,
which deals with sanctions.
"The West will pay more attention to any potential loop-hole countries
so they don't become safe havens," he said. "Ankara's hands would be
tied... and it would inevitably have to take a tougher stance against
Russia."
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![](../images/032822PIX/news_w45.jpg)
Eclipse, a superyacht linked to sanctioned Russian oligarch Roman
Abramovich, is docked in Marmaris, Turkey March 22, 2022. REUTERS/Yoruk
Isik/File Photo
![](http://archives.lincolndailynews.com/2022/Mar/28/images/ads/current/farmandhome_lda_SFARM_2022.png) This could send a chill through
Turkish banks and companies dealing with Russian clients or doing
business abroad. In 2020, the U.S. Treasury applied secondary
sanctions on Turkey's Defence Industry Directorate, its chief and
others over Ankara's purchase of Russian S-400 missiles.
Yet given Turkey's efforts to mediate between Moscow and Kyiv, it
could avoid the sanctions crossfire. Another round of peace talks is
due to take place in Istanbul this week.
Dutch Prime Minister Mark Rutte has welcomed Ankara's diplomatic
role, while adding "we would very much like Turkey to implement all
the sanctions".
HOW ARE BANKS AND COMPANIES PREPARING?
Faced with a flood of new Russian customers, Turkish banks have
resisted some deposit and transfer requests and ramped up compliance
checks for fear of contravening sanctions.
This has frustrated some Russians. But it reflects caution across
the sector that seeks to avoid a repetition of the years-long U.S.
prosecution of Turkish state lender Halkbank, which is accused of
having helped Iran evade U.S. sanctions.
The BDDK bank regulator said it has given no instruction to limit
citizens of any country. But a senior banking source said the
sanctions were nonetheless "perceived as a new risk" and firms had
met several times to discuss it since the war began.
Akbas said big Turkish companies and conglomerates have more than
$10 billion in assets in Russia, and Moscow is now pressing them to
continue operations and pay workers or risk bankruptcy.
Many of them do far more business in the West and may have to make a
"binary decision" whether to leave Russia as several big U.S. and
European brands have done, he said.
![](http://archives.lincolndailynews.com/2022/Mar/28/images/ads/current/charrons_bch_2022.png)
Any sanctions fallout could further bruise Turkey's reputation among
foreign investors after years of unorthodox monetary policy and
outflows.
That reputation took another hit last year when an international
watchdog, the Financial Action Task Force, downgraded Turkey to a
so-called grey list for failing to head off money laundering and
terrorist financing.
(Reporting by Jonathan Spicer; Additional reporting by Ebru Tuncay
and Can Sezer in Istanbul; Editing by Gareth Jones)
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