Turkey risks acting as a “safe haven” from sanctions for the Russians

ISTANBUL, March 28 (Reuters) – Since Russia’s invasion of Ukraine triggered a series of Western sanctions against Moscow, at least one oligarch and thousands of other Russians have come to Turkey, seen as a safe place to stay, invest and hold assets. despite its membership in NATO.

Acting as a safe haven increases the risks for Turkey’s government, banks and businesses that could face difficult decisions and sanctions if the United States and others increase pressure on Moscow with broader “secondary” sanctions.

This is what’s at play:

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Turkey has said Russian President Vladimir Putin’s decision to invade Ukraine is unacceptable, but it opposes sanctions in principle and is not enforcing them.

Turkey’s economy, already battered by a currency crisis and rampant inflation, relies heavily on Russian oil, gas, trade and tourism.

Some 14,000 Russians have reportedly arrived in Turkey since the war began on February 24, many with wads of cash due to blocks on their US credit cards and basic banking challenges. Estate agents say that many are using cash and converted cryptocurrencies to buy properties as a safe investment. Read more

Roman Abramovich, one of several Russian oligarchs blacklisted from the West, has also visited Turkey and two of his superyachts worth a combined $1.2 billion docked at Turkish resorts last week. The oligarchs could invest more, sources familiar with the private talks told Reuters.

Turkish Foreign Minister Mevlut Cavusoglu said on Saturday that Russian oligarchs and citizens were “of course” welcome and could do business in Turkey in accordance with international law.


Western governments have already seized the assets of some oligarchs, frozen Russia’s reserves and kicked it out of the SWIFT banking system, and could pressure Ankara to close the loopholes. Analysts say they could impose secondary sanctions on those doing business with the primary target, Russia.

“If the humanitarian tragedy persists and Putin has no intention of backing down, I think secondary sanctions are inevitable,” said Hakan Akbas, a founding partner of Istanbul-based Strategic Advisory Services, which deals with sanctions.

“The West will pay more attention to any potential loophole 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.”

This could send a chill down the spine of Turkish banks and companies dealing with Russian clients or doing business abroad. In 2020, the US Treasury applied secondary sanctions to Turkey’s Defense Industry Directorate, its head and others for Ankara’s purchase of Russian S-400 missiles. Read more

However, given Turkey’s efforts to mediate between Moscow and kyiv, it could avoid the crossfire of sanctions. This week another round of peace talks will take place in Istanbul. Read more

Dutch Prime Minister Mark Rutte welcomed Ankara’s diplomatic role, adding that “we would very much like Turkey to implement all sanctions.”


Facing a flood of new Russian clients, Turkish banks have resisted some deposit and transfer requests and increased compliance checks for fear of breaching sanctions.

This has frustrated some Russians. But it reflects caution across the sector seeking to avoid a repeat of the US prosecution of Turkish state lender Halkbank, accused of helping Iran evade US sanctions. Read more

Banking regulator BDDK said it has not given instructions to limit citizens of any country. However, a senior banking source said the sanctions were “perceived as a new risk” and that the companies had met several times to discuss it since the war began.

Akbas said large Turkish companies and conglomerates have more than $10 billion in assets in Russia, and Moscow is now pressuring them to continue operations and pay workers or risk bankruptcy.

Many of them do much more business in the West and may have to make a “binary decision” about whether to leave Russia as several big American and European brands have done, he said. Read more

Any fallout from the sanctions could further damage Turkey’s reputation among foreign investors after years of unorthodox monetary policy and capital outflows.

That reputation took another hit last year when an international watchdog, the Financial Action Task Force, downgraded Turkey to a so-called gray list for failing to prevent money laundering and terrorist financing. Read more

(This story is reintroduced with additional reporting credit)

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Reporting by Jonathan Spicer; Additional reporting from Birsen Altayli, Ebru Tuncay and Can Sezer in Istanbul; Edited by Gareth Jones

Our standards: The Thomson Reuters Trust Principles.

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