Reuters: US Sanctions Against Moscow Disrupt Turkey-Russia Trade

Reuters reported on Monday, February 19, citing seven informed sources, that the US warning of sanctions against financial companies trading with Russia has disrupted the trade between Turkey and Russia. The White House announced on Friday, December 22, that President Joe Biden signed a new executive order imposing severe sanctions on financial institutions that assist in funding Russia's war machine. One source told Reuters that this executive order does not explicitly target Russia's energy sector to avoid a sensitive political spike in gasoline prices in the US, but it has complicated some of Turkey's payments for Russian crude oil as well as payments from Russia for a range of Turkish exports. Russia is the largest exporter of crude oil and diesel to Turkey, selling about 9 million tons of crude oil and nearly 10 million tons of diesel to Turkey in the 11 months leading up to October this year. An informed source said that Russian oil exporters have not received any payments from Turkey for two to three weeks. A source from the Turkish oil industry stated, 'Although the focus is not on oil imports and it has not affected daily operations, payments have faced difficulties since December.' The Turkish Treasury declined to comment on this matter. Ankara, despite criticizing Russia's invasion of Ukraine, has opposed Western sanctions against Moscow and has maintained its relations with both Moscow and Kyiv. The Kremlin announced on February 1 that it is aware of the tightening of Turkish banks with Russian clients due to what it called the 'aggressive' pressure from the US and is working with Turkey to find a solution. The head of the Russian Central Bank said on Friday that there are further problems related to settlements in foreign trade transactions. One Turkish banker stated that banks have implemented 'very precise' procedures regarding sanctions to ensure that the section overseeing compliance with sanctions in these banks reviews all transactions. A senior US State Department official told Reuters that it is encouraging that Turkish banks are reviewing existing banking transactions with Russian clients and adopting procedures to ensure compliance with sanctions. He emphasized, 'Foreign financial institutions are responsible for ensuring that they refrain from transactions that benefit the Russian military or facilitate circumvention of sanctions.' This official stated, 'We had comprehensive discussions with our Turkish partners last year. We will review the January trade data as soon as it becomes available and look forward to continuing these discussions.' An informed source told Reuters that Turkey's machinery exports to Russia have been halted due to similarities with military equipment. Since the beginning of the Russian forces' invasion of Ukraine on February 24, 2022, the international community, led by the US, has imposed extensive sanctions on Russia and provided significant financial and military assistance to Ukraine. As a result of this invasion, Finland and Sweden officially requested to join NATO, with Finland's membership being approved and Sweden on the verge of joining this US-led defense pact. EU members are nearing an agreement to approve the thirteenth sanctions package against Russia.