FT: US, EU step up pressure on Türkiye over Russia sanctions

The US and EU are stepping up pressure on Türkiye to crack down on Russian sanctions evasion amid concerns that the country’s banking sector is a potential backdoor for illicit finance.

The US is focusing on Turkish banks that have integrated into Mir, Russia’s domestic payments system, two western officials involved in the plans told the Financial Times, as Brussels prepares a delegation to express its concerns to Turkish officials directly.

“You’re going to see us kind of focus on financial sector evasion,” said the first western official. “We’ll send a message very clearly that, for example, third-country financial institutions should not be interconnecting with the Mir payment network because, you know, that carries some sanctions- evasion risks.”

“We need to close loopholes,” according to the second official, involved in this month’s talks between the EU and US on sanctions enforcement, citing Türkiye as the major target.

Türkiye’s president Recep Tayyip Erdoğan, whose country has been a Nato member since 1952, has pursued what he calls a “balanced” approach to the Ukraine conflict. His refusal to sign up to sanctions against Russia and a recent pledge to deepen economic cooperation with Moscow have alarmed his western allies. Erdoğan, who will meet Putin on Friday, said last month that there is “serious progress” on expanding Mir in Türkiye.

Five of Türkiye’s largest banks, Vakıfbank, Ziraat Bank, İş Bank, DenizBank and Halkbank, are members of the Mir payment system, which was developed by Russia’s central bank as a domestic alternative to Visa and Mastercard.

Türkiye’s foreign ministry said that while Ankara had a longstanding policy of only implementing UN-backed sanctions, “we have also been equally firm in our policy of not allowing Türkiye to become a channel to evade sanctions”.

Wally Adeyemo, deputy US treasury secretary, wrote to Turkish businesses last month warning them of “Russia’s attempts to use your country to evade sanctions” and the risks of “conducting transactions with sanctioned Russian-based entities”.

Rolled out in waves of measures in the initial weeks after Russia’s invasion, western sanctions have sought to cut off Russia’s biggest banks, energy and defence companies and hundreds of senior officials and richest businessmen from the global market.

The EU and US will also target entities assisting Moscow with processing Russian export revenues or facilitating imports of industrial or defence products banned under western sanctions, the three officials said.

Other measures under discussion include targeting more individuals involved in Russia’s software, e-commerce and cyber security industries, two officials said.

In addition to Türkiye, the crackdown on potential back doors for sanctions evasion is targeting countries in the Caucasus, Central Asia and the Gulf, officials said. “Russia will try every door. And every country needs to be mindful that we will track that and talk to them,” said James O’Brien, sanctions coordinator at the US state department.