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payment from it will go through. In other words, payment chains are adapting to a new reality. “Before, the relationship was: client – Russian bank – foreign bank – client. Now there might be another three or five banks in the chain. But overall, it still works," the source said.
Turkey The situation with other countries is even less clear. After Biden’s order, Turkish banks tightened their approach. The biggest Turkish banks started to close correspondent accounts with Russian credit institutions, and ceased servicing payments under contracts agreed after the invasion of Ukraine. Turkish exporters also asked the authorities to exempt contracts with Russian firms from the legal requirement to repatriate foreign earnings, Turkish business publication Ekononim reported earlier this year. According to Ekononim, problems began with payments after US Secretary of State Anthony Blinken visited the country.
Turkish exports to Russia in February fell 33% y/y to $670mn, according to Turkish Trade Ministry data. “US dollar [payments] are getting worse, but rubles and lira are going through,” said a federal official.
UAE In the UAE, leading banks have restricted settlements with Russia and are beginning to close accounts for companies and individuals, business daily Vedomosti reported. Local banks have stopped accepting money from Russia, and have closed the accounts of companies owned by Russians. There are regular cases where transfers to an account are merely returned to the sender, according to Vedomosti. Several banks require explanatory documents for nearly every transaction, and it can take a long time to complete payments.
What’s the effect on Russia? Secondary sanctions limit Russia’s ability to use reserve currencies – US dollars, euros and pounds – for international payments. These currencies are easier to use for international trade because the more people use something, the more accepted it becomes. For example, 80% of cases in which the US dollar is used as the currency for an import transaction have nothing to do with the United States. Not only is it easier for exporters to pay in a currency that they can use as widely as possible, it’s also more profitable for countries with small markets to nominate prices for their goods in a reserve currency.
This article first appeared in The Bell
2.15 Russian business and consumer confidence
Consumer Sentiment Index up 6 pp in Q1 2024. "It is critical that growing demand of the population for purchases of goods and services was supported by development of the economy of the offer in key industries," Konstantin Tuzov noted.
Business sentiment improved significantly in March, cost growth slows. The results of monitoring of enterprises conducted by the Bank of Russia
36 RUSSIA Country Report April 2024 www.intellinews.com