What difficulties does Russian business face when working with Turkey and the UAE?
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Trade with Turkey risks stalling due to financial problems. According to the Dunya newspaper, local companies are unable to receive remittances from Russia and close their export accounts, and banks are rejecting payments en masse. The country’s Ministry of Trade called the situation force majeure. Also, after banks in China, Turkey and the United Arab Emirates tightened requirements for compliance with anti-Russian sanctions, domestic oil companies are faced with delays in paying for fuel, writes Reuters. The topic will be continued by Alexander Mezentsev.
Problems with transfers between Moscow and Ankara have been observed since the beginning of the year. Banks are increasingly rejecting such transactions due to the threat of secondary US sanctions. Turkish companies must receive export earnings within six months.
But in current force majeure circumstances, the Ministry of Commerce may extend the period to two years. If the situation cannot be resolved in the near future, production volumes in the country will decrease and the unemployment rate will increase. Turkish business expects a slowdown in work with Russia, says Istanbul-based journalist Abdurrahman Kambur-oglu:
“There is a possibility that sanctions may be introduced against banks that carry out transfers and payments for trade turnover. And in this regard, lately there have been a lot of complaints from the Turkish side that businessmen cannot make payments with Russia or make transfers to Russian companies. This creates difficulties.”
Many banks in Turkey, China and the United Arab Emirates ask their clients to confirm that no individual or legal entity on the US SDN (Special Designated Nationals) list is involved in the transaction or is not the beneficiary of the payment, Reuters clarifies. For example, Turkey’s Ziraat and Vakifbank are still processing payments, but this can take up to several months. Meanwhile, Moscow and Ankara are discussing ways to solve the problem, Dmitry Peskov assured. However, some entrepreneurs have already stopped interacting with Turkey, Ararat Mardoyan, the founder of the Avtotaster company, told Kommersant FM:
“Banks that accept transfers from the seller in Turkey ask for more documents. The problem is that studying these documents takes a lot of time. Banks don’t say no. They simply delay payments on accounts, thereby complicating the work of the business.
We refused to work according to such a system, it is very risky, and we took a break. Because navigating financial resources is really very difficult.”
According to the Turkish Ministry of Trade, exports to Russia in February decreased year-on-year by a third – to $670 million. Imports from Russia decreased similarly. It amounted to $1.3 billion. For comparison, in February 2023 the figure reached $2 billion.
Serious problems with translations are also observed in other countries, confirms the founder of the 21 Shop chain of stores and the Zaporozhets Heritage brand, Mikhail Labakhua: “We encountered a similar situation a year and a half ago. The money arrives in Turkey, the bank says that it sees it, but then it cannot transfer it to the account of the final recipient, and the funds were not returned.
But we have the same problem now with both China and India. With India, at least something is starting to work out, it can be resolved through rubles and rupees, but it’s still all quite a big headache. And Russian banks have some lists of, say, Chinese financial organizations that, for example, have stopped accepting dollars altogether and only work with yuan. Partners have to go there, open a new account there, try some new moves.”
In February, Turkish exporters asked the authorities to make an exception for Russia and add it to the list of countries, in payments for exports with which it is not necessary to transfer money through a bank and declare the transaction, local media wrote. There are currently 33 countries on this list, in particular Belarus, Cuba and Moldova.
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