Russian nationals living in Turkey are racing to open new bank accounts over fears they will lose their savings due to Western sanctions against Russia amid the invasion of Ukraine.
There has been a significant increase in demand from Russian citizens seeking to open bank accounts in Turkey in recent weeks, according to local reports.
That demand will only increase further as more sanctions are levied against the Kremlin, experts believe.
In an effort to prevent the withdrawal of funds due to sanctions imposed on the country, Russia’s central bank has temporarily suspended money transfers abroad.
The bank has also set a $10,000 limit on the amount that can be withdrawn from citizens’ foreign currency accounts until Sept. 9.
Anything above this can be withdrawn in rubles at the market rate on the day of the withdrawal.
Many Russian nationals have arrived in Turkey—as well as neighboring countries Georgia and Armenia—in recent weeks to avoid having to undergo compulsory military service, and amid fears that sanctions will worsen the Russian economy.
Others have simply lost their jobs or are financially struggling amid the country’s economic hardship, while some have cited their opposition to Russian President Vladimir Putin’s invasion of Ukraine as a reason for leaving.
The European Union, United Kingdom, United States, and Canada have shut down their airspace to Russian airlines amid the ongoing invasion, but Turkey—which is not officially part of the EU but is one of its main partners—has not yet done so.
Meanwhile, the West has dealt Russia a string of sanctions targeting oligarchs with close ties to Putin, as well as the country’s energy and transport sectors and its export controls and visa policy.
When asked on March 13 whether Turkey—which has established close relations with Russia in an effort to find a political resolution to the war in Syria—would join Western nations in imposing sanctions on Russia, Turkish Foreign Minister Mevlut Cavusoglu declined, according to Russian state-owned news agency Tass.
“We believe that the sanctions will not resolve the problem,” Cavusoglu said.
Speaking at a diplomatic forum in Antalya, Cavusoglu cited Turkey’s airspace as an example, stating that “in accordance with the Montreux Convention we have no power to close it.
“This is a legal obligation.”
Meanwhile, Turkey’s President Recep Tayyip Erdogan has continued his diplomatic efforts to deescalate the conflict in Ukraine and called on both sides to come to an agreement regarding a ceasefire.
Ankara also continues to send humanitarian aid to Kyiv and has shown its support for Ukraine’s territorial integrity and sovereignty.
Given Turkey’s neutral stance on the invasion, Russians who would typically visit the country during the summer holidays have been flocking to Turkey to stay indefinitely.
Dozens of Russian natives have joined the numerous ex-pat groups in big cities such as Istanbul and Ankara in recent weeks, asking locals for help and guidance with everything from getting a residency permit to set up a bank account.
Tim Ash, a senior emerging markets strategist at BlueBay Asset Management in London, told Ahval (an Emirati-funded online news website that reports solely on Turkey) that Western nations need a “clear-eyed approach to Turkey if it is going to succeed in cutting off Russia from financial flows, markets, and trade.”
“It is pretty clear that Russia will, and indeed is, using Turkey,” Ash said, adding that the West needs to make it clear to Turkey that breaking sanctions will have consequences.
Despite the actions of the Turkish government, Ash said he believes most financial institutions within Turkey, particularly the private banks, will “take Western sanctions warnings seriously.”
“They are highly professional, have strong risk management, and understand the consequences of getting caught breaking Western sanctions,” Ash said of private banks in Turkey.
“But at the margin, some will try and get around sanctions.
“They need to be encouraged to adhere to sanctions.”
NATO member Turkey, which shares a maritime border with Ukraine and Russia in the Black Sea, isn’t the only country that has seen an increase in the number of Russian nationals looking to open bank accounts in the country.
The Moscow branch of a Chinese state bank has also seen a surge in inquiries from Russian firms wanting to open new accounts, Reuters reported.