(Bloomberg) -- President Recep Tayyip Erdogan is set to meet top officials to discuss alternatives to Russian Mir cards after private banks pulled out of the payment system for fear of being penalized by the US Treasury.
Two Turkey Banks Suspend Use of Russian Mir Cards After US Warns
Turkiye Is Bankasi AS, or Isbank, and Denizbank AS have already suspended participation in Mir, leaving Turkish state lenders in limbo over its use according to officials familiar with the matter, who asked not to be named, citing sensitive internal discussions.
Mir is popular among Russian visitors and brings foreign income to Turkey during the tourist season.
Erdogan said he will discuss “alternatives” to Mir with his government’s ministers on Friday, according to comments to Turkish reporters in New York and reported by Turkish news stations. “We will hold a meeting and make our ultimate decision.”
It was unclear as of Thursday afternoon whether three state-run Turkish lenders -- Turkiye Halk Bankasi AS, also known as Halkbank, TC Ziraat Bankasi AS and Turkiye Vakiflar Bankasi TAO -- were still actively using the system. The banks didn’t return multiple requests for comment made on Thursday.
Turkish banks turning away from lucrative financial links with Russia following the US threat would be one of the most dramatic examples to date of the power of US secondary sanctions to force countries, including those that have refused to join the primary restrictions, to fall into line.
The US Treasury’s Office of Foreign Assets Control, or OFAC, last week warned financial institutions against entering new agreements or expanding existing ones with the Russian operator of Mir cards.
Erdogan has had to perform a delicate balancing act since Russia’s invasion of Ukraine began in February, meeting and negotiating with Putin while Turkey helps to arm Ukraine as it defends itself against the invasion. He’s positioned Turkey as a mediator, and helped secure deals to resume grain shipments from Ukraine’s Black Sea ports and more recently, for prisoner exchanges between the warring sides.
Erdogan Seeks Out Russian Help for Economy Under Pressure (1)
He’s also publicly defended Putin against sanctions and urged nations not to “underestimate” Russia.
Erdogan’s relations with Ukraine, including the supply of drones, have rankled Moscow. But Ankara remains a key partner for Putin as international sanctions shutter other routes for trade, travel and investment.
(Updates with Erdogan quote in fourth paragraph)
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