Russian President Vladimir Putin speaks as he attends the inauguration ceremony of a new gas pipeline “TurkStream” on January 8, 2020, in Istanbul. (Alexy Druzhinin /Sputnik /AFP)
US sanctions on Russia’s Gazprombank will complicate Turkey’s energy payments to Moscow, pushing Ankara to find alternative channels to complete the transactions.
The US Treasury last week designated Gazprombank and its six foreign subsidiaries over the Ukraine war, accusing the bank of being a conduit for payments to Russian soldiers. The sanctions include a wind-down period until 20 December.
However, unlike past US actions targeting Russian banks, this time Gazprombank will not have exceptions for energy transactions.
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Turkey imported more than 40 percent of its gas needs from Russia last year, paying billions of dollars.
“Sanctioning Gazprombank will definitely complicate payments for gas,” a former senior Turkish official familiar with the issue told Middle East Eye. “But I’m sure there will be some solutions, through other financial institutions or third parties.”
The former official added that some of the Turkish gas payments could be delayed for a while due to the sanctions but not for long.
Sohbet Karbuz, a prominent Paris-based energy expert, said the sanctions were primarily targeting European purchases of Russian gas.
In March 2022, Moscow demanded that countries hostile to Russia pay for gas supplies under a scheme that involves the conversion of hard currency into rubles. Buyers could open two accounts at Gazprombank, one in rubles and one in foreign currency.
“Such a move may push Russia to completely cut off gas supplies as a force majeure, dragging Europe into a crisis,” Karbuz told MEE. “But I don’t think there will be any issue that could block Turkey’s gas purchases.”
The sanctions against Gazprombank have already taken effect.
The Russian state news agency Tass reported that UnionPay cards issued by the bank automatically stopped working at ATMs and businesses in Turkey.
The Turkish banking industry has already been dealing with the sanctions since last December, when the US imposed secondary sanctions on financial transactions involving sanctioned Russian banks.
Turkish officials have been tabling proposals to address the issue, as Turkish banks have been overcomplying with the secondary sanctions, even blocking legitimate transactions allowed under exceptions out of an abundance of caution.
Erdogan and Putin discuss sanctions
Russian counterproposals, authorising only a Russian bank to handle the payments, didn’t sit well with Turkey, according to sources familiar with the matter.
The topic remained on the agenda for almost a year and was discussed during a bilateral meeting between Turkish President Recep Tayyip Erdogan and Russian President Vladimir Putin last month.
Erdogan told his counterpart at the top of the meeting that efforts to resolve the banking transaction issues were underway, as several ministers from both sides were working on the matter.
Aleksei V Erkhov, the Russian ambassador to Turkey, told a Turkish newspaper on Monday that US sanctions were disrupting trade with Ankara.
“The US and the European Union continue to cause a nightmare for the Turkish business world, which has suffered losses,” he told Ekonomim newspaper. “I think Russian-Turkish trade will decrease by the end of the year.”
Gokhan Yardim, a former general manager of Turkey’s state pipeline company Botas, said Turkey would still find a way to make its energy payments to Russia.
However, he reminded that Ankara’s two contracts with Moscow are set to expire in 2026.
