Turkish State Banks Set to Exit Russia’s Mir on US Warning

Turkish state banks are planning to exit a payment system used by Russians, a dramatic example of how US secondary sanctions are forcing countries to distance themselves from Moscow.

Turkiye Halk Bankasi AS, also known as Halkbank, TC Ziraat Bankasi AS and Turkiye Vakiflar Bankasi TAO on Tuesday made the decision to pull out of Russia’s Mir cards, a senior Turkish official said, asking not to be identified because the information isn’t public.

Turkey’s Ministry of Treasury and Finance declined to comment.

The lenders’ exit comes after President Recep Tayyip Erdogan held a meeting with Treasury and Finance Minister Nureddin Nebati last week to discuss alternatives to Mir. Turkish state banks turning away from lucrative financial links with Russia following the US threat is 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.

Turkiye Is Bankasi AS and Denizbank AS, two Turkish private lenders, were the first to suspend participation in Mir last week. Mir cards are popular among Russian visitors and bring foreign income to Turkey during the tourist season.

US Warning

The US Treasury’s Office of Foreign Assets Control, or OFAC, 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 Russia’s Vladimir Putin, while Turkey helps to arm Ukraine as it defends itself against the invasion.

Erdogan has 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.

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.