Turkiye banks abandon MIR payment system

Due to intense pressure and the prospect of sanctions from the United States, Turkish institutions have fully stopped facilitating transactions through the Russian payment system MIR.

Turkiye Halk Bankas, TC Ziraat Bankas, and Turkiye Vakflar Bank were reportedly the last three banks in Turkiye to stop accepting MIR cards; as a result, no banks in Turkiye are currently accepting MIR cards, according to the Turkish station NTV. They made that choice a week after the two largest private banks, Isbank and Denizbank, did the same.

The US Treasury’s August warning of possible sanctions against enterprises in Turkey and other nations if they continue to transact with Russia economically led directly to the entire cessation of the usage of the payment system. The Treasury claims that aiding the MIR system “would risk supporting Russia’s efforts to evade US sanctions”

Turkish President Recep Tayyip Erdogan spoke last week with his senior finance officials about alternatives to MIR before the banks’ resolutions, and they had already spoken with their Russian counterparts. According to reports, this week or shortly thereafter, the Turkish government will make its official decision on the topic known.

Responding to the decision, Kremlin spokesman, Dmitry Peskov, noted that “It’s clear that banks and economic operators are under the strongest possible pressure from the United States and they are threatened with secondary sanctions on the banking system. And this decision, of course, was made under this unprecedented pressure”.

Ankara has maintained and strengthened ties with Moscow throughout Russia’s ongoing invasion of Ukraine, opposing the attack and making efforts to serve as a mediator. The facilitation of the MIR payment system was a crucial element of that after the Russian economy was shut off from the global Western SWIFT payment system. The ties between both countries have grown significantly in the economic sector.

Through Turkiye, Belarus, and other nations in central Asia and Latin America, Russian firms and residents have been able to operate financially with worldwide markets and get over Western sanctions over the previous seven months thanks to this cooperation.

The Turkish banks’ move is a significant turning point since it demonstrates the weight of Washington’s increased pressure and scrutiny, especially because Ankara did not take part in imposing sanctions against Moscow until now. Armenia, Belarus, and Kyrgyzstan are some of the few nations still supporting the MIR system after similar moves by Kazakhstan, Uzbekistan, and Tajikistan to likewise halt its usage.

The abandonment of MIR in Turkiye is anticipated to have an impact on both the Russian population already present there, which has significantly increased since the invasion of Ukraine, as well as the recent influx of Russians fleeing their country as a result of the Kremlin’s announcement of a partial mobilisation of reserves, which led to a conscription drive across Russia.