In December, the US Treasury Department imposed economic sanctions on banks financing Russia’s warfare. Since then, exports from Turkey to Russia have plummeted, as banks severed financial relations due to secondary sanctions targeting countries with increased trade with Russia since the aggression against Ukraine.
Turkey’s exports to Russia dropped by a third from the previous year to $2.1 billion in the first quarter of 2021. High-priority products fell by 40% to $93 billion from the previous quarter, critical for warfare but intended for civilian use. Russian companies are now resorting to smaller banks and alternative currencies due to fear of US sanctions, causing a significant shift in Russia’s trade practices.
Experts believe that the drop in war-related exports is a result of banks’ fears of potential sanctions. The US can track dollar transactions and penalize banks working with companies tied to warfare. As a result, Russian companies are increasingly using rubles for trade, with the share of exports paid in rubles rising from 15% to 40%.
The use of rubles in imports has also increased, causing a significant shift in Russia’s trade practices. This change is attributed to the sanctions imposed by the US on foreign banks aiding Russian warfare.
