In December, the US Treasury Department imposed economic sanctions on foreign banks supporting Russian warfare. Since then, exports from Turkey to Russia have plummeted significantly, with Turkish banks severing financial relations with their Russian counterparts due to the sanctions.
The so-called secondary sanctions targeted banks in countries that had increased trade with Russia following the aggression against Ukraine. This led to a collapse in trade between Russia and these countries in the first quarter of the year.
For example, Turkey’s exports to Russia dropped by a third from the previous year to $2.1 billion. Exports of high-priority products from Turkey, critical for warfare but intended for civilian use, fell by 40% to $93 billion from the previous quarter. Russian companies are now resorting to smaller banks and alternative currencies due to fear of US sanctions.
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.