The dispute continues between those who want to reward Turkey and those who want to condemn it because of its contradictory positions on the Russia-Ukraine war.
Last week, the Wall Street Journal (WSJ) published a detailed article by Jared Malsin and Elvan Kivilcim, titled: “Superyachts, Seaside Apartments and Suitcases Full of Cash: Russians Pour Money Into Turkey.”
The WSJ reports that as a result of the sanctions imposed by the West on Russian banks and businesses, tens of thousands of Russians have fled to Turkey with suitcases full of money, superyachts, private jets and other assets. “Many left carrying hundreds or thousands of dollars in cash because of capital controls that the Russian government imposed,” reported the WSJ. The Russians are buying houses and other properties in Turkey, taking advantage of the law that allows foreigners to become Turkish citizens if they invest at least $250,000. Many Russians are able to circumvent Western sanctions by transferring their money from Russian to Turkish banks and converting their rubles to Turkish liras or other currencies. All NATO member countries, with the exception of Turkey, have imposed strict sanctions on Russia, preventing its citizens from wiring their money out of the country, blocking Russian Airlines from flying to western countries, and confiscating the oligarchs’ superyachts and private jets. Refusing to impose sanctions on Russia, Turkey is trying to revive its bankrupt economy by generating desperately-needed funds.
Fleeing Russians are able to avoid Western sanctions and capital controls imposed by Russia on its citizens through “Russian cash transfer companies that operate in Turkey, cryptocurrencies and simply carrying thousands of dollars in cash through airports,” according to the WSJ. The Turkish government has come up with the lame excuse that it will allow the transfer of Russian funds to Turkey as long as “the money is legal.” Such scrutiny, if it ever existed, very quickly disappeared, ignoring the requirement that foreigners obtain a residency permit before being allowed to open a bank account. According to the WSJ, “at a single branch of one state-owned bank in Istanbul, Russians have opened more than 600 accounts in recent weeks.”
The WSJ reported that “Turkey’s central bank took in about $3 billion in just two days in mid-March… That money was likely largely composed of deposits from Russians, said Omer Gencal, an economist and former executive at HSBC Turkey and other major Turkish banks.”
Gül Gül, the chief executive of Istanbul real-estate company Golden Sign, told the WSJ: “the newly arrived Russians are buying as many as four apartments at a time, usually with cash, in order to invest the $250,000 required for citizenship. ‘Currently, out of 10 flats [apartments] we sell, six or seven are bought by Russians, said Ms. Gül. They are mostly businesspeople, wealthy ones, some of them oligarchs.’”
Russian oligarch Roman Abramovich moved two of his superyachts to Turkish ports in recent weeks. Former Russian President Dmitry Medvedev docked his 74-meter-long (249 ft.) vessel called Universe in Istanbul last week, according to the WSJ.
Furthermore, the WSJ reported that the “search-engine company Yandex, classified-ad site Avito, commercial bank Tinkoff and software firm DataArt collectively had more than 1,000 workers fly to Turkey. About 900 Yandex workers flew to Turkey shortly after the beginning of the war, though around 300 of them have since left.”
Visa and Mastercard’s decisions to shut down operations in Russia have prompted Russians to use “the Russian Mir payment system, which works at certain locations in Turkey. ‘We accept Mir’ signs have begun cropping up in grocery stores around Istanbul,” the WSJ wrote.
“Middle-class Russians have mostly brought a few thousand dollars at a time, either in cash or by using Russian wire-transfer companies that continue to operate in Turkey. One popular service is KoronaPay, which allows people to wire money out of Russia and withdraw money in Turkey and a range of other countries. The company allows transfers worth more than 15,000 euros, equivalent to $16,400, as long as customers verify their source of income, according to the company’s website,” reported the WSJ. “Volkan Celikyurek, a money changer in Istanbul’s Laleli neighborhood, which is frequented by Russian traders and one of the only areas where exchange offices buy and sell rubles,” told the WSJ, “I bought at most 100,000 rubles at a time. But there are those who bought millions.”
In the meantime, Turkey’s economy is benefiting from the flow of Russian money, while its hypocritical condemnation of Russia is winning dividends from western countries. The UK government just lifted the restrictions it had imposed on exporting weapons to Turkey. Turkish Foreign Minister Mevlut Cavusoglu announced on April 7 that Turkey is interested in “cooperating with the UK in important defense projects, including warplanes, warships and aircraft carriers.” Cavusoglu also announced that Turkey is discussing with Canada the resumption of the purchase of camera systems for the Turkish Bayraktar armed drones, suspended after the 2020 Artsakh war.
Amazingly, the Biden administration, instead of punishing Turkey for its sanction-busting schemes, wants to reward it by indicating that selling Turkey F-16 fighters is in the best interest of the United States and NATO. Nevertheless, Congress is opposed to the sale. Over 50 members of Congress signed a letter in February urging the Biden Administration to reject the Turkish request to buy 40 F-16 jets and upgrade 80 other jets already in Turkey’s possession. The congressmen cited Turkey’s purchase of the Russian S-400 missile systems and the wholesale violation of human rights as the reasons for opposing the sale. Selling F-16 jets to Turkey would “more likely lead to further death and destruction in the region at the hands of Erdogan’s military,” the lawmakers wrote.
It remains to be seen how long Turkey can play its deceptive game on both sides of the fence in the Russia-Ukraine war.