“This is the clash between the rule of law and the law of arms, between democracy and autocracy.” The words spoken by the President of the European Commission von der Leyen, on the fifth day of the invasion of Ukraine by the Russian Federation, not only interpreted the horror that Kiev was experiencing in those days, but also the scenario that was about to take shape. : what would have seen the international community forced to make choices to defend what is dearest to it.
In the days immediately following the invasion, an alliance made up of the European Union, the United States, the United Kingdom, Canada, Australia and Japan adopted unprecedented sanctions against Russian state entities, financial institutions and the Kremlin elite and its oligarchs. believed to be jointly responsible for Putin’s criminal actions. To reinforce this action was added the establishment of the multilateral task force REPO (Russian Elites, Proxies, and Oligarchs), with the aim of coordinating the efforts of the allies to enforce the sanctions imposed. The compactness of democratic states in responding with such sanctions to the crimes of the Kremlin has generated, without our surprise, criticism from countries led by authoritarian regimes. After all, that the sanctions are feared by the autocrats is nothing new, and that they know how to ally to offer the sanctioned an escape route, either.
Turkey is the prime example. Although he is a member of NATO, he has never hidden his “critical” position regarding the sanctions against Russia. Foreign Minister Mevlüt Çavuşoğlu initially limited himself to stating that Ankara did not intend to join international sanctions and then go further by even welcoming sanctioned Russian individuals to his country, both as tourists and as investors. He then hinted that Turkey would be a safe haven for Russian money. “Presenting itself as a neutral actor or a fair mediator between the two sides has been Ankara’s attitude at the beginning of almost every crisis in the past decade,” said Hasim Tekineş, a former Turkish diplomat. “But, when the crisis degenerates, Turkish President Erdoğan bets and takes the side of who could offer him an advantage, as he did in Syria, Libya and Qatar”.
Ankara has already shown, in the past, that it takes the side of those hit by international sanctions, helping them to evade them and then gain, as in the United States-Iran case. Between 2012 and 2016, Turkish state bank Halkbank helped Iran evade US sanctions by secretly transferring $ 20 billion in funds reserved for the government of Tehran.
Several clues suggest that even today Turkey has a similar plan in mind for Russia. The pro-Erdoğan columnist Abdulkadir Selvi wrote on March 8 that the Turkish president had suggested to Putin, in the course of a phone call, the creation of a trilateral trading structure between Russia, Turkey and China that would allow trading in gold, rubles , lire and yuan and thus circumvent the sanctions on Russia.
To support this thesis are the same sanctioned Russian oligarchs, who already see Turkey as a safe haven. For example, the businessman and former KGB agent Igor Sechin, who allegedly told the captain of his superyacht, now seized following EU sanctions, to leave the French coast and sail to Turkey as quickly as possible. Even the British media report that the luxury superyacht of the well-known oligarch Roman Abramovich, on which the mystery of a possible poisoning hovers in these days, has been spotted off the Turkish coast in recent weeks, while last month it would have been seen in Istanbul. even his private jet.
Concern about a Turkey ready to help Russia evade sanctions therefore seems well founded. Both the country’s real estate and financial markets have seen significant growth in Russian buyers in recent weeks. Speaking to Voice of AmericaTimothy Ash, a journalist and emerging markets analyst based in London, said: “We have been told of an increase in requests for new bank accounts in Turkey by Russians, presumably to try to circumvent some of the problems that are likely to lie. meeting “. Analysts’ attention is also focusing on Russian companies seeking to export or trade with Russia that are allegedly reselling themselves as Turkish entities.
After all, Turkey is in dire need of foreign currency. In an effort to protect the Turkish lira, it squandered its reserves, reaching their lowest level since 2002, standing at $ 8.63 billion in December 2021. The government does not have the political will to fight illicit money. On the contrary, needing $ 200 billion by 2022 to repay its external debt, it welcomes it regardless of source. The goal is to attract foreign currency and increase the amount of money in the country’s financial system and for this the ruling Party of Justice and Development (AKP) for years, has enacted the tax amnesty laws in 2008, 2013, 2016 , 2018 and 2019. The deadline of the 2019 law has been extended several times, and will be in effect until 30 June 2022.
Under this rule, which is similar to the previous ones, all money, gold, foreign currency, securities and other previously undeclared capital market instruments held abroad or in Turkey will be considered legitimate if transferred in Turkey or if the tax authority will be informed of their existence by 30 June 2022. The owners will not be required to provide any explanation as to the origin of the assets and will not be subject to tax controls in relation to the declared assets. This amnesty is so extensive that it even eliminates any tax on goods brought in from abroad. Money can also be carried in a suitcase.
A scenario that becomes even more worrying when we consider the ineffectiveness of the due diligence mechanisms of the Turkish banking system – Turkey is on the gray list of the Financial Action Task Force, an intergovernmental organization aimed at combating money laundering, terrorist financing. and the financing of the proliferation of weapons of mass destruction – and the institutional weakness of regulators.
In Turkey, the Banking Regulatory and Supervision Agency (BDDK) and the Financial Crimes Investigation Board (MASAK) are primarily responsible for the regulation and supervision of financial institutions. The MASAK has the task of combating money laundering. However, the institutional capacity and independence of these two bodies have been weakened in recent years due to the government’s aversion to bureaucracy. The recent statement by the finance minister, Nurettin Nebati, during a meeting with foreign investors, leaves no room for doubt: «The thing I least like is the difficulty that investors face due to legislation and bureaucracy. We will do away with the red tape and change the legislation. On this, we are already advancing ».
By thus taking advantage of Turkey’s economic vulnerabilities and lax laws, Russian oligarchs can secure their money in the country’s financial system, without paying any taxes or facing legal consequences. It will be enough to find a facilitator in the place, which can be any natural or legal person based in Turkey.
Certainly, a Turkey that offers a way out for individuals affected by international sanctions because they are linked to the atrocious crimes of the Kremlin can no longer be said to be impartial. He chose to stay with the other regimes, that is, on the side of the autocracy. In this sense, Ukraine will have to be cautious in the negotiations: Russia has a lot of influence over Turkey and it is unlikely that Turkey will be able to act as a fair and neutral mediator.
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