Banks in countries that trade with Russia are increasingly delaying or disrupting payments for fear of secondary sanctions. This makes it difficult and sometimes impossible to conduct transactions, particularly with China and India. This was reported by Bloomberg ,and UNN .
Details
New U.S. restrictions imposed in June to cut off support for the Kremlin's war against Ukraine have put local banks in countries that trade with Russia at higher risk of so-called secondary penalties, increasingly delaying or disrupting payments to and from places like China and Turkey. This makes it difficult, if not impossible, to conduct transactions, in particular with China, which is arguably Russia's most important economic partner since the start of the war in 2022
According to a source in the Russian government, there are problems with the transfer of profits from India's other key trading partner. Profits have declined since the first years of the war, and they have not been fully resolved because the rupee is not fully convertible and transactions with third countries are expensive.
It is noted that the difficulties threaten to disrupt Russia's trade with economic partners on which it has relied after the European Union and the United States imposed sanctions.
Imports to Russia from China have begun to grow again after a drop in volumes when the US initially threatened foreign banks with fines in December, but the latest move threatens to seriously complicate the situation. In many cases, transactions with China are only possible through agents in the former Soviet republics. Under these agreements, foreign currency, including the yuan, does not enter Russia. While Chinese clients pay in yuan to agents in third countries, exporters often receive rubles in Moscow
Also, in the case of India, the pressure on banks due to the threat of sanctions is compounded by the fact that the rupee is not fully convertible. When trade between the two countries surged after Russia invaded Ukraine, it accumulated billions of dollars in rupees in India.
To allow Russia to use the accumulated rupees, the Reserve Bank of India in July 2022 proposed rules under which the funds can be invested in projects or Indian securities, as well as adjust purchases of goods and services in the future. officials with direct knowledge of the details. Russia typically buys smartphones and other electronic goods, chemicals and pharmaceuticals, food, agricultural tools, and textiles from India
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