Turkey Faces Risks Acting as Sanctions ‘Safe Haven’ for Russians

Eclipse, a superyacht linked to sanctioned Russian oligarch Roman Abramovich, is docked in Marmaris, Turkey March 22, 2022. (Reuters)
Eclipse, a superyacht linked to sanctioned Russian oligarch Roman Abramovich, is docked in Marmaris, Turkey March 22, 2022. (Reuters)
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Turkey Faces Risks Acting as Sanctions ‘Safe Haven’ for Russians

Eclipse, a superyacht linked to sanctioned Russian oligarch Roman Abramovich, is docked in Marmaris, Turkey March 22, 2022. (Reuters)
Eclipse, a superyacht linked to sanctioned Russian oligarch Roman Abramovich, is docked in Marmaris, Turkey March 22, 2022. (Reuters)

Since Russia's invasion of Ukraine sparked a flurry of Western sanctions on Moscow, at least one oligarch and thousands of other Russians have arrived in Turkey, seen as a safe place to stay, invest and hold assets despite its NATO membership.

Acting as a safe haven raises risks for Turkey's government, banks and businesses that could face tough decisions and penalties if the United States and others ramp up pressure on Moscow with broader "secondary" sanctions.

Here is what is at stake:

Why is Turkey attractive to Russians?

Turkey has said Russian President Vladimir Putin's decision to invade Ukraine is unacceptable but opposes the sanctions on principle and is not enforcing them.

Turkey's economy, already battered by a currency crisis and soaring inflation, relies heavily on Russian oil, gas, trade and tourism.

Some 14,000 Russians have reportedly arrived in Turkey since the war began on Feb. 24, many carrying wads of cash due to blocks on their US credit cards and challenges in doing basic banking. Realtors say many are using cash and converted crypto currencies to buy property as a safe investment.

Roman Abramovich, one of several Russian oligarchs blacklisted by the West, has also visited Turkey and two of his superyachts worth a combined $1.2 billion docked at Turkish resorts last week. Oligarchs could invest more, sources familiar with private talks have told Reuters.

Turkish Foreign Minister Mevlut Cavusoglu said on Saturday Russian oligarchs and citizens were "of course" welcome and could do business in Turkey according to international law.

Can the safe haven last?

Western governments have already seized some oligarchs' assets, have frozen Russia's reserves and ousted it from the SWIFT banking system, and they could press Ankara to tighten loop holes. Analysts say they could impose secondary sanctions on those doing business with the main target, Russia.

"If the humanitarian tragedy persists and Putin has no intention of backing down, I think secondary sanctions are inevitable," said Hakan Akbas, founding partner of Istanbul-based Strategic Advisory Services, which deals with sanctions.

"The West will pay more attention to any potential loop-hole countries so they don't become safe havens," he said. "Ankara's hands would be tied... and it would inevitably have to take a tougher stance against Russia."

This could send a chill through Turkish banks and companies dealing with Russian clients or doing business abroad. In 2020, the US Treasury applied secondary sanctions on Turkey's Defense Industry Directorate, its chief and others over Ankara's purchase of Russian S-400 missiles.

Yet given Turkey's efforts to mediate between Moscow and Kyiv, it could avoid the sanctions crossfire. Another round of peace talks is due to take place in Istanbul this week.

Dutch Prime Minister Mark Rutte has welcomed Ankara's diplomatic role, while adding "we would very much like Turkey to implement all the sanctions".

How are banks and companies preparing?

Faced with a flood of new Russian customers, Turkish banks have resisted some deposit and transfer requests and ramped up compliance checks for fear of contravening sanctions.

This has frustrated some Russians. But it reflects caution across the sector that seeks to avoid a repetition of the years-long US prosecution of Turkish state lender Halkbank, which is accused of having helped Iran evade US sanctions.

The BDDK bank regulator said it has given no instruction to limit citizens of any country. But a senior banking source said the sanctions were nonetheless "perceived as a new risk" and firms had met several times to discuss it since the war began.

Akbas said big Turkish companies and conglomerates have more than $10 billion in assets in Russia, and Moscow is now pressing them to continue operations and pay workers or risk bankruptcy.

Many of them do far more business in the West and may have to make a "binary decision" whether to leave Russia as several big US and European brands have done, he said.

Any sanctions fallout could further bruise Turkey's reputation among foreign investors after years of unorthodox monetary policy and outflows.

That reputation took another hit last year when an international watchdog, the Financial Action Task Force, downgraded Turkey to a so-called grey list for failing to head off money laundering and terrorist financing.



To Get Their Own Cash, People in Gaza Must Pay Middlemen a 40% Cut

A destroyed branch of the Bank of Palestine in the Tal al-Hawa neighborhood of Gaza City is seen Wednesday, July 9, 2025. (AP)
A destroyed branch of the Bank of Palestine in the Tal al-Hawa neighborhood of Gaza City is seen Wednesday, July 9, 2025. (AP)
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To Get Their Own Cash, People in Gaza Must Pay Middlemen a 40% Cut

A destroyed branch of the Bank of Palestine in the Tal al-Hawa neighborhood of Gaza City is seen Wednesday, July 9, 2025. (AP)
A destroyed branch of the Bank of Palestine in the Tal al-Hawa neighborhood of Gaza City is seen Wednesday, July 9, 2025. (AP)

Cash is the lifeblood of the Gaza Strip’s shattered economy, and like all other necessities in this war-torn territory — food, fuel, medicine — it is in extremely short supply.

With nearly every bank branch and ATM inoperable, people have become reliant on an unrestrained network of powerful cash brokers to get money for daily expenses and commissions on those transactions have soared to about 40%.

"The people are crying blood because of this," said Ayman al-Dahdouh, a school director living in Gaza City. "It’s suffocating us, starving us."

At a time of surging inflation, high unemployment and dwindling savings, the scarcity of cash has magnified the financial squeeze on families — some of whom have begun to sell their possessions to buy essential goods.

The cash that is available has even lost some of its luster. Palestinians use the Israeli currency, the shekel, for most transactions. Yet with Israel no longer resupplying the territory with newly printed bank notes, merchants are increasingly reluctant to accept frayed bills.

Gaza’s punishing cash crunch has several root causes, experts say.

To curtail Hamas’ ability to purchase weapons and pay its fighters, Israel stopped allowing cash to enter Gaza at the start of the war. Around the same time, many wealthy families in Gaza withdrew their money from banks and then fled the territory. And rising fears about Gaza’s financial system prompted foreign businesses selling goods into the territory to demand cash payments.

As Gaza’s money supply dwindled and civilians’ desperation mounted, cash brokers' commissions — around 5% at the start of the war — skyrocketed.

Someone needing cash transfers money electronically to a broker and moments later is handed a fraction of that amount in bills. Many brokers openly advertise their services, while others are more secretive. Some grocers and retailers have also begun exchanging cash for their customers.

"If I need $60, I need to transfer $100," said Mohammed Basheer al-Farra, who lives in southern Gaza after being displaced from Khan Younis. "This is the only way we can buy essentials, like flour and sugar. We lose nearly half of our money just to be able to spend it."

In 2024, inflation in Gaza surged by 230%, according to the World Bank. It dropped slightly during the ceasefire that began in January, only to shoot up again after Israel backed out of the truce in March.

Cash touches every aspect of life in Gaza

About 80% of people in Gaza were unemployed at the end of 2024, according to the World Bank, and the figure is likely higher now. Those with jobs are mostly paid by direct deposits into their bank accounts.

But "when you want to buy vegetables, food, water, medication -- if you want to take transportation, or you need a blanket, or anything — you must use cash," al-Dahdouh said.

Shahid Ajjour’s family has been living off of savings for two years after the pharmacy and another business they owned were ruined by the war.

"We had to sell everything just to get cash," said Ajjour, who sold her gold to buy flour and canned beans. The family of eight spends the equivalent of $12 every two days on flour; before the war, that cost less than $4.

Sugar is very expensive, costing the equivalent of $80-$100 per kilogram (2.2 pounds), multiple people said; before the war, that cost less than $2.

Gasoline is about $25 a liter, or roughly $95 a gallon, when paying the lower, cash price.

Bills are worn and unusable

The bills in Gaza are tattered after 21 months of war.

Money is so fragile, it feels as if it is going to melt in your hands, said Mohammed al-Awini, who lives in a tent camp in southern Gaza.

Small business owners said they were under pressure to ask customers for undamaged cash because their suppliers demand pristine bills from them.

Thaeir Suhwayl, a flour merchant in Deir al-Balah, said his suppliers recently demanded he pay them only with brand new 200-shekel ($60) bank notes, which he said are rare. Most civilians pay him with 20-shekel ($6) notes that are often in poor condition.

On a recent visit to the market, Ajjour transferred the shekel equivalent of around $100 to a cash broker and received around $50 in return. But when she tried to buy some household supplies from a merchant, she was turned away because the bills weren’t in good condition.

"So the worth of your $50 is zero in the end," she said.

This problem has given rise to a new business in Gaza: money repair. It costs between 3 and 10 shekels ($1-$3) to mend old bank notes. But even cash repaired with tape or other means is sometimes rejected.

People are at the mercy of cash brokers

After most of the banks closed in the early days of the war, those with large reserves of cash suddenly had immense power.

"People are at their mercy," said Mahmoud Aqel, who has been displaced from his home in southern Gaza. "No one can stop them."

The war makes it impossible to regulate market prices and exchange rates, said Dalia Alazzeh, an expert in finance and accounting at the University of the West of Scotland. "Nobody can physically monitor what’s happening," Alazzeh said.

A year ago, the Palestine Monetary Authority, the equivalent of a central bank for Gaza and the West Bank, sought to ease the crisis by introducing a digital payment system known as Iburaq. It attracted half a million users, or a quarter of the population, according to the World Bank, but was ultimately undermined by merchants insisting on cash.

Israel sought to ramp up financial pressure on Hamas earlier this year by tightening the distribution of humanitarian aid, which it said was routinely siphoned off by militants and then resold.

Experts said it is unclear if the cash brokers’ activities benefit Hamas, as some Israeli analysts claim.

The war has made it more difficult to determine who is behind all sorts of economic activity in the territory, said Omar Shabaan, director of Palthink for Strategic Studies, a Gaza-based think tank.

"It's a dark place now. You don't know who is bringing cigarettes into Gaza," he said, giving just one example. "It's like a mafia."

These same deep-pocketed traders are likely the ones running cash brokerages, and selling basic foodstuffs, he said. "They benefit by imposing these commissions," he said.

Once families run out of cash, they are forced to turn to humanitarian aid.

Al-Farra said that is what prompted him to begin seeking food at an aid distribution center, where it is common for Palestinians to jostle over one other for sacks of flour and boxes of pasta.

"This is the only way I can feed my family," he said.