Sanctions - The Times Of Central Asia

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Banks Suspend Transfers between Kyrgyzstan and Russia

More than a dozen banks in Kyrgyzstan have suspended money transfers to Russia to avoid falling under secondary sanctions, which could lead to blocked operations and loss of access to international financial markets. The list of banks involved includes large and regional institutions. By suspending transfers, the banks aimed to reduce risks associated with international payment systems such as SWIFT, which can be used to pressure financial institutions linked to Russia. The situation became more complicated after several Western countries began to monitor financial transactions related to Russia and apply sanctions to banks that continue such transactions. Nevertheless, some banks in Kyrgyzstan have found ways to maintain financial flows between the two countries by using transfers that are less dependent on international systems. For example, Optima Bank and Aiyl Bank employ alternative systems that are not subject to Western sanctions. Inter-country remittances play an essential role in the Kyrgyz economy, contributing to economic stability and supporting the well-being of many families. The imposition of restrictions could significantly impact the country, especially since numerous households in Kyrgyzstan depend on remittances from Russia for a significant portion of their income. In June, several banks in Kyrgyzstan suspended work with Russian money transfer systems amid the expansion of U.S. sanctions. At the time, Mbank explained that the temporary restriction was caused by “volatility of the exchange rate and possible sharp fluctuations in the currency market.” In addition to MBank, restrictions were imposed by Doscredobank, KICB, Keremet Bank, Kompanion Bank, RSK Bank, KCB Bank, and Bai-Tushum Bank, but later lifted by some to resume accepting transfers from Russia.

Russia Politics Sanctions International Transit

Kazakh Deputy Prime Minister Zhumangarin: Astana Will Not “Blindly Follow” Anti-Russian Sanctions

In an interview with Bloomberg, Kazakhstan's Deputy Prime Minister and Minister of Trade and Integration, Serik Zhumangarin said the country does not intend to “blindly follow” Western sanctions against Russia if they harm Kazakhstan's economy. According to Zhumangarin, Kazakhstan will comply with the sanctions, but will also consider the impact on the domestic market and the country's economic interests. The statement responded to the concerns of Kazakh entrepreneurs, who are already facing difficulties due to disruptions in trade chains and logistical problems caused by the sanctions. The Deputy Prime Minister emphasized that Western sanctions against Russia have caused disproportionate damage to his country. According to the official, Kazakh producers are suffering huge losses, while their former Russian customers have reoriented themselves to suppliers inside Russia and “continue to prosper.” Without the restrictions, “profits would have stayed in Kazakhstan,” the Deputy Prime Minister said. Instead, he said, they are now “going to those against whom” the West has imposed sanctions. The Kazakh Deputy Prime Minister noted that the sanctions imposed against Russia had already hurt Kazakhstan's economy. In particular, in terms of the breakdown of logistics chains and decreased exports to Russia, one of Kazakhstan's largest trading partners. Zhumangarin stated that Astana will continue to adhere to Western restrictions, but stressed that in the context of global instability, Kazakhstan is seeking to pursue a balanced policy to minimize the impact of sanctions at home and maintain stability in the domestic market. Kazakhstan adheres to an independent policy and continues to develop trade relations with other countries, such as Iran and China, Zhumangarin noted. In particular, Kazakhstan is studying the possibility of using routes across the Caspian Sea to expand trade to the south. Kazakhstan is also negotiating with Western countries to allow the sale of Kazakhstani goods to Iran, or to use the country for transit. Kazakhstan's position reflects its desire to maintain economic independence and minimize the risks associated with external sanctions. At the same time, Kazakhstan is currently complying with international rules and is in dialog with Western countries to find compromise solutions that will avoid further pressure on the economy. Thus, remaining faithful to its international obligations, Kazakhstan seeks to protect its national interests, maintain stability, and develop its economy in a difficult foreign policy environment.

Extreme Sports Sanctions

Intrigue Shadows a Rugged Motor Race with Central Asian Roots

Several vehicle crews from Turkmenistan are competing in the Silk Way Rally, a 5,243-kilometer race that started in Russia’s Siberian city of Tomsk on July 5 and will finish in Ulaanbaatar, Mongolia on July 15 after passing through mountain and desert terrain. The Russia-backed event has attracted scrutiny not just for the off-road adventure – its organizers face U.S. sanctions for allegedly helping Russian military intelligence. The annual Silk Way Rally, which comes at a time of high tensions between Russia and the West over the war in Ukraine, has a history of Central Asian involvement since it was first held in 2009. The initial route started in Kazan, Russia, went through Kazakhstan and finished in Ashgabat, the capital of Turkmenistan. After a few more route variations, the 2016 edition began in Red Square in Moscow and passed through Kazakhstan on the way to the finish in Beijing after an epic 10,735 kilometers. The race was canceled in 2020 because of the pandemic. The rally has had competitions for various categories, including trucks, cars, SSVs (Special Service Vehicles, of a type often used by police or firefighting units for difficult conditions at high speeds) and quad bikes, which are four-wheel, all-terrain vehicles. [caption id="attachment_20146" align="aligncenter" width="374"] silkwayrally.com[/caption] The rally, which purports to follow routes used by merchants on the so-called Silk Road network many centuries ago, is reminiscent of the renowned Dakar Rally in West Africa. It has recently come under suspicion as an alleged front for Russian operatives. Past winners and competitors in the Silk Way Rally have included people from France, Spain and other Western European countries, as well as Ukraine, Israel, Qatar, Saudi Arabia and Argentina. At least two dozen countries were represented in several editions of the annual race in previous years. This year, nationals from about half a dozen countries signed up and the vast majority are Russian, illustrating the impact of sanctions and the deterioration in ties since Russia’s full-scale invasion of Ukraine in 2022. Several two-member teams from Turkmenistan, including brothers Merdan and Shokhrat Toylyev, are competing in the T2 class of cross-country vehicles. A Kyrgyz citizen is listed with a Russian in a team in another vehicle category. The 2024 Silk Way Rally is not recognized by the Fédération Internationale de l'Automobile, also known by its initials FIA. The Paris-based governing body of motorsport has taken action to isolate Russia and its ally, the government in Belarus, since the Russian invasion of Ukraine. The race has caught the attention of the U.S. Department of the Treasury, which on June 12 said it was imposing sanctions on the organization and its directors for alleged ties to the Russian military intelligence agency GRU. The department said Silk Way head Bulat Akhatovich Yanborisov, a Russian citizen, had received awards from the GRU for his work and appears to use his properties in Europe as transit points for Russian military intelligence officers. “Bulat, who is Silk Way’s CEO and general director, alongside his son Amir Bulatovich Yanborisov (Amir),...

Investments Stock Market Sanctions Economy Banking

Kazakhstan Stock Exchange Set to Recoup Shares from Moscow Exchange

The Kazakhstan Stock Exchange (KASE) has approached the Moscow Exchange (MOEX) with an offer to buy back its shares. The move was prompted by the US sanctions imposed on MOEX, Russian publication Frank Media reported, citing sources close to the Russian trading floor. Moscow Exchange presently owns 13.1% of KASE shares. It acquired the first part of this stake (3.3%) in early 2020 and increased it to the current level at the end of the same year. The KASE shares were obtained as part of a strategic partnership for the Russian side's technology. The stake has a market value of KZT 12.1 billion, equivalent to RUB 2.2 billion ($25.9 million). In mid-June 2024, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) included the Moscow Exchange in the SDN list and issued a license to curtail operations with MOEX until August 13. The UK has joined the sanctions against MosBirch. "KASE will consider continuing business relations with MOEX taking into account the sanctions restrictions," stated the Kazakh exchange, the day after sanctions against Mosbirzhya were imposed. Timur Suleimenov, chairman of the National Bank of Kazakhstan, who has repeatedly mentioned the possible buyout of MOEX's stake in KASE, was vague however, when citing various options. "The National Bank has 47% in KASE. We have our funds, so we will buy out [Moscow Exchange's stake if such a decision is made]," he said on June 13, immediately after the sanctions against the Russian exchange were imposed. The head of the republic's regulator also said that KASE is negotiating with MOEX and considering various options, including possibly buying back shares. Some indirect data point to the preparation for the buyout. In the middle of last week, KASE announced the convocation of the extraordinary general meeting of shareholders in a month, at which the only question to be discussed is the methodology change for determining the cost of shares of Kazakhstan exchange at their redemption. According to the FM interlocutor close to the Russian Central Bank, Mosbirzha may agree to sell its stake in the Kazakhstan Stock Exchange under these conditions. In the past, entering the capital and providing technologies to KASE had a strategic goal—to leave it in the zone of Russian influence, he noted. In particular, American Nasdaq could provide technologies for the Kazakhstan stock exchange. South Korea has likewise expressed interest in KASE .

Sanctions Finance

Kyrgyz Banks Restrict Money Transfers to Russia

Several commercial banks in Kyrgyzstan have suspended work with Russian money transfer systems after the expansion of U.S. sanctions. Most cite as the reasons behind this decision both technical problems and exchange rate volatility. The RSK Bank, which occupies one of the leading positions in Kyrgyz financial market, announced that, “Due to technical works, the following money transfer systems (sending and receiving) are not working at the moment: Astrasend, Unistream, Contact, Zolotaya Korona, Sberbank-Online." The temporary suspension of services to send and receive transfers in rubles through the applications ‘Kompanion ’ and ‘Unistream,’ was also reported by Kompanion Bank. Mbank, among the most popular in the Kyrgyz market, joined suit, stating that, "Due to the exchange rate volatility and possible sharp fluctuations of the currency market, a temporary restriction on ruble accounts and cards has been introduced (replenishment, transfers, conversions). " Via its website, the bank confirmed its full protection of clients' ruble accounts. Five more Kyrgyz banks have now announced the introduction of restrictions on operations concerning dollar accounts and ruble/dollar conversion. As reported by TCA on June 13, new U.S. sanctions were imposed on the Moscow Exchange, the Russian National Clearing Center (NCC), and the National Settlement Depository (NSD).

Investments Sanctions Economy Banking Russia

How Sanctions Against the Moscow Exchange Will Affect Kazakhstan

The introduction of U.S. sanctions against the Moscow Exchange (MOEX) will not have legal consequences for the Kazakhstan Stock Exchange (KASE), because the Russian platform's share in Kazakhstan's capital is not large enough, KASE's press service has reported. On June 12th, the Office of Foreign Assets Control (OFAC) of the United States put the Moscow Exchange on the SDN list, which means blocking its accounts in U.S. banks and depositories and banning cooperation for U.S. citizens and residents. The exchange has already announced that it will stop trading in dollars and euros in the foreign exchange section. At the same time, contrary to popular belief, the entry of a company into the SDN list does not automatically lead to the introduction of secondary sanctions against all its partners, including those from third countries. Restrictions may be imposed on the subsidiaries of sub-sanctioned companies if they own at least 50% of their authorized capital. MOEX owns 13.1% of KASE shares, which means the latter is not considered a company under the control of the SDN-list participant. "In this regard, Kazakhstan Stock Exchange and KASE Clearing Center continue to operate normally. Standard regulations will conduct trades, clearing, and settlements. KASE will consider the continuation of business relations with MOEX considering the sanctions restrictions," noted the release from the Kazakhstan Stock Exchange. In November last year, KASE head Alina Aldambergen said that the platform carefully analyzes the risks of sanctions. At the same time, she said that cooperation with the Moscow Exchange has been reduced to providing IT services. Economist Rasul Rysmambetov previously wrote for The Times of Central Asia that he believes sanctions against several financial structures in Russia will not directly affect Kazakhstan. However, there are bound to be consequences for Kazakhstan from the actions of the Russian authorities. "At some point, the Russian financial authorities will see that the pressure of sanctions is aimed not at complicating their operations, but at destroying their financial structure, and they may start taking symmetrical actions," Rysmambetov wrote on social networks. Rysmambetov believes the ruble's depreciation will affect Kazakhstani entrepreneurs producing sugar, milk, and grain.