Russian money exodus ‘may direct to Turkey’

LONDON - Anadolu Agency

Liza Ermolenko, an economist at London-based Capital Economics, has said Russian investors’ withdrawal from Western banks have begun.

Turkey could stand to gain from tension over Crimea if it becomes a new destination for billions of dollars of Russian capital pulled out of the West ahead of possible financial sanctions against Moscow, according to analysts.

There is still no certain data showing the amount of Russian capital that has exited Europe and the United States, Standard Bank Developing Economies Chief Economist Timothy Ash told Anadolu Agency, but added that Turkey could benefit from that movement.

The U.S. and European Union imposed personal sanctions on March 17 on Russian and Crimean officials involved in the de facto secession of Crimea from Ukraine.

U.S. President Barack Obama slapped sanctions on the 11 Russians and Ukrainians blamed for the act, including former Ukrainian President Viktor Yanukovych, as well as Vladislav Surkov and Sergei Glazyev,
two of Putin’s aides. Meanwhile in Brussels, the EU’s 28 foreign ministers agreed to subject 21 Russian and Ukrainian officials to visa restrictions and freeze their assets for their roles in the events.

As Washington and Brussels said further steps could follow in the coming days if Russia does not back down but instead formally annexes Crimea, Russian investors that have money in the West are expected to withdraw their funds to avoid potential freezes.

Speaking in an interview with Anadolu Agency, Liza Ermolenko, an economist at Capital Economics in London, said Russian investors had begun to pull their money out from banks in the U.S. and Europe to transfer them back to Russia.

“However, the amount Western investors withdrew from Russia is much higher than the amount pulled out by Russians in the West. Our estimates say Western countries have
taken out around $50 billion worth of investments from Russia,” she said.

Extension fears

Ermolenko said the Russian withdrawal from European banks did not pose a serious risk for the European banking system, while adding that she expected the Western sanctions to remain limited on an individual basis.

Ash, who visited the U.S. last week, said the White House “is extremely serious” about the sanctions, even though European leaders had dragged their feet at first, particularly considering the continent’s serious dependence on Russian gas.

British Foreign Secretary William Hague said EU countries had begun discussing the need for Europe to reduce its reliance on Russian energy “over many years to come.” Much of that energy is shipped through gas pipelines crossing Ukraine.

Germany, the EU’s strongest economy, obtains 40 percent of its gas from Moscow and could become more dependent as it phases out nuclear power.