Smart Economy


Armenia to ditch Russian cards over US sanctions

 Published: 13:04, 31 March 2024

Armenia to ditch Russian cards over US sanctions

Armenian banks on Friday said they would stop processing transactions made by Russian Mir payment cards due to Western sanctions imposed on Russia following Ukraine war.

In September 2022, the US Treasury Department threatened foreign banks with secondary sanctions for servicing Mir cards, a Russian card payment system.

The Treasury's Office of Foreign Assets Control said in February that Russia has been using the system to evade Western sanctions, which have targeted Moscow's financial system.

The Union of Banks of Armenia said the country's commercial banks "will stop servicing Mir cards as of Saturday, because of the risk of secondary sanctions."

An exception will be made for Mir cards issued by the Armenian subsidiary of Russia's state-controlled VTB Bank, it added.

After the West slapped sweeping sanctions on Moscow, Armenian banks saw their profits triple due to a dramatic increase in cash flows from Russia.

Thousands of Russians fled to Armenia amid a crackdown on dissent and fears of being drafted for the war. Armenian companies have also been re-exporting Western-manufactured consumer goods to Russia.

Yerevan has been drifting from Moscow since 2020, when it lost a war to Azerbaijan. Relations further soured last year when Baku took control of the disputed Nagorno-Karabakh region in a lightning offensive.

Yerevan has complained that Moscow failed to protect it in the face of a persistent security threat from Azerbaijan.

Ditching the use of Mir cards is the latest in a string of diplomatic rows between the two countries.

On Friday, a government official said Armenia will block broadcasts of shows by Russian TV presenter Vladimir Solovyov -- whom the US State Department has called "the most energetic Kremlin propagandist."

Last month Prime Minister Nikol Pashinyan said Armenia had suspended its participation in the Collective Security Treaty Organisation (CSTO), a Moscow-led security alliance of several ex-Soviet republics, and has been trying to forge partnerships with Western countries, mainly France and the United States

The country has also formally joined the International Criminal Court (ICC), despite warnings from Moscow, and is now obliged to arrest Russian President Vladimir Putin if he sets foot on Armenian territory under an ICC arrest warrant issued in March 2023.