Russia criticized Armenian banks on Wednesday for their decisions to stop processing payments via Russian Mir cards following fresh U.S. sanctions imposed on Moscow.
The Russian Foreign Ministry spokeswoman, Maria Zakharova, said the decisions were ordered by the Armenian authorities under U.S. pressure and will seriously hurt Armenia’s own economy.
The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned Russia’s National Card Payment System (NSPK), which issues Mir cards, in February. It said that Moscow has been using the system to evade the sweeping Western sanctions slapped over the Russian invasion of Ukraine.
Seventeen of Armenia’s 18 commercial banks announced afterwards that they will stop servicing the cards through the domestic payments system ArCa from March 30. Only the local subsidiary of Russia’s VTB bank continues to carry out transactions with them.
Read also
The Central Bank of Armenia insisted that it did not force the banks to ditch the Mir system. The Union of Armenian Banks attributed their decisions to “the risk of secondary sanctions” by the United States.
Zakharova claimed that the economic cost of the decisions for Armenia will outweigh the impact of potential U.S. punitive measures against the Armenian banks.
“We note with regret that Yerevan bowed to Western pressure in this matter as well,” she told a news briefing. “The country’s economy will suffer significant losses and the country’s citizens will face serious inconvenience. It will become more difficult for Armenians working in Russia to transfer money to their homeland, and [Russian] tourists will also lose the opportunity to pay by card.”
Mir cards became an alternative for Russian travellers in March 2022 when Visa and MasterCard shut off their Russian networks over Moscow’s war against Ukraine. Russians account for the vast majority of foreign tourists visiting Armenia.
Armenian entrepreneurs have cashed in on the Western sanctions, re-exporting second-hand cars, consumer electronics and other Western goods to Russia. This explains why Armenia’s exports to Russia tripled in 2022 and doubled in January-August 2023.
A resulting dramatic increase in cash flows from Russia has also greatly benefited the Armenian banks. They tripled their combined profits to a record 253 billion drams ($626 million) in 2022. The figure fell slightly in 2023.