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European banks benefit: Putin collects millions in taxes
European banks are profiting from Russia's weakness: millions are flowing into the economy while the Kremlin cashes in. Find out more about the unexpected consequences of Western sanctions.
European banks benefit: Putin collects millions in taxes
The sanctions that western industrialized countries have imposed on Russia were intended to weaken the economy. The measures include banning the import of Russian diamonds and trade barriers. European banks nevertheless benefited from the weakness of Russian banks.
Last year, European banks generated significant tax revenue for the Kremlin. According to the Financial Times, the sector paid around 800 million euros to Russia. Financial institutions such as Raiffeisen Bank International, Unicredit, ING, Commerzbank, Intesa Sanpaolo and OTP Bank are said to have made more than three billion euros in profit, a threefold increase compared to 2021.
The exclusion of Russian banks from the international SWIFT system for transactions has a negative impact on the Russian economy. Although transactions can be carried out without SWIFT, they are more expensive and complex. The sanctions also affect European banks that are having difficulty withdrawing profits from Russia due to licensing problems by Russian authorities.
Chinese banks have also pulled out of Russia as the situation became more complicated. Putin, in turn, imposed sanctions on the US bank JP Morgan Chase and confiscated assets worth $440 million. The EU is considering similar measures in the face of frozen Russian assets in the West, but is cautious so as not to jeopardize trade confidence.