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Turkey, Russia used nuclear project as cover to evade Western sanctions on Moscow: report

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Russian and Turkish officials used the construction of a nuclear power plant in southern Turkey to circumvent Western sanctions imposed on Moscow due to its 2022 invasion of Ukraine with the transferring of more than $5 billion indirectly from a sanctions-hit Russian bank to a state-run bank in Turkey, The Wall Street Journal reported.

According to the financial scheme developed by Russia and Turkey, Russia would transfer $9 billion from the sanctions-hit Russian central bank to the unsanctioned Gazprombank, the banking arm of Russia’s state gas company, for the construction of the Akkuyu nuclear power plant in the southern province of Mersin. The plant’s construction began in 2018, and it is expected to be fully operational in 2026.

The power plant is being built by Russia’s state-run nuclear energy company, Rosatom, which also wasn’t under sanctions.

From Gazprombank, the money would be transferred to Turkey’s state-run Ziraat Bank. In this way, Russia transferred more than $5 billion with the promise of more to come.

Under Moscow’s plan, the nuclear plant could hand over dollars to Russian companies that also had accounts at Ziraat Bank, which would remove the need to ping money in and out of the US, risking detection.

“Expensive nuclear plants financed in complicated ways offer a convenient way to conceal money moving for other reasons,” the WSJ said in its report.

However, US investigators were alarmed by the huge money transfers as two of America’s pre-eminent banks, JPMorgan Chase and Citigroup, handled the flow of money, and $2 billion of the Russian funds were frozen at JPMorgan after the US government halted some of the bank transfers.

According to the WSJ, the US Justice Department suspects that one of President Recep Tayyip Erdoğan’s aides, intelligence director İbrahim Kalın, was involved in the payments in 2022.

Kalın was the presidential spokesperson and a powerful national security adviser at the time. He now leads Turkey’s main intelligence agency.

In addition to Kalın, Turkey’s then-finance minister Nureddin Nebati was also a key player in the transfers, the people who spoke to the WSJ said.

Kalın and Nebati didn’t respond to requests for comment.

For Turkey, the incentive was to top up the greenback supply in its financial system at a time when Turkey’s central bank was borrowing dollars from commercial banks so it could shore up the lira without raising interest rates in the face of escalating inflation.

US prosecutors in 2024 prepared to try to seize the money on the grounds it was the proceeds of sanctions evasion, money laundering and bank fraud. But they were blocked in the final stretch of the Biden administration, the people said, because the White House wanted to avoid angering Turkey, a vital but sometimes contentious ally.

US officials feared a complaint implicating Turkey could undermine cooperation with Erdoğan’s government on everything from prisoner exchanges and counterterrorism work to efforts to stabilize Syria and end the war in Gaza.

Unlike other allies in NATO, Turkey did not impose sanctions on Russia after the invasion of Ukraine and instead expanded its economic relationship with Moscow at a time of financial stress.

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