Bakai Bank Shareholder Sergei Ibragimov on Adhering to Anti-Russian Sanctions

Businessman and philanthropist Sergei Ibragimov — one of the rules of business is strict adherence to international regulations.

Major Shareholder of One of Kyrgyzstan’s Largest Banks, Bakai Bank, Discusses the Impact of Sanctions Against Moscow and How to Address Them

The West has long been trying to deprive Russia of the ability to continue the war in Ukraine through economic sanctions. The sanctions have a certain effect. However, the Western blows to Russia's economic and industrial pressure-points sometimes lead to crises in neighboring countries, those that are historically and geographically forced to maintain partnerships with Moscow. This is especially true for the former Soviet states in Central Asia, such as Kyrgyzstan, positioned between Kazakhstan and China.

The repercussions of anti-Russian sanctions can sometimes significantly affect various sectors of this country. Particularly in the financial sector, as Moscow remains Kyrgyzstan's largest trading partner, accounting for over 21% of the republic’s trade turnover. Additionally, almost a million Kyrgyz people still work in Russia, providing a substantial share of remittances to the country.

"We Analyze Geopolitical Tensions"

Just over a month ago, the U.S. Treasury imposed sanctions on the Russian Moscow Exchange (its counterparty in all currency transactions), the National Clearing Center, and the National Settlement Depository. Many experts called this move, by Washington, if not the most effective, then certainly the most spectacular in recent times in terms of restrictions against Russia. As a result, Russia was forced to halt stock trading in dollars and euros on the same day.

All of this could not but affect the financial market of Kyrgyzstan. Several local banks temporarily suspended operations with Russian money transfer systems and restricted ruble transfers.

Businessman, former chairman of the board, and shareholder of one of the largest private banks in Kyrgyzstan, Bakai Bank, Sergei Ibragimov, believes that such a situation was generally predictable: “The U.S. sanctions against the Moscow Exchange and other organizations did not come as a particular surprise to us. We see geopolitical tensions and try to analyze the consequences. This has become one of the conditions for doing business nowadays. The currency exchange market, of course, experienced a slight shock. But, for example, Bakai Bank took all necessary measures in time, including banning ruble exchange.”

Sanctions Against Russia Affect Kyrgyzstan

Amidst the rally at currency exchange points, the republican National Bank acknowledged that changes in the financial markets of Kyrgyzstan’s main business partners would have a "limited impact on the domestic currency market." The regulator also expressed hope that the situation in this area would remain relatively stable and that banks would have enough financial resources for this. At the same time, the National Bank continued to warn against conducting operations related to people and goods on the U.S. sanctions list.

“The story with sanctions against the Moscow Exchange is very telling,” says former Bakai Bank head Sergei Ibragimov. “It clearly demonstrated how quickly the negative consequences of these restrictions could affect Kyrgyzstan's financial system. The economies of the two countries are still closely intertwined, and no matter how much we prepare for the consequences of sanctions against Russia, they are almost always unexpected and unpleasant.”

Dialogue to Avoid Crossing Red Lines

In reality, a rather strange situation has developed in Kyrgyzstan. Local businesses overwhelmingly comply with sanctions against Russia—this fact is confirmed by all international monitoring organizations. But at the same time, they want to minimize the negative consequences of anti-Russian sanctions for themselves and the entire economy of the republic.

Bakai Bank, in which Sergei Ibragimov is a shareholder, has long and responsibly followed the requirements of U.S. government agencies. This financial institution was one of the first to condemn the hostilities in Ukraine. It was also among the first to disconnect from the Russian payment system "Mir" long before U.S. sanctions were imposed on it.

However, despite this, even for an organization like Bakai Bank, which is a member of the American Chamber of Commerce and has been audited by the international firm KPMG, constant dialogue is necessary to avoid accidentally crossing red lines in the numerous gray areas that now exist due to the imposition of restrictive measures. “This is really what our business needs right now,” says Sergei Ibragimov.

USA and Kyrgyzstan — Expanding Points of Interaction

The need for such a dialogue was apparently addressed by the Prime Minister of Kyrgyzstan, Akylbek Japarov, during his recent visit to Washington. According to media reports, he tried to convince Washington of the vital necessity of Bishkek’s cooperation with Moscow in the context of complying with anti-Russian sanctions during his speeches at the spring meetings of the International Monetary Fund and the World Bank Group.

The fact that the Kyrgyz prime minister seems to have been heard is evidenced by an interview with Warren Ryan, a representative of the U.S. Treasury Department's Office of Terrorist Financing and Financial Crimes. He gave it during his visit to Kyrgyzstan, which took place just a few days ago. According to him, the U.S. has made significant progress in developing a common understanding and informing the private sector about the risks for businesses that do not want to violate U.S. sanctions. At the same time, Warren Ryan proposed expanding points of interaction through constant dialogue and sustainable partnership.

Complying with International Sanctions Now Will Yield Great Profits in the Future

Despite everything, Kyrgyzstan has relatively calmly weathered one of the most spectacular recent waves of anti-Russian sanctions. Contrary to forecasts, the local currency market did not collapse; remittances continued to flow, albeit along slightly adjusted routes; imports did not significantly increase in price, and Kyrgyz exports remained competitive. The uncertainty in the banking sector predicted by experts quickly dissipated.

However, almost no one in the Kyrgyz business community wants a repeat of such shocks. For the progressive development of the state, which has recently experienced a series of socio-political upheavals, stability is crucial. Along with it, predictability and clarity regarding sanctions against Russia, which can severely impact most sectors of Kyrgyzstan’s economy, are also important.

“The geopolitical situation is very complex,” repeats Sergei Ibragimov, “but at least at Bakai Bank, we established clear business rules from the very beginning: do not covet others’ property; keep your word; do not let partners down; do not work in the shadow sector; do not get involved in politics. We added to this list our strict adherence to international sanctions. It may not always be profitable for the bank now, but it will definitely yield great profits in the future.”

Share this article: