Preparing for an invasion of Ukraine for 8 years: Russia has long begun to change the economy so that Western sanctions do not hit it

Since the outbreak of war in Ukraine, a flurry of Western sanctions has undermined the Russian economy and damaged its financial system. The country is largely cut off from the SWIFT international payment system, its access to $630 billion of foreign exchange reserves is limited, and more than $17 billion of assets have been confiscated from Russian oligarchs. But, as it turned out, for the past eight years, Russia has been preparing for the worst. Read more about this publication Yahoo!.

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In June 2014, just three months after the invasion of the Crimean peninsula, Russia created its own payment system to help process credit card transactions domestically. The Russian national payment card system, known as the NSPK, continued to process credit card transactions during the war in Ukraine.

While Mastercard, Visa, American Express, PayPal and Discover have suspended their operations in Russia, its citizens are not experiencing the disruption that many might expect.

Mastercard has announced that credit cards issued by Russian banks are no longer supported by its network. Instead, credit cards used in Russia are now processed through a so-called switcher operated by the Central Bank of Russia.

Dr. Leo Lipis, CEO of payments industry consultancy Lipis Advisors, said the switch is "a communication center that connects the various banks involved in the payment network."

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This means that Russian consumers who rely on locally issued Mastercard-branded cards can still use their cards as usual, Lipis said.

A Mastercard spokesperson confirmed that the company does not have the ability to block domestic transactions in Russia, but does not receive “any benefit” from them. This is because Mastercard, along with other Western companies, have signed an agreement that their transactions will be processed by NSPK in 2015.

Russians are still banned from using credit cards outside the country, but this has only helped the Kremlin achieve its goal of preventing assets from moving abroad. The sanctions also spurred Russia's own credit card company, MIR, based on the NSPK and owned by the Central Bank of Russia.

When MIR debuted at the end of 2015, the Russians were in no hurry to take cards. The government then made it mandatory for public sector workers receiving public funds and social benefits to use MIR payment cards, which led to the growth of the firm.

“If we go back to 2015, Visa and MasterCard have practically divided the Russian market 50/50,” Lipis said. “And by 2020, the market has split into three parts.”

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According to the company, more than 100 million MIR cards have been issued to date. And with the departure of American card companies from Russia, MIR can easily increase its market share.

In recent years, other countries, including Turkey, India and China, have also developed their own payment systems to limit the influence of US credit card companies and lessen the pain of any sanctions.

After invading Ukraine, Russia's largest bank, Sberbank, turned to China's Union Pay and the so-called Cross-Border Interbank Payments System (CIPS) to bypass Western sanctions and issue new cards.

According to Lipis, Union Pay has agreements with many European and American credit card networks that allow foreign cards to be processed through their payment system and accepted in some Western countries, especially in tourist destinations.

A payment systems expert noted that China's Union Pay could open up to "secondary sanctions" from the West if it knowingly helps Russian banks circumvent sanctions.

However, when it comes to processing transactions abroad, Russia's MIR and Chinese payment systems are not "adequate replacements" for US payment systems such as Visa and Mastercard, Lipis said. And they bear less than 0,5% of the total payments made via SWIFT.

As ForumDaily wrote earlier:

• On the night of February 24 began full-scale war of Russia against Ukraine.
• In the light of these events in Russia and around the world, protests against the invasion of Ukraine.
• US and UK imposed broad economic sanctions against Russia because of her invasion of Ukraine.
• February 25 President of Ukraine Volodymyr Zelensky urged Russian President Vladimir Putin to sit down at the negotiating table. Putin's press secretary Dmitry Peskov said that Putin is ready to send a delegation to Minsk (Belarus) for negotiations with Kiev. He specified that the delegation will include representatives of the Ministry of Defense, the Ministry of Foreign Affairs and the presidential administration.
• In the USA there were large-scale rallies in support of Ukraine.
• Pope Francis visits the Russian Embassy February 25, to personally "express his concerns about the war" in Ukraine, which made an unprecedented deviation from diplomatic protocol.
• European Union, USA and UK imposed sanctions and froze the assets of Putin and Lavrov.
• The United States has declared its readiness accept refugees from Ukraine.
• February 26, the world famous and one of the most popular groups of hackers Anonymous recorded a video message to Russian President Vladimir Putin. She promised to find all the "skeletons in the closet" and "leave no stone unturned".
• As it became known, the Oscar-winning Hollywood actor Sean Penn is located in Ukraine and is making a documentary for Vice about events in the country.
• February 28 The world's largest aircraft An-225 was destroyed during the Russian invasion of Ukraine, which caused alarm and sadness among the aviation world, in which he has almost a cult status.
• On the same day, the United States and France called on their citizens immediately consider leaving Russia.
• From the very beginning of the invasion, many actions took place around the world in support of Ukraine. How it was in the USA, see our material.
• On March 1, the United States asked 12 Russian diplomats from the United Nations leave the US accusing them of "espionage activities" as Russia continues its advance into Ukraine.
• March 2 Russian businessman Alex Konanykhin offered $1 million reward for dead or alive Putin.
• Airbus and Boeing refused to work with Russia, and this endangers almost all civil aviation.
• March 3 CEO and founder of the Russian TV channel "Rain" announced the suspension of the channel. This is due to the Russian invasion of Ukraine.
• Which of the Hollywood stars supported Ukraine, and who was on the side of Russia, read here.
• What Russians living in Ukraine say about the war, you can find out in our material.
• Which companies left Russia and how it hit the economy, read on link.
• Where citizens of Ukraine can receive special services in Poland - by link.
• The US State Department has warned citizens of Ukraine that the US Mission in Ukraine does not currently offer visa services. That's it services provided in Germany.
• Meanwhile, the killers tried to kill the President of Ukraine Vladimir Zelensky at least three times since Russia invaded his country on February 24.
• In Russia, the situation with free media is becoming more and more difficult. Even relatives of Ukrainians from Russia do not believe in shelling of Ukraine.
• Russian diplomats announced persona non grata, left the US, and the Russian airlines stop international flights.
• Meanwhile at the International Court of Justice in The Hague consideration of the lawsuit of Ukraine against Russia began. The subject of the lawsuit is allegations of genocide. The International Court of Justice in The Hague ruled that Russia must stop hostilities in Ukraine as interim measures pending consideration of Kyiv's complaint about Moscow's misinterpretation of the Genocide Convention as a pretext for aggression.
• Russia began active preparations for shutdown from the global internet.
• Thousands of Ukrainians leave the country: 11-year-old boy from Zaporozhye made it to the border with Slovakia and crossed it on foot.
• USA support Ukraine – government officials and ordinary Americans alike: 20 workers in West Coast ports refuse tohandle Russian cargo. President of Ukraine Volodymyr Zelensky was awarded a medal Liberty Ronald Reagan.
• Tesla will continue to pay salaries to employees who decide to go to fight in Ukraine.
• In the meantime, the sanctions are taking effect: Russia is rapidly rising in price or disappearing from the sale of drugs and medical equipment manufactured by countries that have imposed sanctions on the Russian Federation because of the war in Ukraine. Down on the country iron curtain. The world is on the hunt on the assets of Russian oligarchs.
• Russia cannot establish a dialogue with the world - she threatens to leave from the Council of Europe and the OSCE.
• To further assist Ukraine in its fight against the aggressor, Congress approved an emergency military and humanitarian package. assistance in the amount of $13,6 billion. Biden, among other things, wants take away trade privileges from Russia in relations with America.
• The United States has banned deliveries to Russia dollar bills and restricted access to cryptocurrencies, and world educational organizations will no longer recognize diplomas issued by Russian universities.
• Intelligence sources claim that Vladimir Putin suffering from a brain disorder caused by dementia, Parkinson's disease or "steroid rage". He named Russians living in a large area in Miami and the French Riviera, traitors to their homeland.
• U.S. President Joe Biden says he considers Russian leader Vladimir Putin a "war criminal" for his attacks on Ukraine. This was the first time Biden publicly branded Putin with this phrase. He then called him a "bloody dictator" and a "pure thug".
• A US citizen was killed in the Ukrainian city of Chernihiv. His sister said that his brother was killed while he was standing in line for bread with other civilians.
• Countess Alexandra Tolstaya, former partner of the Russian oligarch - "Kremlin banker" Sergei Pugachev, spoke about Russian President Vladimir Putin and how he is with close people.
• According to intelligence, representatives of the Russian elite are considering the possibility of "poisoning, sudden illness, accident" to remove Putin and restore economic ties with the West.
• Trump believes that Biden took too weak a stance on Ukraine.
• Zelensky harshly criticized the leaders of NATO and European countries, they greeted his performance with a standing ovation.
• The United States will accept about 100 Ukrainians and other persons fleeing Russian aggression in Ukraine.
• According to a list compiled by the Yale School of Management, more than 400 companies have announced their withdrawal from Russia since its invasion of Ukraine on February 24. However, for some brands, it's easier said than done.
• American intelligence reported that Russian precision-guided missiles fail 60% of the time in Ukraine.
• Three participants in the negotiations between Russia and Ukraine had symptoms characteristic of poisoning with chemical weapons. Among the victims is businessman Roman Abramovich.
• Google went on about Russia and issued a decree not to call the war in Ukraine a war. All services that are still working in the Russian Federation do not use this wording.
• Russian the air regulator switches to a paper version after being subjected to a massive cyberattack by the hacker group Anonymous on March 26, which resulted in the loss of all agency data.
• US intelligence agencies have partially declassified a report stating that Putin's entourage does not provide him with accurate and complete information about what is happening in the war in Ukraine.
• In the meantime, the war continues, the world is making predictions about the future developments. For example, the American philosopher, political scientist, political economist and writer Yoshihiro Francis Fukuyama spoke about what awaits Russia in the war against Ukraine. Mikhail Khodorkovsky spoke about the war, the chances for peace and the Stockholm syndrome of Russians.