Russian-Israelis are suffering financially from sanctions against Russia

Tens of thousands of Russian-Israelis have been suffering financially as a result of international sanctions against Russia that the Jewish state is expected to comply with. 

Israel’s Finance Minister Avigdor Liberman has failed so far to soften the impact of international restrictions on transferring money belonging to Israeli citizens from Russian banks to Israel. 

During a high-level meeting, Liberman and directors of several large Israeli banks decided that relaxing such restrictions could be perceived as Israel's attempt to circumvent the international sanctions penalizing Russia as a consequence for Moscow’s invasion of Ukraine. 

The sanctions issue affects approximately 57,000 Russian-born Israeli pensioners who immigrated to the Jewish state and are entitled to Russian pensions totaling about $89 (300 NIS) per month. While this amount might not seem large by Western standards, it is an important financial source for many socioeconomically strained, Russian-born pensioners in Israel. 

A second affected group are some 30,000 Russian Jews who recently immigrated from Russia to Israel in response to the war in Ukraine. Many left hastily and now seek to transfer their savings from Russian bank accounts to Israeli banks. 

Israeli businessmen who own investments and bank accounts in Russia, while not personally sanctioned, are yet a third category of people impacted. 

Sanctions against Russia are just one problem facing Russian-born Israelis hoping to withdraw their money from Russian banks. Israel currently has no formal policy that prohibits or permits financial transfers from Russia except for general guidelines to follow the international sanctions imposed upon Russian's financial institutions. 

Russian-born immigrants in Israel also have faced hurdles on the Russian side. The Russian Central Bank decided in early March to limit foreign-currency cash withdrawals to $10,000 USD maximum, with the rest of the funds “in rubles at the market rate on the withdrawal day.” 

This Russian policy is believed to be connected to a fear in Moscow that unrestricted withdrawals of foreign currencies would deplete the value of the already battered Russian ruble even further. 

These restrictions have had a particularly negative impact on Russian citizens who are leaving the increasingly isolated country. In addition, some Israeli banks have refused the deposits of Russian-origin funds by Russian immigrants arriving in Israel. 

While Israel has not officially joined the international sanctions against Russia, Israeli authorities and banks are complying increasingly with the sanctions set up by the U.S. and European countries. Israeli banks fear that a failure to adhere to international sanctions on Russia would place them on American and European blacklists. 

The sanctions, designed to hurt the Kremlin and Russian elites, evidently have also hurt many regular people with modest financial assets – thousands of Russian-born immigrants in Israel. 

In March, U.S. State Department Under Secretary for Political Affairs Victoria Nuland warned Israel against becoming a safe haven for “dirty money” used to finance the Russian invasion of Ukraine. 

“You don’t want to become the last haven for dirty money that’s fueling [Russian President Vladimir] Putin’s wars. So whatever Israel is able to do, Ukrainians would welcome, and the international coalition in support of Ukraine would welcome,” Nuland said.