Name: Ma. Eunice Jasmine P.

Bodino 
Course and Section: IDS41
Subject: International Political Economy
Professor: Jumel G. Estrañero

Political Economy AnalySynthesis No. 2

A. News Tidbits 
According to the news report of Iain Withers (2023), due to the economic
restrictions and sanctions put in place by the West in response to Russia's invasion of
Ukraine, HSBC, a major international bank with headquarters in the UK, will stop
operating in Russia and Belarus. This decision includes ending services like commercial
payments and remittances starting from October 27.
B. Analysis 
A significant international bank like HSBC has a moral responsibility to uphold
the international laws and values that support world peace, justice, and human rights. By
ceasing activities in Russia, they are demonstrating their commitment to respecting
international law and applying more pressure to Russia to end its ongoing conflict in
Ukraine. HSBC’s halting operations in Russia greatly corresponds to the goal of
maintaining global peace and stability.
Moreover, HSBC probably made this decision for their own interests. Given that
Russia's economy is shrinking due to Western sanctions, it must have been challenging
for HSBC to operate there. Russia has been experiencing inflation, currency depreciation,
decreasing trade, and declining investments. Given these negative economic and political
climate of the country, continuing business in that situation might expose HSBC to
financial risks and result in severe losses. Additionally, HSBC could have made this
decision in order to avoid facing sanctions and security threats from the West and
international political organizations that seek to deter Russia's aggressiveness in Ukraine.
However, ceasing operations will have a negative impact on businesses and
consumers that rely largely on HSBC's banking and financial services for their trade and
investments. Russia may face difficulties in getting cash to meet its financial
responsibilities and debts. As a result, it is possible for Russia to have a tense relationship
or strained diplomatic relations with UK, as HSBC’s actions are aligned with the West.
Russia may seek compensation for the inconvenience caused by the international bank, or
it may also consider imposing aggressive consequences on the United Kingdom.
C. Policy Recommendations
HSBC must have a contingency plan to minimize their financial losses due to the
halted operations. They must also have notified and created an agreement with their
affected customers regarding how they intend to provide support in this circumstance.
The international bank should also have the option of requesting support from
international courts and other global political bodies in the case of potential Russian
threats. Meanwhile, in order to lessen economic recession, Russia can try to negotiate
with HSBC through legal actions to resume its banking and financial services in the
country. The two parties can participate in diplomatic negotiations and keep lines of
communication open in order to reach a mutually acceptable settlement to this situation.

References

European banks still in Russia: Should they stay or should they go? (n.d.). The Banker. https://www.thebanker.com/European-banks-still-in-
Russia-Should-they-stay-or-should-they-go-1679043431

Sourouema, A. C. M. O. (2020, February 28). The impact of conflict and political instability on banking crises in developing countries. IMF.
https://www.imf.org/en/Publications/WP/Issues/2020/02/28/The-Impact-of-Conflict-and-Political-Instability-on-Banking-Crises-in-
Developing-Countries-49047

Withers, I. (2023, September 8). As war grinds on, HSBC halts Russia payments. Reuters. https://www.reuters.com/business/finance/war-grinds-
hsbc-halts-russia-payments-2023-09-08/

Yiu, P. (2023, September 8). HSBC to halt corporate remittances to and from Russia. Nikkei Asia.
https://asia.nikkei.com/Business/Finance/HSBC-to-halt-corporate-remittances-to-and-from-Russia