Name: Ma. Eunice Jasmine P.

Bodino
Course and Section: IDS41
Subject: International Political Economy
Professor: Jumel G. Estrañero
Political Economy AnalySynthesis No. 2

As war grinds on, HSBC halts Russia payments

By Iain Withers (2023)

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.

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 on 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 the 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.

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 the 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

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
/