European banks in Russia

A banker is a professional who is responsible for managing the financial transactions of clients. Bankers provide financial advice to clients and help them with investments, loans, and other financial services. Bankers should have a good understanding of financial markets, banking regulations, and accounting principles. A few short weeks from now, we will be asked to place our trust in politicians at the ballot box. Sadly, this does not reflect a sudden surge in the popularity of the political parties. It has more to do with the fact that even those with the most sensitive political antennae are struggling to predict the outcome. As a result, people will believe that their vote is more likely to make a difference and, so the logic goes, be more eager to put their cross in the box. 

Bankers, like politicians, too often lose sight of their purpose. The crash exposed some ugly truths about the way some big banks and bankers gained an overweening sense of entitlement and, over many years, systematically and cynically abused their position and customers. The covenant of trust between banks and their customers was broken. Hubris had indeed led to nemesis.

EU banks still operating in Russia are squirming to show they're abandoning their ever-more toxic client — but actions speak louder than words. Some banks pulled out of Russia a long time ago, but a lot of people didn't and now they've been caught with their pants down. Austria's top lender, Raiffeisen Bank International (RBI), made €1.8bn in pre-tax profit in Russia last year. Following earlier briefings with German lenders, the US has threatened Austria's top bank with sanctions for doing business in Russia.

RBI is one of eight leading EU banks still in Russia. The others are Dutch lender ING, Germany's Commerzbank and Deutsche Bank, Hungary's OTP Bank, Italy's Intesa Sanpaolo and UniCredit, and Sweden's SEB. The US Treasury warned Austria's Raiffeisen Bank International (RBI) that it risked "being cut off from the US financial system" if it was helping to fund Russia's military.

OTP Bank, which used to be on Ukraine's Sponsors of War list, posted a 125 percent increase in its Russia profit in 2023, pocketing €242m. It has 82 retail branches in Russia and employs 2,018 people there. The US Treasury didn't reply if Morris might come knocking on OTP Bank's door in Budapest in the future. 

But US Treasury officials have also briefed German financiers on the new sanctions threat. Commerzbank does corporate banking for mostly German companies active in Russia. It doesn't disclose its Russian profit and employs about 130 people there. ING also does corporate banking in Russia, where its Moscow office employs some 270 people and manages €1.3bn of loans. The Dutch bank said it didn't feel at risk because it "complies with all international sanctions laws including UN, EU, and OFAC".

We trust people who are clear and open with us, with nothing to hide. In a similar vein, we trust people we can rely on, who dependably do what they say they will. We trust people who show they trust and respect us, and those prepared to act against their own self- or short-term interests on our behalf. Lastly, we respond to those whose values we share, who live by those values and don’t contradict them. Some are hoping that if they can keep their head down, the whole thing will blow over and they can have good business in Russia afterwards. Some are afraid of violating any Putin decree because they don’t want personal cases opened up against them. Some are just paralyzed by fear. These are not people who ever imagined, despite all the warnings, that they would be in the middle of this murderous war where they could get killed in the crossfire.

Radioactive smoke cover

Europe could see a plume of radioactive smoke cover its skies if a nuclear plant explodes in the Ukrainian city of Zaporizhzhia if a disaster were to happen in the plant. According to the Ukrainian Hydrometeorological Institute, radioactive particles would mainly affect Ukraine, significant concentrations of radionuclides could reach the city of Kyiv, but would also affect neighboring EU countries such as Belarus, Lithuania, Estonia, Letonia, Poland, Romania, Moldova, Hungary, and Slovakia.

Russian Foreign Ministry spokeswoman Maria Zakharova said Sunday that NATO leaders should discuss Ukraine's Zaporizhia nuclear power plant at a summit in Vilnius. Accusing Ukraine of "systematically damaging" the facility, Zakharova said that "the key attention of the NATO summit should be devoted to this. After all, the vast majority of alliance members will be in the zone of direct impact" if something happens at the plant, Zaharova said on Telegram.

What is behind Russia and Ukraine’s unprecedented mutual accusations over a possible explosion at the nuclear power plant of Zaporizhzhia – and the threat it would pose to Europe?

The 1986 accident at the nuclear power plant of Chornobyl, also on Ukrainian territory, is widely considered the worst disaster in the history of nuclear power – and still bringing shivers of horror to Europeans.

With its six VVER-1000 reactors, the Ukrainian Zaporizhzhia nuclear power plant is the largest in Europe. It is, at present, on territory occupied by Russia and claimed as Russian under an internationally-unrecognized annexation.

The plant is close to the front line, as Ukraine is conducting a counteroffensive to free the occupied territories. However, the counteroffensive is not advancing as well as Kyiv would like.

While nothing much is happening at the front, there has already been a man-made disaster, namely the breach of the Kakhovka dam, which is undoubtedly linked to the military offensive. By blowing Kakhovka, a Ukrainian dam under the control of Russia, huge territories were flooded to create an obstacle for the Ukrainian counteroffensive.

Of course, Russia couldn’t care less about the ecological consequences.

The question is, could Russia do something similar in Zaporizhzhia?

Ukraine and Russia have blamed each other for shelling that has repeatedly downed power lines essential to cooling Zaporizhzhia’s six reactors and avoiding a nuclear meltdown.

They also traded accusations that by blowing Kakhovka, the other side sought to dry up the center’s cooling pond, which fortunately still has water.

Russia keeps repeating that the Ukrainian army is preparing an attack on Zaporizhzhia with the possible use of long-range missiles provided by the West.

This is perceived by Ukraine and by Western analysts as preparation by Russia for a ‘false flag’ attack, meaning that Russia will cause a catastrophe, blame Ukraine, and use it as justification for more drastic action.

The same happened with Kakhovka. Russia keeps claiming that Ukraine hit the dam, although experts say that only a powerful bomb inside the concrete structure of the dam wall could have produced the result we saw. Only the Russian army had access to this infrastructure.

Meanwhile, Ukraine claims that Russia has planted explosives on the roofs of two of the Zaporizhzhia reactors, the onus being on IEAE to go and verify.

The Ukrainians have good intelligence. They had warned about Kakhovka, which in the West was dismissed as preposterous.

At first sight, neither side has an interest in causing a nuclear disaster. Both Ukraine and Russia consider this territory as theirs, why should they contaminate it for many years to come?

But bombs on the roof of two of the reactors, if confirmed, would cause more noise than nuclear pollution, if any.

The reactors are behind steel casing and concrete walls and an accident with the release in the atmosphere of the content of the reactor, as happened with Chernobyl, is out of the question.

Moreover, the US has warned Russia that nuclear contamination of NATO member states (the closest to Zaporizhzhia being Romania and Bulgaria) would trigger Article 5, meaning that the US may inflict a heavy blow to the Russian army as a reprisal.

A bomb explosion in Zaporizhzhia could also be considered a ‘dirty bomb’ because of the nuclear reactors and the nuclear waste stored nearby.

Such a bomb would reverberate hugely, even with no nuclear contamination.

Russia would of course blame Ukraine, but first and foremost it would relish the psychological effect, the panic in our societies, hoping to discourage the West from supporting Ukraine militarily and achieving a ceasefire on the Kremlin’s terms.

The best our societies could do is not to panic if Zaporizhzhia makes big headlines. But we are humans, radioactivity is scary and our feelings will always dominate the discourse – perhaps exactly the result Russia wants.

My note: The simulations described in this post do not reflect a current or predicted situation in Ukraine. To stay updated on the current situation at nuclear power plants in Ukraine and across the world, visit the website of the International Atomic Energy Agency at https://www.iaea.org/. Thanks, Z.S.