Trouble for banks and shipping companies: US government hunts Putin’s foreign aides

Trouble for banks and shipping companies
US government hunts Putin’s foreign aides

By Christian Herrmann
February 26, 2024, 7:37 a.m

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India buys Russian oil, Chinese and Turkish banks are happy to do business with Russian companies. Many of the first Russia sanctions are seen by other countries not as a deterrent, but as an opportunity. Now the US government has had enough.

Indian oil imports fill the Russian war chest because, for the Indian government, among others, good business is more important than the Russian attack on Ukraine. But Russian oil tankers are currently doing strange things: On the way to India, they suddenly stop, turn around or switch off their tracking systems in order to disappear from shipping charts. Others make surprising U-turns on the way to Russian Baltic Sea terminals and anchor in the Black Sea instead. Observers are certain: There are increasing signs that Russia is having difficulties selling its oil.

Because the financial portal Bloomberg already had it in January 14 freighters identified who were supposed to deliver 11 million barrels of Russian crude oil to India but did not. In February the list grew to at least 21 tankers at. When asked, the Indian government explained briefly: Imports had been canceled because the prices were not cheap enough.

But another reason also seems possible: All ships belong to a group of 50 that have been placed on a US blacklist since October, either themselves or through their shipping companies, because they help Russia with their deliveries, US to circumvent sanctions.

Attack on the Shadow Fleet

After the Russian attack on Ukraine, the G7 countries decided on a price cap of $60 per barrel for Russian crude oil in December 2022 in order to draw money from the Russian war chest without torpedoing global trade. The success was short-lived: Russia built its own shadow fleet in order to be able to deliver its oil to Indian or Chinese customers undisturbed. Some Western companies also ignored the price cap and transported Russian oil because there were few or no controls.

At least until now, because at the end of last year the USA began to investigate possible violations of the price cap and punish them with exclusion from the American financial system – Washington has initiated a new chapter in Russia sanctions.

Greece is getting out

Greek shipping companies are currently also feeling the consequences. They also earn a lot of money from oil transport and therefore continued to do business with Russia until last September. Recently, however, the three leading Greek shipping companies rejected further orders for November or later, according to the Reuters news agency reported.

The reason? The US Treasury Department withdrew several tankers from Turkey and the United Arab Emirates (UAE) in November subject to sanctionsbecause violations of the oil price cap were discovered. Your property located in the United States or financial flows using U.S. systems such as the dollar may therefore be confiscated. That’s practically all of them.

The picture is still inconsistent; the US Treasury Department is investigating and punishing violations of the Russia sanctions in batches. But it is also clear elsewhere that the USA and the EU are not thinking of easing their sanctions regime – on the contrary.

Closure of Russian accounts

Immediately after the start of the war, the United Arab Emirates willingly provided Russian private individuals or companies with new accounts, office space and contacts that were no longer welcome in Europe or North America. Now, however, several banks in the Emirates have begun to restrict payment flows to and from Russia and close accounts of Russian companies and private individuals for fear of violating US sanctions. This is what the Russian business newspaper “Vedemosti” said reported citing three Russian businessmen who make their money trading oil in the Emirates.

The Emirates are thus catching up with what has long been common practice in Turkey and China: although the Turkish government had announced that not to recognize Western sanctionsTurkish banks began not accepting Russian payments earlier this year, according to the Russian daily Moscow Times, Block or close accounts. The Russian business newspaper “Kommersant” reported the consequences a few days ago: the number of transactions in Turkish lira fell by 75 percent from December to January.

Also after the turn of the year, state-owned Chinese banks pulled the emergency brake: At least two According to Bloomberg, they demand detailed and binding documentation from their Russian clients that goods or money are not intended for the Russian defense industry.

Exclusion from the dollar system

These cases were preceded by an order that US President Joe Biden signed in December and which can be summarized as follows: If banks are caught using their money to indirectly support the Russian invasion of Ukraine, they will blacklisted and excluded from the dollar system – and thus effectively from the global financial system.

The EU is also tightening its screws: in February it proposed new trade restrictions for companies in Hong Kong, Serbia, India and Turkey. And for the first time in their history three Chinese electronics and technology companieswho are therefore no longer allowed to do business in Europe.

The Russian leadership is aware of the problem: they do not consider the problems to be critical and are currently negotiating a solution, explained sources close to the Kremlin, after the Emirates banks distanced themselves from Russian companies. Others became clearer: it was “unprecedented, blatant and aggressive pressure.”