EU Hits Shipper With Sanctions

"The European Union imposed sanctions on a Dubai-based subsidiary of Russia's state-owned shipping giant, the first time it has used new powers to hit foreign-based entities that help Moscow circumvent Western restrictions.

The sanctions target Sun Ship Management, the manager of dozens of oil tankers that ferry Russian oil and natural gas around the world. The new sanctions include an EU asset freeze and ban on financing the company, which the EU said is part of government-controlled shipping company Sovcomflot.

The move against Sun Ship was part of the latest package of measures detailed over recent days from the EU, U.K. and U.S. The measures seek to close loopholes in previous rounds of sanctions. The EU and the U.S. imposed sanctions on Sovcomflot last February in the first days of the military operation.

Sun Ship's services help bring in more than 70% of Russia's energy revenue, according to the EU's official journal published on Saturday.

"Sun Ship has been operating as one of the key companies managing and operating the maritime transport of Russian oil," the EU said. "The Russian Federation is the ultimate beneficiary."

Sun Ship and Sovcomflot didn't respond to a request for comment.

The move against Sun Ship uses powers the EU adopted previously to go after people or companies who knowingly help Russia breach the sanctions.

Sovcomflot set up Sun Ship in Dubai in 2012. The subsidiary was called SCF Ship Management (Dubai) until July. In April 2022, Sovcomflot transferred management of 92 of its tankers and LNG carriers to Sun Ship, according to senior Russian shipping executives with knowledge of the deal.

Dubai, part of the United Arab Emirates, has emerged as a significant hub for Russian business activity in the wake of the Ukraine military operation. Thousands of Russian nationals and Russian businesses have relocated to the Middle Eastern city. International commodity trading and shipping companies moved staff to Dubai from Europe and Singapore to facilitate dealings with Russia.

U.S. authorities last week imposed sanctions on MTS Bank, a Russian lender that opened a bank in the U.A.E. last year. It received a license from the Central Bank of the U.A.E. last year.

The move against Sun Ship and other offshore entities is the start of a broader campaign to keep Russia from finding offshore workarounds to sanctions.

"They're effectively trying to cut off the corporate mechanisms utilized by Russia to try to continue its operations," said Zia Ullah, a partner and head of corporate crime and investigations at law firm Eversheds Sutherland.

Unless Sun's vessels travel to EU ports, they may not be breaking the trade bloc's new sanctions.

But the new measures are aimed at making it more difficult and expensive for Sovcomflot to operate. The West has tried to balance the need to restrict the money Russia earns from energy exports, while allowing Russian and oil and gas to reach global markets and to keep prices low." [1]

 

A little more complicated, a little more expensive... It's fist-pumping after the fight's over. Since sanctions against Russia are not working, and payed by our taxes politicians are doing nothing but sanctions, it's time to think about how we can elect smarter politicians.

 

1. World News: EU Hits Shipper With Sanctions
Hirtenstein, Anna; Paris, Costas; Norman, Laurence.  Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 27 Feb 2023: A.9.