Russia’s Sanctions Evasion Creates Lasting Costs
Russia quickly found a workaround to profit from oil in spite of a price cap and import restrictions by building up a huge fleet of dilapidated ships with hazy ownership that covertly shuttle its fuel to far-flung markets. This shadow fleet has managed to evade the sanctions and make money, but it comes with serious and potentially long-lasting effects.
The rickety ships pose dire risks to the environment, and the trend has created a huge illicit shipping economy that some experts worry could outlast the war. That could pave the way for nations to continue skirting the existing order, with nations including Russia and Iran as shippers, and China and India as customers.
“A lot of people want to do the easy part — impose sanctions — but we’ve actually caused a bigger problem,” said Ian Ralby, an expert in maritime security and founder of the research firm I.R. Consilium. “The sanctions don‘t put them out of business. They put them out of legitimate business.”
The Shadow Fleet’s Growth
The shadow fleet accounts for about 17 percent of all in-service oil tankers sailing the ocean today, according to S&P Global Market Intelligence, a research firm. There were 940 ships in the fleet as of earlier this year, up 45 percent from a year ago, based on the firm’s estimates.
While there were some boats with dubious ownership and shipping practices in operation before Russia‘s full-scale invasion of Ukraine in February 2022, they became far more common after the start of the conflict. The growth of the shadow fleet is a direct result of Russia’s ability to evade sanctions and continue profiting from oil sales.
Environmental Risks
The rickety ships pose dire risks to the environment, with concerns over oil spills, pollution, and damage to marine ecosystems. The trend has created a huge illicit shipping economy that some experts worry could outlast the war.
“This is not just about Russia; this is about the global maritime industry,” said Ralby. “We’re seeing a proliferation of unscrupulous operators who are willing to take risks to make a quick buck.”
Long-Lasting Consequences
The consequences of Russia‘s sanctions evasion could be long-lasting, with some experts warning that it could pave the way for nations to continue skirting the existing order.
“This is not just about Russia; this is about the global maritime industry,” said Ralby. “We’re seeing a proliferation of unscrupulous operators who are willing to take risks to make a quick buck.”
Original Article: How Russia’s Sanctions Evasion Could Create Lasting Costs – The New York Times — Nytimes