Following the large-scale invasion of Ukraine by Russia last year, the West deployed a set of financial sanctions unprecedented measures designed to hamper the Russian economy and its ability to finance the war. But after some spectacular seizures of yachts and mansions from Russian oligarchs in Europe, everything seems to have slowed down in such a way that they no longer have the desired effect. Russia may be losing the war on Ukrainian soil, but it is winning it on the economic one thanks to the complicity of various allies and the critical support of global oil companies.
The co-founder of International Transparency, frank voglwrote in The Globalist that the application of sanctions is disappointing. “After a blizzard of publicity in March and April 2022 about the seizure of high-value effects belonging to Putin-allied oligarchs, there was a strange silence on the part of the western judicial authorities”, says Vogl in reference to the almost non-existent judicial approaches related to sanctions.
Russia’s most successful move to keep its economy afloat is in the de-dollarization of its reserves and the export of oilits most profitable production, which it would not have been able to achieve without the complicity of dozens of large global oil companies. China, India, Türkiye and the United Arab Emirates they are doing more business with Russia than ever before.
According to the organization Global Witnesswhich is dedicated to monitoring the movements of fossil fuels on the planet, since the beginning of the war, Russia exported by sea more than 1,220 million barrels of crude oil for an estimated value of 97,000 million dollars. And to this we must add another 928 million barrels of refined petroleum products. And it was all marketed by the big western oil companies, from Vitol and Gunvor until Shell and BP, which transferred almost 40% of the total: 533 million barrels of Russian oil with an estimated value of 14.8 billion dollars, and another 362 million barrels of refined products.
But Russia also took effective measures to protect itself, says Caileigh Glenn in it Washington Quarterly. The Kremlin had prior experience with Western sanctions after the 2014 invasion of Crimea, and had rolled out a series of “sanctions-proof” measures. Glenn lists among Putin’s “achievements”“the creation of a tax haven to facilitate the return of Russian wealth abroad, the substitution of imports with domestic products, the development of a new card payment system, the expansion of trade with several African countries and China, retaliation against those who impose sanctions; and limiting government assets held in US dollars and transactions carried out with them”.
And the result is in sight. In its January global economic forecasts, the International Monetary Fund said that while the Russian economy shrank 2.2% in 2022, it is likely to grow 0.3% this year and record 2.1% growth in 2024. The Russian economy is generally on “a stable path” despite cuts to Russian oil and gas purchases by Europe and the United States, which more than 1,000 companies with annual revenue of 50 million or more have left the country and that hundreds of thousands of Russians – many with great technological knowledge – have left the country in protest of the war and to avoid conscription.
But the international banking continues to operate in Russia and with its funds throughout the world. The largest Italian bank, Unicreditreported that the profits obtained by its Russian branch in the fourth quarter of 2022 increased by 88.2%, to €354 million. The bank Raiffeisen of Austria obtained global profits last year of 3,600 million euros. 60% of that amount, €2.2 billioncomes from business in Russia and Belarus, four times more than in 2021. Also, banks from the Emirates (UAE), Cyprus, Luxembourg, Austria and Switzerland they continue to allow substantial transactions involving Russian citizens close to Vladimir Putin’s inner circle or companies acting as fronts for these individuals.
After a barrage of criticism of his reluctance to impose the sanctions, a Swiss court sentenced the director of the Russian bank’s subsidiary gazprombank and three other directors for having facilitated the management of 32 million euros from the cellist Sergei Roldugin, Putin’s close friend and suspected of being one of his front men. But in the case of Credit Suisse Another Zurich judge diverted the investigation into Russian dirty money entering that bank and focused it on alleged violations of Swiss bank secrecy laws by journalists.
“The vast assets of the oligarchs – amounting to hundreds of billions, perhaps trillions of dollars – remain invested in the main capital markets through a myriad of holding companies and global wealth management departments at major Western banks, venture capital firms and hedge funds,” says the report by the European association that monitors the level of sanctions on Russia and other countries. Even the Russian oligarchs had to withdraw with their families inside the country, but they do not stop traveling and maintain their properties abroad. “Yes, you don’t see them on the French Riviera anymore, but if you go to Dubai you will find a Moscow in the sand”, wrote a Portuguese economist in a tweet last week outraged by the ineffectiveness of the sanctions.
Responding to criticism, the Office of Foreign Assets Control (OFAC) The US Treasury Department announced that it added “more than 2,500 Russia-related targets to the List of Specially Designated Nationals and Blocked Persons (SDN) as of February 2022, including approximately 2,400 people and entities, 115 ships and 19 aircraft”. And he stated that the new sanctions “will facilitate the investigation, prosecution and punishment of violations of restrictive measures in all member states equally.”
But none of this points to the large importers of Russian oil, which continues to be the lung with which the economy of that country breathes. Indian, Chinese and Türkiye They continue to operate without any restrictions and have considerably increased their purchases. But it’s not just these Kremlin allies. The company Vitolbased in the Netherlands, which counts among its senior executives Alan Duncanformer UK government minister, helped Russia sell more than 113 million barrels of oil and byproducts since the invasion, including crude oil worth an estimated $2.4 billion. Under pressure, Vitol last week said he intended to “stop trading in crude oil and products of Russian origin.” He also clarified that his intervention is “in full compliance with all applicable laws and regulations” and that his “current volumes of traded Russian crude and products are negligible.”
Gunvor, the second largest Western facilitator, helped Russia displace more than 109 million barrels of oil and petroleum products, including crude oil with an estimated value of $772 million. The operator based in Cyprusfounded by the sanctioned Russian oligarch Gennady Timchenko, also ensures that “everything is done in strict compliance with all applicable international economic sanctions.” The list of the main operators also includes the big BP, Shell and TotalEnergies. The latter, which traded 29 million barrels, condemned “Russia’s military aggression against Ukraine” in March, where it also pledged to “stop all its purchases of Russian oil and oil products as soon as possible.” BP, which traded 16 million barrels, in February called the war an “act of aggression that is having tragic consequences throughout the region.” BP had written off its stake in the Russian oil company Rosneft in February 2022 and had pledged not to enter into new purchase contracts for Russian oil or oil products. AND Shell, which sold 15 million barrels, last year condemned the Russian government for “its atrocities in Ukraine”while announcing his “intention to withdraw from his participation in all Russian hydrocarbons”.
Global Witness was also able to detect that 83% of the oil was transported in Greek ships. Tankers owned by three Greek shipowners – Economou Group of Companies, Andreas Martinos & family, and Dimitris Prokopiou & family – were the second, third and fifth largest shippers of Russian oil and petroleum products as of February 24, 2022. Minerva Marine, owned by the Martinos family, ensures that “all business activities are always carried out in full compliance with all the applicable laws and regulations.” While the Greek government, which must enforce the sanctions imposed by the European Union, does not speak on the matter.
“The EU, UK and US banking and financial regulatory authorities they failed to launch a meaningful attack on the owners and managers of this cash that serves Putin’s war machine. This has to change. The oligarchs and their financial accomplices must suffer to guarantee the democratic future of Ukraine”, is the conclusion of frank vogl of Transparency International. In the headquarters of the EU in Brussels they registered in the last days “great bill passes” in this sense between representatives of countries that are making a great effort to send arms and direct economic aid to Kiev and those of the members of the union that look the other way when their companies continue to do business with Moscow.
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