Europeno February 24th The United States marked the anniversary of Vladimir Putin’s invasion of Ukraine by freezing the assets of more than a dozen Russian banks.UK and European Union Also extended their blacklist. Part of the reason for tightening sanctions again is to close loopholes in the existing system: the US is going after “targets related to evasion”; Europe has vowed to punish those who “betray” Ukrainians.as a joint study economist Investigative agency SourceMaterial says Russia’s sanctions evasion will only become more advanced — especially when it comes to extracting the oil that finances Putin’s wars.
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Europe imposed a ban on imports of Russian refined oil a month ago, having already banned purchases of the country’s crude. To keep global supplies flowing while limiting Putin’s income, European Union Allow its shippers, insurers and banks to continue facilitating Russian exports to other countries as long as the oil is sold below the price set by Russia G7 groups of large economies. But Russian oil is not as cheap as one would hope. Most countries outside the West have not imposed their own sanctions, allowing the rise of an army of shady middlemen beyond the reach of Western measures. Our investigation revealed a missing piece of the puzzle: how their trade was financed.
Take Bellatrix, a once-obscure trader who, shipping data shows, now controls seven tankers capable of carrying 3 million barrels. The company did not answer our questions, but tax returns filed in Hong Kong, where it is based, show that its ownership was transferred to Azerbaijani citizen Bilal Aliyev six weeks after the war began. It has been involved in at least 22 Russian oil product deals since Jan. 1, the data show. All but three times it bought barrels from Russia’s state-owned oil giant Rosneft. Where did it find the money?
Written records provide clues. State-owned Russian Agricultural Bank approved a loan facility of up to $350 million to Bellatrix on Dec. 30, to be repaid by May 2025, a document in Hong Kong showed. Although Russia’s deputy prime minister, Viktoria Abramchenko, said on December 22 that sanctions on banks should be lifted to ease the food supply, adding that “for our part, we guarantee only food, only minerals. fertilizer to pass through the bank.” Another document, dated Dec. 27, showed Bellatrix signed a loan agreement with the Russian Regional Development Bank, a subsidiary of Rosneft.
Until recently, a significant portion of Russia’s oil exports appeared to have been financed by the Russian government on open credit, with traders paying for the goods after collecting the proceeds themselves. Our findings suggest that the trade is becoming more institutionalized. A number of obscure traders appear to be tapping Russian banks on behalf of buyers further down the supply chain. Bellatrix itself appears to have a close business relationship with Coral Energy, a Dubai-based trader owned by another Azerbaijani businessman. A document dated Dec. 28 said Bellatrix entered into an upfront payment and offtake agreement with India’s Nayara refinery (49% owned by Rosneft), which has been assigned to Coral.
Can the West do anything to stem the flow of gray finance?Some interpret U.S. blacklisting decision MTS, a Russian bank, just days after Abu Dhabi granted it a license, as a signal that it may soon exert more pressure. But Russian fuel demand remains high. Imports by China’s independent refineries jumped 180% last month.Shipment of heavy oil to Fujairah port United Arab Emiratesbreaking records as Russian exports surged.
Some Russian crude even found its way back to Europe after being refined. The advocacy group Global Witness claims that Western energy companies and traders, such as Shell and Vitol, are shipping some energy to the EU, often from Turkey. The companies rightly said such transactions were not illegal. Our investigations show that the mechanics of Russia’s oil trade are increasingly being greased by Kremlin money early in the supply chain. ■
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