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EU and US struggling to match sanctions rhetoric with enforcement

EU guidance on port bans for sanctions breaches adds little clarity while forthcoming US advisory avoids proscriptive measures in favour of industry recommendations

Despite all the strong words from the EU about cracking down on ‘a sharp increase of deceptive practices by vessels transporting Russian crude’, enforcement has not followed. The latest documents from the EU and the US highlight the difficult and potentially contradictory juggling act that regulators must perform to impose and manage economic sanctions

ONE month after the EU adopted its 11th package of sanctions against Russia, the long-awaited guidance setting out how governments will ban ships suspected of breaching the Russian oil import ban, has finally been published.

The watered-down guidance confirms what industry officials have long suspected — that the headline threats of ships being barred from EU ports will ultimately have little consequence and add little clarity to what sanctions lawyers have described as “poorly drafted regulations”.

The 11-page document issued on Monday confirms that vessel bans would only last for the duration of a single voyage and enforcement relies largely on “mutual trust and co-operation” between member states to monitor any potential breaches.

Under the rules unveiled on June 23, tankers face a potential ban from EU ports if they fail to give 48 hours warning of ship-to-ship transfers within 370 km of the shores of member states. Tankers carrying Russian oil that conduct STS transfers or turn off their AIS navigation systems also face a potential ban.

The latest round of sanctions had been billed as a crackdown on enforcement and promised close off suspected circumvention of the previous 10 editions of economic measures agreed by EU states aiming to hobble Russia oil revenues.

European Commission President Ursula von der Leyen promised the package would “deal a further blow to Putin’s war machine” and having highlighted the fact that “attempts to circumvent European Union restrictive measures have resulted in a sharp increase of deceptive practices by vessels transporting Russian crude oil and petroleum products,” the EU package was publicly positioned as a robust clampdown.

And yet four weeks on, no member state has taken action against any vessels and the guidance only adds to the long list of existing caveats.

While the EU banned Russia-flagged ships from entering its ports from April in the past year, European operations can still ship Russian oil without breaching sanctions rules if the barrels are sold to third countries below the agreed fixed prices set out in the price cap.

That has effectively left both European and US policymakers struggling to achieve seemingly contradictory goals: Reduce Russia’s oil revenues while simultaneously allowing trade at a level that prevents an oil price rally.

Both in the EU and in the US, policymakers have been struggling to balance the promise of enforcement with a clear message that allows the continuation of trade.

As a result, attempts to codify what is and is not considered suspicious activity are routinely falling short in terms of useful clarity for industry participants.

A draft advisory from the US Departments of State, Treasury and Energy, currently being circulated to interested parties before it is published seeks to make recommendations concerning “specific best practices in the maritime shipping industry”.

Much like the EU FAQ guidance, the document attempts to spell out areas of concerns from the regulator’s perspective, including AIS gaps, high risk ship-to-ship transfers and vessels that have switched to non-mainstream classification and insurance providers. 

While the document is still being drafted, Lloyd’s List understands that the document is unlikely to offer a proscriptive set of specific guidance on these issues.

What ends up staying in and being edited out of the current draft is proving to be a contentious issue. However, officials familiar with the drafting have sought to downplay the effect of this advisory compared with previous US guidance.

A 2020 advisory issued by the US Treasury, State and the US Coast Guard included a detailed set of best practices for private industry to consider adopting to mitigate exposure to sanctions risk. That document quickly became seen as the industry standard for financial and insurance risk and has since been routinely referenced by the private sector in most compliance protocols.

Those familiar with this latest advisory insist this edition is not going to be of the same magnitude and suggest it will be positioned more as “a shot across the bow to remind everyone that the US is paying attention”.


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