On 20 May, the European Union approved another 17th package of sanctions on Russia. It imposes trade restrictions on companies from Turkey, Serbia, Uzbekistan or the United arabian Emirates for circumventing previously imposed restrictions. According to EU's head of diplomacy Kaja Kallas, the package besides included almost 200 ships from Russian "shadow float". "It's a blow to Putin's drip," comments the media. What is this “shadow float” and what is expected to consequence from the severity of sanctions?
Let's start with any basic information. By 2022, the sales of oil and petroleum products accounted for about 40% of Russia's full exports. At the same time, it provided you with 30% of the budget revenue. Most of the hydrocarbons went to EU associate States. A full-scale invasion of Ukraine forced the European community to impose sanctions on the Russian Federation, including the embargo on energy resources. The reason for this was the belief that Moscow, without crucial financial influence, would yet run out of money to proceed the war, resulting in peace.
Ships outside jurisdiction
The reality turned out to be more complicated – Russia redirected exports of minerals to Asian markets. Sales fell, but not adequate to disrupt the extraction and endanger the budget. The Russian ability to adapt thus triggered another reaction – in late 2022 the EU (with G7 and Australia) introduced a price cap for oil from Russia. Since then, it could not cost more than $60 per barrel, which was expected to limit Russian profits. How was compliance with the limit planned? Shipowners and insurers would take care of that. Under the punishment of the failure of the concession, they were prohibited from providing services at prices that did not respect the imposed ceiling. And that shipping and insurance companies from the G7 countries then had 90% of the market, The Russians were forced to accept fresh realities.
At least it seemed so. In early 2023, Western media were pleased to study that Russian profits from oil and derivatives sales fell by a third. But they shortly bounced back – what happened on the way? The Russians stopped utilizing shipowners' services, who imposed unfavourable prices on them and moved to the grey zone. This was the phase of the “shadow float” – at the beginning of last year it was liable for transporting 80% of Russian oil exported abroad. This meant almost complete circumvention of the sanctioning mechanism, which was to be a severe blow for Russia. Indeed, the mines carried by the ‘shadow float’ were sold at marketplace prices which were above the imposed limit. They're inactive sold like that.
Cleansed marketplace for ‘foods’
Migrants – due to the fact that they should be called that – have not been afraid so far with the consequences of breaking sanctions. The ships of the “shadow floats” swim under inexpensive flags – Panama, Liberia or Gabon – and belong to companies from the mediate East and Asia, with an highly opaque ownership structure. Units are frequently changed names, re-recorded their flags – all to make it hard to identify individual ships. These during cruises hide their locations, excluding lighting or transponders. So it is hard to track them – virtually and figuratively – and they stay outside the jurisdiction respecting the sanctions of states and organizations. And as long as there are countries willing to buy oil from Russia at marketplace prices, it's business. These countries are India, Turkey and China, where more than 90% of Russian exports of minerals go.
Let's keep moving. In order for Russia's needs to be met at all, the shadow float had to be expanded. Buying first-hand tankers for illegal business is not easy, and the supply of recently launched units remains limited. The developed capacity to service ships exists in places that the owners of “shadow floats” would like to avoid. As a result, the crushing majority of this armada is old and used, and the mass buying of "foods" almost cleared the market. According to manufacture media, tankers more than 15 years old are virtually unavailable and their price in the last year has increased by 120%.
Moscow has raised the stakes
But while the limited availability of "foods" is simply a concern for unfair shipowners and consequently the Russians themselves, the method condition of "shadow floats" is simply a global nuisance. This is about ecological risks, specified as the effects of accidents, bad or not at all, due to deficiency of decent service and insurance money. Let's add to that the hazard of a marine collision, advanced erstwhile the unit hides its location. As with another smuggling activities, the “shadow float” is multiplying criminal threats. To put it plainly, an individual who, in principle, avoids contact with the services of respective twelve countries, can besides carry another contraband outside oil – specified as weapons or people kidnapped for slave labour.
The sea smuggling business itself is not new, and the shadow float services have long been utilized by Iran or North Korea. But only Russia has made a mass phenomenon – all period Russian oil transports up to 200 tankers. And Moscow decided to rise the stakes – ships belonging to the "shadow float" began to be utilized for diversion as well. Importantly, these acts besides happen in the Baltic. In mid-November 2024 2 telecommunications cables were interrupted, connecting Finland with Germany and Sweden to Finland. A fewer days later, EstLink2, which runs under the Gulf of Finland, was broken. At the end of December there was besides the demolition of 4 submarine cables for data transmission. 3 between Finland and Estonia and 1 leading to Germany.
Until the Russians come up with something.
Under specified circumstances, the shadow float has become a tool not only in the economical war. Moreover, Russia took off the mask. In mid-May, an incidental occurred in the Gulf of Finland, where the Estonian Navy led the ‘Jaguar’ tanker towards the Russian port of Primorsk out of the exclusive economical region of the country. At that time, the unit was escorted by a Russian fighter. This was the first case erstwhile the Federation military tried to defend a unit that had nothing to do with it. So far, Moscow has detached itself from its relation with the “shadow float”, the presence of Suchoy over “Jaguar” definitely contradicts this narrative.
Will the recently introduced sanctions – on circumstantial individuals – change anything? The Russian-floating "shadow float" has virtually limited area for manoeuvre. Shipping routes run in specified a way that most ships at any point must affect EU and G7 waters. Failure to submit to control would be a manifest violation of the law. It is besides illegal transportation or deficiency of insurance, whose disclosure opens the way to take over the ship. And so bad, and so bad, looking at dishonest shipowners and Russians.
Unless those another guys figure it out again...
