Call to Cease Support: Shipping Firms Facilitating Russia's War Effort

In 2023, somewhat counterintuitively, Russia outpaced both the United States and EU in economic growth, flaunting a rate of 3.6% despite grappling with sectoral sanctions and isolation from major global markets.

Although scepticism lingers over the accuracy of this rosy economic data, it appears Moscow is well-positioned to sustain funding for its ongoing invasion of Ukraine, which drags on into its third year.

It would seem, therefore, that the effectiveness of Western sanctions and export controls has been compromised by the evasion of sanctions and Russia’s thriving ties with China and India.

At the same time, the mass exodus of businesses from Russia anticipated at the conflict's onset has failed to materialise. Numerous companies opted to stand their ground, albeit with scaled-down operations and investments, while still funnelling billions to the Kremlin’s coffers.

Regarding Russia’s prodigious hydrocarbons industry, on 5 December 2022, the European Union enforced an embargo on seaborne imports of Russian oil. Yet just a month later, an Investigate Europe and Reporters United investigation revealed that the move was having a very limited impact: Moscow continued to reap profits from exports, with European companies still facilitating much of the trade.

For nearly a year and a half after the sanctions were first imposed, European ships continued to export millions of tonnes of fossil fuels from Russia, providing critical funds for Putin’s war in Ukraine. Oil, gas, and coal tankers owned by European firms and boasting a capacity of almost 16 million deadweight tonnes conducted hundreds of voyages after the sanctions took effect.

Greek tanker companies in particular moved large volumes of Russian oil earning significant profits. Within just a year of Russia’s incursion in February 2022, they had carried a staggering 292 million barrels of oil and oil-based products.

At the helm of these efforts was George Economou, a Greek billionaire who owns TMS Tankers amongst a suite of other shipping interests. TMS is the second-biggest player in the trade of transporting Russian oil, behind only Russia’s state-owned Sovcomflot – a dubious title.

Vessels associated with Economou made over 200 maritime journeys departing from Russia in the year between February 2022 and 2023, yielding profits ranging between $4 million and $5 million for every 60-day expedition from the Baltic Sea to India.

In April 2022 alone, data from Lloyd’s List shows that ships owned by the Athens-born businessman transported 1.9 million tonnes from four Russian ports.

Despite Ukraine's persistent efforts to encourage Greek officials and companies to cut back on Russian shipments, for nearly two years, Economou turned a deaf ear to these calls and continued to increase his fortune, capitalising on TMS’s position as a conduit between Russia and the rest of the world.

As a consequence, Ukraine’s National Agency on Corruption Prevention placed TMS atop a list of what it described as ‘international sponsors of war.’

Even though Greek government officials asserted their commitment to abiding by sanctions, the current situation is tinged by hypocrisy. The United States has always wanted to prevent the complete disruption of the Russian oil trade for fear of destabilising oil prices and unsettling voters.

While the sanctions have underscored the White House’s intent to challenge the Putin regime, the Biden administration and its allies in Europe have shown a reluctance to embrace the measures required to meaningfully tighten the screws on the Kremlin.

Stronger penalties that would sequester Russia’s oil revenues, or secondary sanctions on those that aid and abet its hydrocarbons industry, would truly sever the Kremlin from the global financial system to devastating effect.

While such a policy could destablise global energy markets, Ukraine continues to lobby the West for its implementation – recognising that its resistance is running out of steam in the face of a well-funded Russian war machine.

Indeed, it is clear that the support provided by figures like Economou and firms like TMS have only served to uplift the Russian economy at a time when the complete opposite was needed. Western policymakers, therefore, must act decisively to bring this collusion – for that is what is – to an end, and now.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.