European Businesses Continue to Profit From Russia’s War In Ukraine

Russia’s illegal war in Ukraine has created a plethora of lucrative opportunities for companies and businesspeople willing to profit from military aggression, the evasion of sanctions set up in response to it, the tactical destruction of Ukrainian infrastructure, and even the theft of Ukrainian agricultural products.

Facilitating the sale of Russian crude has been one of the first sources of revenue that Russia-friendly commodities trading companies turned to when the first set of sanctions were rolled out by the U.S., European countries and their allies. The G7-imposed oil price cap, which the EU and its partners have also subscribed to, has restricted companies’ access to partner ports, trading services and insurance if they were found to be trading Russian oil above 60 USD, a great deal below average market value.

Combined with the EU’s substitution of Russian oil imports with alternative sources, the market was flooded with crude trying to find a new home, driving the price of Russian crude down. With freight rates to ship Russian oil shooting up after the war began, the Kremlin even offered to cover transportation costs, attracting scores of businesses to deal with Moscow and benefit from price discrepancies. Middle Eastern and Asian countries such as the UAE, Saudi Arabia, India and China also jumped on the bandwagon, and started to purchase Russian crude in much greater volumes than before the war. Some of this crude, they refined and ‘repackaged’ for Western consumers as their own. All taken together, both Russia and its new customers profited tremendously from such oil sales.

Among the non-Russian actors who benefitted from the sale of sanctioned Russian oil was a commodities trading company based in Switzerland, Paramount SA. Based in Geneva and owned by Dutch citizen Niels Troost, Paramount SA came under suspicion for redirecting virtually all of its trade volume to its Dubai-based subsidiary firm, Paramount DMCC after the start of the war. On top of this, the company started to trade a significantly increased amount of oil after February 2022. Investigations would eventually lead to the sanctioning of Niels Troost and his UAE business partner, Mr. Francois Edouard Mauron, who both remain sanctioned to this day.

In addition to oil, the grains market has been another area of activity where both Russia and those doing business with Moscow have become active. One of the most controversial aspects of Russia’s operations in Ukraine and its currently occupied eastern provinces, has been the theft of grains and their export under Russian banners. Ukraine is among the largest producers of wheat, barley, and maize in the world alongside Russia. From the beginning of the war, Russia sought to disrupt Ukraine’s agricultural production and boost its own by artificially driving up export prices, simultaneously threatening the food security of developing nations reliant on such exports.

The newly occupied ports of Mariupol, Berdyansk, Kherson, and the previously occupied port of Sevastopol in Crimea, became the primary exit points through which Russia exported Ukrainian grain. From 2022 onwards, Russia has consistently broken grain production records, not in least part due to its illegal acquisition of Ukrainian grains.

In parallel with this, the Russian military also began to attack Ukraine’s grain storage and export facilities in the western coast of the country, away from its area of occupation. The Odessa, Reni, and Izmail ports became the targets of airstrikes in July 2023. Silos, sheds, grain terminals and port infrastructure have been successfully destroyed or significantly damaged in all three cities.

The above mentioned Niels Troost also appears on this front. By early 2024, Troost already referred to himself as an investor in Harvest Commodities, announcing the construction of grain warehouses in Izmail. Harvest was one of the few privileged companies that facilitated the export of grains for the first time after the Russian blockade of Ukrainian ports ended as a result of the ‘Grain Deal’ in the Black Sea. Interestingly, of all the trades executed, only 2 on record were of Ukrainian grain, with the rest being Russian.

Grain trade has been highlighted as one of means by which Russia has hidden its export of crude. Its fleet of ‘shadow vessels’ that have navigated the world’s seas without insurance and identification have been suspected of masking the sale of oil under the guise of agricultural products, and facilitated ship-to-ship transfers of oil mid-sea, to hide the Russian origin of the crude and circumvent the oil price cap.

The links between Paramount and Harvest—alongside multiple other businesspeople who serve as intermediaries—point to the operation of a syndicate potentially specialized in profiting from the war in Ukraine. Rebuilding silos in ports destroyed by Russia as ‘benevolent’ investors, and trading previously blocked grains on ‘humanitarian’ grounds are just some of the tricks that these businesses employ to avoid attracting too much attention. Although it appears that pressure faced by Harvest may have become too much, leading to the company’s ongoing liquidation, it is difficult to ascertain what is next in terms of tricks that will facilitate the continued trade in sanctioned goods. This strategy has worked so far. Authorities hoping to catch sanction evaders and other Russian proxies facilitating sanctions evasion must think and act at least as quickly as the operators of such crime syndicates, to uncover and put an end to their operations.

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