Ships illegally transporting sanctioned Russian oil are still operating with insurance ultimately backed by European financial markets, according to analysts and a lawmaker tracking the tankers.
Russia’s so-called shadow fleet uses intermediaries and, ultimately, “European and Western banking organizations” to channel money and “basically wash the insurance through these middle hands,” said Ville Niinistö, chair of the European Parliament’s Delegation to the EU-Russia Parliamentary Cooperation Committee and a leading lawmaker pushing for tougher action against the vessels.
Ships generally require protection and indemnity cover to operate and to access ports. Providing insurance for a shadow fleet vessel is generally illegal if the shipment breaches sanctions, including by transporting oil above the G7 price cap or involving sanctioned vessels.
But tracing the underlying sources of insurance and financing is difficult because ownership, management and financial arrangements are often deliberately obscured. The analysts POLITICO spoke with declined to identify the European banks that are likely underwriting the Russian insurance due to this complexity and the legal risk associated with naming them.
So EU financial entities gut the effect of sanctions. Money over principles.