Page 13 - bne magazine February 2024_20240206

bne February 2024 Companies & Markets I 13
The sanctions package encountered unanimous agreement among EU nations on December 13, except for Austria, which sought additional time to conduct a final legal examination before providing its approval. Sources familiar with the matter indicated that Austria's delay was linked to an attempt to have Raiffeisen Bank International, the largest Western bank in Russia, removed from a Ukrainian blacklist.
Hungary had a similar complain, when its leading bank OTP was placed on Ukraine’s “international sponsors of war” list this summer for failing to close down its large Russian franchise. Since then, as part of Kyiv’s attempts to placate Budapest, the bank has been removed from the list and also language laws that prevent the Hungarian language being used in Ukrainian schools in the Carpathian region, where there is a large Hungarian population, have also been watered down.
Ukraine has put Raiffeisen on the same list, as despite repeated promises, the Austrian bank has also failed to sell its large Russian subsidiary.
Despite Austria's reservations, the sanctions move forward, signalling the EU's unwavering commitment to holding Russia accountable for its actions. Raiffeisen Bank International remains on Ukraine's blacklist, underlining the intricate diplomatic considerations surrounding the imposition of sanctions.
What didn’t make the list
The negotiations on what to include in the twelfth package of sanctions have been torturous and many measures didn’t make the final cut.
The most controversial point that disappeared from the draft version was the requirement to co-ordinate with regulators any money transfer from the EU in favour of Russian companies or resident individuals. All that remains from this proposal is a requirement to notify national EU regulators about any transfers of over €100,000.
The new package will also not include a ban on the sale of tankers to the Russian “shadow fleet” thanks to lobbying by Greece. As reported by bne IntelliNews in a sanctions leakage report last year, Greek tankers expanded their business shipping Russian oil and other commodities shortly after the war started, but more recently Greek shipping magnates have been making a fortune from selling their vintage tankers to Russia for huge profits, but Cyprus and Malta both also have significant shipping fleets working with Russia.
The new-old tankers have allowed Russia to expand its shadow fleet to the point where it can ship most of its oil to non-aligned countries entirely outside the sanctions regimes.
Another point that is missing from the final version is a clause banning re-export to Russia for all export contracts of EU companies and a tracking regime to enforce the rule. Moreover, the original version also suggested applying
the rule retroactively, but that was considered a bridge too
far by most European countries and dangerous to their international trade. What remains of the proposal are limits on the export of military and dual-use items.
There is also still no agreement on whether to include in the sanctions package a ban on the imports into the EU of sanctioned goods for personal use from Russia, such as cars. Earlier this year some customs officials began confiscating privately owned cars registered in Russia that were crossing the border into the EU.
US moves first
The EU has also voted to tap part of the $300bn of Central Bank of Russia (CBR) reserves that were held in the EU, mostly by Euroclear in Belgium, that were frozen at the very start
of the war. While European property right laws make this money hard to seize without undermining the EU’s own rule of law, Brussels has proposed taking the profits earned from that money’s investments and redirecting them to Ukraine, estimated to be worth some €3bn a year.
Washington appears to have become impatient with the EU’s dithering over implementing the twelfth package of sanctions and has imposed its own new package without co-ordinating it with the new EU package.
The lists of persons subject to blocking sanctions included 23 people and over 200 companies. As explained in a detailed press release from the US Treasury, most of those on the list are participants in schemes for the supply of weapons produced
in China, and electronics and other dual-use goods from
third countries to Russia. A significant part of the companies are foreign: there are four Chinese, seven Turkish and eight Emirati companies on the lists. This is yet another clear confirmation that the sanctions confrontation has moved into the phase of a cat-and-mouse game between the sanctions departments and the authors of circumvention schemes.
The US list includes not only the perpetrators of Russian- Chinese and Turkish sanction-busting schemes unknown to the general public, but also targets two large Russian businessmen.
The first is number 43 on the Russian Forbes list, Zarakh Iliev and his Kyiv Ploshchad holding company, the largest owner of commercial real estate in Russia. Kyiv Ploshchad is home to the Europa Centre, the largest and most profitable mall in Europe. The second co-owner of Kyiv Ploshchad, God Nisanov, has been under American sanctions since June 2022 as an “oligarch associated with numerous Russian officials,” reports The Bell.
The second businessman on the list is the owner of the Kismet Capital fund, former CEO of mobile phone giant MegaFon and media investor Ivan Tavrin. The State Department press releases did not explain why Tavrin had ended up on the sanctions list, but he actively participated in the purchase of assets of foreign companies leaving Russia after the war started. Forbes has named Tavrin the biggest buyer of foreign assets and he has also been named as a possible buyer of Russia’s internet giant Yandex along with a who’s who list of Russian oligarchs."
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