Page 15 - bne magazine February 2024_20240206

bne February 2024 Companies & Markets I 15
US runs of out money to help Ukraine
bne IntelliNews
White House representative of the National Security Council John Kirby says that the US has run out of money for new military aid to send to Ukraine and won’t get more unless Congress approves the draft $61bn package .
Kirby said that there are no available funds for new military aid packages to Ukraine after President Joe Biden signed the last military assistance package for Kyiv in December. Additional security assistance requires congressional approval, Kirby emphasised.
The end of US military aid will be a serious problem for Ukraine and comes just as Ukraine faces the biggest missile barrage since the start of the war just under two years ago.
Moreover, Ukraine is running out money again as Ukraine’s 2024 budget has a $29bn funding gap in it, part of which was supposed to be covered by US aid. Western financial and military aid has become snarled in internal wrangling and an EU €50bn package is also caught up in internal wrangling.
To solve the funding problem, the US is pushing its EU allies to seize the $300bn of Central Bank of Russia (CBR)’s reserves, most of which has been frozen in Europe. However, as there is no legal precedent and technically taking the money would be theft under current rules, the leading EU member states as well as the European Central Bank (ECB) are against the plan.
Holding only about $4bn of frozen CBR funds, the US has little exposure to the repercussions of seizing Russia’s money.
Kyiv is also pushing for the West to seize Russia’s money. Ukrainian Prime Minister Denys Shmyhal said the same day that a key task for 2024 is to transfer Russian assets towards the reconstruction of Ukraine.
Shmyhal expressed optimism that the Western allies would find a formula that would allow the Russian money to be used to aid Ukraine. He noted that the US, the EU, and other nations are making significant progress in addressing this issue.
US adds 17 Liberian-flagged bulk carriers and oil
tankers to Russian sanctions-busting blacklist
bne IntelliNews
The US Office of Foreign Assets Control (OFAC) has added 17 Liberian-flagged bulk carriers and oil tankers to
its Russian sanctions busting blacklist, citing alleged violations related to Western-imposed oil price cap sanctions on Russian oil, it was reported on January 19. The sanctions also target the shipping company Hennesea Holdings from Abu Dhabi in the United Arab Emirates (UAE).
Deputy Secretary of the Treasury Wally Adeyemo said the inclusion on the list is the consequence for those violating the price cap that was imposed almost a year ago.
"Today’s actions once again demonstrate that anyone who violates the price cap will face the consequences. No one should doubt our coalition’s commitment to stopping those who help the Kremlin," said Adeyemo.
The oil price cap sanctions have failed after the Financial Times reported at the end of last year that not one barrel of Russian oil has been sold under the $60 cap imposed by the sanctions. The West has tried to tighten the enforcement of the oil price cap sanctions and OFAC has already added three tankers to its list as well as
putting around a hundred shipping companies on its watch list.
However, analysts say OFAC is unlikely to widely and strictly enforce the rule, as it is afraid of restricting supplies of oil to the market and causing a price spike that would have serious negative consequences for the global economy.
The blacklist also represents a change of tactics. Originally the West was hoping to use its 95% market share of maritime insurance to police the sanction. Insurance would be withheld for any ship or shipping company that did not comply with the sanctions. However, Russia and its partners have simply insured the ships themselves. At the same time, Russia has developed a large shadow fleet that operates entirely outside the sanctions regime. That has left OFAC playing a game of whack-a-mole by targeting individual ships for secondary sanctions.
The US Treasury alleges that Hennesea Holdings owns vessels involved in transporting Russian crude oil priced above the $60 per barrel limit. The vessels, purportedly owned by Hennesea, have reportedly made repeated port calls at Russian ports, according to OFAC.
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