EU wants to put the squeeze on Russian crude smugglers

BRUSSELS — An EU effort to close loopholes that allow Russian oil to flow into the European Union is finding broad support from member countries, officials and diplomats have said.

Representatives from the 27 member countries met Thursday to discuss technical aspects of the 11^th package of sanctions against Russia — a response to Moscow’s invasion of Ukraine.

According to three people with knowledge of the talks, there is currently no major opposition to stepping up enforcement of existing energy embargoes — even from countries believed to be benefiting from undeclared imports of Russian crude.

“Of course this package is different from the others, focusing on circumvention, and it will have a different impact so we are taking our time to look at all the proposals,” said an EU diplomat from a country that has faced pressure to cut energy ties with Russia. “But for us, enforcement isn’t proving to be a major issue — we don’t have red lines on this.”

A draft version of the European Commission’s proposals for the sanctions package, seen by POLITICO this week, would bar vessels covertly carrying Russian crude from the bloc’s ports. That’s aimed at the so-called ‘shadow fleet’ of aging tankers carrying Russian crude since the EU banned imports of Russian oil and oil products in conjunction with a price cap imposed by the G7 in March.

Russia doesn’t have enough ships to carry its oil, so is forced to use third-country tankers to move its oil. Much of that fleet is thought to be Greek-owned, according to an analysis by S&P Global. Some ships are turning off their transponders and GPS to avoid being found out, said the draft sanctions measure.

“Given the sharp increase in deceptive practices, and related environmental risks, by vessels transporting Russian crude oil and petroleum products in an effort to circumvent Union restrictive measures,” new measures would create powers to bar “access to the ports and locks of the Union to vessels that are suspected or found in breach of the ban on importing seaborne Russian crude oil and petroleum products into the Union and of the G7 agreed price cap by engaging in ship-to-ship transfers,” the draft said, adding that the same penalties would apply to ships turning off their transponders and GPS.

That tightening is unlikely to spark a major row, said a senior Commission official speaking on condition of anonymity to discuss the sensitive political negotiations.

“For me, on the sanctions package, the media like to write about rock and roll and rough and tumble, but the success has been in unity — preserving that unity for the outside world is very important,” the official said.

The oil measures are part of a broader sanctions package that is likely to take aim at third countries boosting trade with Russia, including China and Iran, as well as an annex to call out specific countries and products. It’s an effort to ensure earlier rounds of sanctions have a more significant impact on the Russian economy and hamper the Kremlin’s ability to wage war in Ukraine.

While there is no strong opposition to tightening the oil sanctions measures, the real test will come once such steps have to be implemented by individual countries, said George Voloshin, a global expert at the Association of Certified Anti-Money Laundering Specialists.

“There’s been very limited enforcement across the EU to date,” he said, adding that “the usual suspects — namely Mediterranean nations” would have to do more than just sign up to the rules in Brussels, but actually return home and target the oil flowing in and the cash flowing out.

Leonie Kijewski contributed reporting.