EU announces 11th package of Russia sanctions and comes under US pressure to toughen China stance

Tue 16 May 2023
Posted by: Phillip Adnett
Trade News

Sanctions spelt out in blocks with Russian, EU and US flags behind

In our latest round-up of international sanctions news, the IOE&IT Daily Update covers the EU’s 11th package against Russia, developments on a so-called ‘shadow fleet’ and the diplomatic fall-out over South African weapons allegedly shipped to Russia.

EU’s latest Russian sanctions

European Commission (EC) president Ursula von der Leyen used a visit to Kyiv last week (9 May) to announce the EU’s 11th package of sanctions against Russia.

The latest package aims to stop Russia breaking sanctions by importinghigh-tech components for the war in Ukraine from neighbouring countries.

According to Politico, central Asian countries such as Uzbekistan and Kazakhstan are the most likely first targets of the proposal.

Several of these nations have reportedly benefited from boosts to both trade and economic growth since Russia’s invasion of Ukraine. China and Turkey will not be immediate targets, despite suspicions that they have aided Russia.

The US has been pushing Brussels to take a tougher line on China, but the EU is reluctant to further alienate Beijing and confronting Turkey is also seen as a political risk.

However, officials in Brussels are expected to announce today (16 May) further details on co-ordination and information sharing efforts, according to the FT.

Sanctions on China

While avoiding sanctioning the country at large, the EC has proposed sanctions on seven Chinese companies accused of selling equipment that could be used in Russian weapons, reports Bloomberg.

Some of the companies, like King-Pai Technology, have already been placed under sanctions by the US for supplying Russia’s military.

Despite rising tensions between them, US and Chinese officials met in Vienna last week to discuss a range of topics, including Russia’s war in Ukraine, reports CNBC.

The White House described the meeting between Biden’s national security advisor Jake Sullivan and China’s top diplomat Wang Yi as “candid, substantive and constructive.”

Washington has tried to deter Beijing from providing support for Moscow’s war effort.

Shadow fleet growing

As part of technical negotiations around its own sanctions package, the EU is increasingly optimistic it can close a loophole that enables a so-called ‘shadow fleet’ to aid oil and other goods flow to Russia, in violation of sanctions.

This fleet has more than tripled in size since the start of the war according to estimates from TankerTrackers.com, as reported by Splash247.

Data analytics firm Vortexa now assesses that 1,000 tankers have operated in the so-called ‘opaque market’ since January 2021, of which 745 of them were still active in the first quarter of 2023. 

Such vessels can be uninsured and pose a risk to shipping lanes. Offshore Energy reported a recent devastating explosion on board the aging oil tanker Pablo.

The explosion took place off the coast of Malaysia, in one of the busiest shipping channels in the world, resulting in the deaths of three crew members.

US accuses South Africa

The US has also accused South Africa of supplying arms covertly to Russia, reports the FT.

Reuben Brigety, US ambassador to South Africa, told local media that the US believed weapons and ammunition were loaded on to the Lady R, a Russian vessel under sanctions that docked at Simon’s Town naval dockyard near Cape Town in December.

Brigety was summoned into the South African foreign ministry over his allegations, with South African finance minister Enoch Godongwana later saying that the issue had been “resolved”, according to Bloomberg.

President Cyril Ramaphosa’s office said an independent inquiry would be set up to look into the allegations.

South Africa is non-aligned in the war, but Ramaphosa’s government is under pressure over signs it is favouring Russia.

Cyprus crack down

The Guardian reports that Cyprus has received an 800-page dossier from the US government detailing sanctions breaches by local individuals and entities that are alleged to have enabled Russian billionaire, Alisher Usmanov, to conceal his wealth.

A new list of names of persons in Cyprus to be sanctioned by the US and the UK is expected to arrive in the capital of Nicosia by the month’s end, according to website InCyprus.

Insiders said the new list will bring new turmoil to the Cypriot business community, with economic as well as political implications.

The Cypriot government has reportedly responded by cancelling a number of ‘golden passports’ – issued in exchange for a sizeable investment in the country – previously given to sanctioned individuals.