Tag Archives: Russia economic sanctions

Crippling the Dark Fleet: the Helicopters

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Two sanctioned oil tankers shut off their transponders early January 2026 and powered to a meetup point, drawing alongside each other in the Sea of Japan. The crew of one of the vessels, known as the Kapitan Kostichev, then emptied 700,000 barrels of Russian crude into the tanks of the other, the Jun Tong, according to ship-tracking service Kpler. The clandestine ship-to-ship transfer, visible via satellite and other shipping data, is a maneuver typical of the shadow fleet, an armada of aging tankers that crisscross the world, smuggling illicit oil for sanctioned nations including Venezuela, Russia and Iran. 

The fleet’s operations came into sharp focus in January 2026 when U.S. Special Forces dropped from helicopters onto the deck of the Russia-flagged Marinera in the Atlantic Ocean south of Iceland. The tanker, which days before was sailing under a false flag and going by the name Bella 1, was escaping Trump administration action against vessels carrying Venezuelan oil. It had a Russian naval escort and wasn’t carrying any oil when it was captured.

There are now more than 1,470 tankers classed as being part of the shadow or dark fleet, according to the ship monitoring website TankerTrackers.com. Their number has swelled since 2022 as Russia has looked for routes around Western sanctions for its war against Ukraine.  S&P Global puts their numbers at 940, which represent 17% of tankers currently transporting oil, oil products and chemicals around the world…A shadow tanker often uses a “flag of convenience” provided by smaller, non-Western nations such as Gabon, Comoros or Cameroon…Flag of convenience states been known to offer sweeteners to shipowners, such as cheaper registration fees, lower taxes and less stringent checks.

Excerpt from Rebecca Feng, A Shadow Fleet Smuggles Illicit Oil Across the High Seas. This Is How It Works, Jan. 8, 2025

Strangling China with Hong Kong: the Politics of Fear

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The U.S. determination  that Hong Kong is no longer autonomous from mainland China, under the Hong Kong Policy Act of 1992, will have significant implications for the city’s exporters and businesses.  Sensitive U.S. technologies could no longer be imported into Hong Kong, and the city’s exports might be hit with the same tariffs levied on Chinese trade.

But the act doesn’t cover the far more extensive role Hong Kong plays as China’s main point of access to global finance.  As of 2019, mainland Chinese banks held 8,816 trillion Hong Kong dollars ($1.137 trillion) in assets in the semiautonomous city, an amount that has risen 373% in the last decade…. China’s banks do much of their international business, mostly conducted in U.S. dollars, from Hong Kong. With Shanghai inside China’s walled garden of capital controls, there is no obvious replacement.

While the U.S. doesn’t directly control Hong Kong’s status as a financial center, Washington has demonstrated its extensive reach over the dollar system, with penalties against Korean, French and Lebanese financiers for dealing with sanctioned parties. The U.S. recently threatened Iraq’s access to the New York Federal Reserve, demonstrating a growing willingness to use financial infrastructure as a tool of foreign policy.  Even though the U.S. can’t legislate Hong Kong’s ability to support Chinese banks out of existence, the role of an international funding hub is greatly reduced if your counterparties are too fearful to do business with you.

Putting the ability of Chinese banks to conduct dollar-denominated activities at risk would be deleterious to China’s ability to operate financially overseas, posing a challenge for the largely dollar-denominated Belt and Road global infrastructure initiative. It would also put the more financially fragile parts of the country, like its debt-laden property developers, under strain.  China’s hope to develop yuan into an influential currency also centers on Hong Kong’s remaining a viable global financial center—more than 70% of international trade in the yuan is done in the city.

Excerpts from Mike Bird, How the US Could Really Hurt China, WSJ, May 290, 2020

Qatar-Russia Financial Alliance

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Russia’s sale of one-fifth of its state-owned oil company to Qatar and commodities giant Glencore PLC last year had an unusual provision: Moscow and Doha agreed Russia would buy a stake back, people familiar with the matter said.  Russian President Vladimir Putin hailed the $11.5 billion sale of the Rosneft stake in December 2016 as a sign of investor confidence in his country. But the people with knowledge of the deal say it functioned as an emergency loan to help Moscow through a budget squeeze.

Moscow agreed with Qatar that Russia would buy back at least a portion of the stake from the rich Persian Gulf emirate, the people said. The Qatar Investment Authority and Glencore, the Swiss-based commodities giant, formed a partnership to buy the 19.5% stake in Russia’s energy jewel at a time when Mr. Putin’s government needed cash. The people with knowledge of the deal say the buyback arrangement was negotiated with involvement from Mr. Putin and the emir of Qatar, Sheikh Tamim bin Hamad Al Thani. Russia and Qatar saw it as an opportunity to build a bridge between countries that had taken up opposite sides in the Syrian civil war, the people said. One of the people said the buyback would happen in the next 10 years…

Rosneft, the world’s largest listed oil producer, is traded publicly in Moscow, but it isn’t easy to buy and sell large pieces of the company because it remains majority-owned by the Russian state and is an instrument of economic power for Mr. Putin.  The people familiar with the deal said a time-limited structure and a buyback agreement for the deal worked for both Qatar and Russia.

Qatar wanted its Rosneft stake to be temporary, the people said. The emirate believes it will profit from selling the shares back to Russia at a later date, the people said, betting that oil prices will rise and push up Rosneft’s share price. Qatar saw the political benefits of giving Russia access to quick cash as a sort of loan to address a budget deficit that had widened due to lower oil prices, the people said.  After the deal, a range of talks opened between Russian and Qatari businesses on a scale not seen before, Russian news agencies have reported….The deal was called the largest-ever foreign investment in a Russian company.

In an unusual arrangement, the rest of the financing was provided by Russian banks, which contributed EUR2.2 billion, and Italian bank Intesa Sanpaolo SpA, which lent EUR5.2 billion to the Glencore-Qatar consortium, according to a Dec. 10, 2016 new release issued by Glencore. The financing is “non-recourse,” Glencore said in the release, meaning the lenders couldn’t pursue Glencore and the Qatar Investment Authority if they weren’t repaid….Under the deal, the Rosneft shares aren’t held directly by Glencore and Qatar but by a U.K. limited liability partnership, according to British corporate records….

After the deal was announced, Mr. Putin awarded one of Russia’s top honors for foreigners — the Order of Friendship — to Qatar Investment Authority’s chief executive, Sheikh Abdullah bin Mohammed bin Saud Al-Thani, Intesa’s chief executive, Carlo Messina, and Glencore’s chief executive, Ivan Glasenberg.

Excepts from Russia’s Rosneft Stake Sale Had a Twist , Wall Street Journal, June 8, 2017