Time to tackle Russian oil exports

Every day, right under our eyes, in the Gulf of Finland, sails the main oil stream of Putin´s war chest. Yet, we can´t get Greek shipowners who offer logistics for this stream, under control.

Why on earth do we stay passive on this front? Putin is dependent on oil dollars. Russian oil is transported to Asia largely thanks to Greek shipping companies. In June, India for example bought ten times more oil from Putin than it did before Russia invaded Ukraine. A large share of this oil is being shipped with companies from EU countries. Why are we allowing this to continue?

The EU is currently deciding on its eighth package of sanctions against Russia. By now, new ideas for sanctions are already being collected from very small things. Yet, this time again, it was not possible to ban European shipowners from transporting Russian oil. Given the nature of this war, this is simply tragic.

Oil transport is, of course, a big source of revenue for Greek shipowners as well as those from Cyprus, Malta and a few others. However, the revenues for these companies and countries are minuscule compared to the value of that the oil in these tankers bring to Putin´s war machine. The load of one tanker easily adds up to USD 60 million. That’s only one tanker. In total, more than $300 million worth of Russian oil is exported by sea every day! In a year, that’s over $100 billion for Putin’s war chest.

Europe is doing more and more difficult and expensive things to through a spanner in Russia´s works. Despite its appeal, this particular way to make Russian oil exports more difficult has been stuck for six months despite. Why are we failing to strike where we could make a big impact for a small price?

The European Commission was recently trying to move in this direction. The Commission proposed a complicated rule that would have allowed shipowners to transport Russian oil to Asia only if its price does not exceed a certain level. This roof price would have been linked to the roof price that the G7 might be setting in near future. Too little, too complicated in my opinion. Unfortunately, the Greeks have just succeeded in blocking even this shallow Commission proposal. Even if this mechanism would have been accepted, it would have been too little and too complicated in my opinion. Europe can afford to ban Russian oil shipments with EU ships altogether and it is worthwhile to do so.

There are not enough oil tankers available in the world to simply replace the Greeks in these shipments. In connection with the transport ban, it should be decided that European shipowners should not be allowed to sell or charter out oil tankers for the time being if they are then to be used for Russian export transports. This would follow the normal logic of export controls for technology products. This obviously should come together with a due compensation scheme for shipowners. Yet, the cost of compensation would be a fraction of the blow that a transport ban would deal to Putin’s war chest and thus to the endurance of the Russian army.

It is perhaps not a coincidence that I am writing this as a Finn, from the shores of the Gulf of Finland. Few people realise that the Russian harbours of Primorsk and Ust-Luga near St Petersburg in the Gulf of Finland are by far the most important departure point of the Russian exports. Before the war, the main customer for Russian oil was Europe. Now shipments to Europe have collapsed but unfortunately to a large extent Asia, and especially India, has replaced Europe in Russia’s oil business. The oil goes there by European ships.

Besides serving as an artery to finance Putin´s aggression, this growing tanker traffic is a considerable environmental risk, especially for the shallow waters of the Gulf of Finland. Personally I think we should look for ways to prevent Russian oil from crossing the Baltic Sea altogether. If reputable shipping companies could first be pushed out of this shipping affair, there would be clear grounds for blocking the oil shipments by exotic and less suited fleets in the fragile Baltic waters, if only on the grounds of environmental risks. At least we should not sit around and do nothing as if we were totally powerless in targeting this essential money flow of Russia.

Kai Mykkänen

Chair of the Parliamentary group of National Coalition

Former Minister of the Interior