EU opens possibility of food export derogation for Russian oligarchs

Brussels targets Russian judges, political parties and military in latest package

The port of Rotterdam, the Netherlands, on March 21, 2016. Reuters

The European Union has added a derogation in its latest sanctions package against Moscow that allows the bloc’s 27 members to give listed Russian businessmen access to frozen funds under specific conditions in order to facilitate the transfer of Russian fertilisers through European ports.

Although Russian agricultural products fertilisers are not sanctioned by the EU, shipping companies have been reluctant to transport them. This has heightened food insecurity in countries that are reliant on Russian products.

European officials insisted that the derogation was not a “general exception or a delisting of individuals concerned”.

The derogation can only be used by national authorities if sanctioned Russian individuals, who held a significant role in the international trade of agricultural food products prior to their listing, need to access their economic resources for the purpose of a specific trade, according to the EU’s ninth sanction package published late on Friday.

“For example, they need to pay the port authority, let’s say in [Europe’s largest port] Rotterdam, but they can’t because their account is frozen,” said an EU official.

“So, under the supervision of the national sanctions’ authority, they can access their account under very strict conditions to be set by the national authorities for the purpose of that trade,” they added.

Countries need to co-ordinate with the European Commission to ensure uniform implementation across the bloc.

The purpose of the derogation is to address complaints made by some countries like Germany and the Netherlands to the Commission about shipments being held at European ports for longer than necessary.

EU diplomats have said that the UN’s Secretary General Antonio Guterres had asked them to “ease up” on fertilisers.

The situation is particularly urgent on the African continent, which imported 44 per cent of their wheat from Russia and Ukraine between 2018 and 2020, according to UN figures.

“African countries ― they really need Russian fertiliser amongst others to act on their food security and prevent famine,” one diplomat said earlier this week.

Some counties like Poland and Lithuania opposed the derogation, arguing that “not a single Euro” should reach the pockets of Russian oligarchs.

EU officials downplayed reports of bottlenecks at European ports, saying that Russian grain and fertilisers were able to reach third countries without facing significant obstacles.

“We have several cases where there are other questions via national sanctions authorities relating, let’s say, to the economic structure of a company involved, whether or not that belongs to a listed individual or not, or questions regarding financial sanctions or banking sanctions, or simply de-risking by European financial institutions that do not want to support such trades,” said an official.

The latest sanctions’ package targeted 190 Russian individuals or entities and included, for the first time, five political parties, including United Russia, which is chaired by former Russian President Dmitry Medvedev.

It was also the first time that Brussels targeted senior members of the Russian judiciary. Nine judges who recognised as constitutional the formal annexation of four regions of Ukraine in September were listed.

The sanctions targeted the Russian armed forces and 23 companies supplying it.

Brussels sanctioned Russian media actors and propagandists such as Nikita Mikhalkov, a film maker, actor and public figure who has actively supported Russia’s invasion against Ukraine in public statements.

Family members of oligarchs who are used to divert assets and escape sanctions were also listed, including four close relatives of prominent Russian banker Yury Kovalchuk. His wife, Tatyana Alexandrovna Kovalchuk, is the third richest woman in Russia with a net worth of $600 million.

Other sanctioned individuals included the 24-year-old Minister of Culture of Chechnya Ayshat Ramzanovna Kadyrova and her younger sister Karina, head of pre-school education in the mayor’s office of Chechen capital Grozny. They are both daughters of Russian President Vladimir Putin’s ally Ramzan Kadyrov, head of the Chechen Republic.