Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

If Russia wants to evade sanctions, it could learn from Iran's playbook

If Russia wants to evade sanctions, it could learn from Iran's playbook

As Russia faces unprecedented sanctions on virtually all sectors of its economy, it may have to turn to a trusted ally with more than four decades of experience with Western embargoes.

Until the Ukraine war, Iran was the most sanctioned country in the world, according to Castellum.Ai, which tracks sanctions. Russia now holds that record and the two countries are in what analysts call "a marriage of convenience" that is likely to grow stronger as the war in Ukraine escalates.

"Common interests in helping the other evade sanctions are important to these dynamics in Russia-Iran relations," said Giorgio Cafiero, CEO of Gulf State Analytics in Washington DC.

Amid tit-for-tat air blockades between Moscow and the West last month, Russian transport minister Vitaly Savelyev said his country is "studying the case of Iran" to help it deal with sanctions on maintenance and spare parts. Iran still operates some planes purchased before the 1979 Islamic Revolution that ruptured its ties with the West.

"This bilateral relationship will likely grow stronger as the war in Ukraine rages on, especially if the Vienna talks fail to revive the JCPOA," Cafiero added, referring to the 2015 deal that put verifiable limits on Iran's nuclear program designed to prevent the country from obtaining a nuclear weapon. He noted that Iran's isolation will further push Tehran to make itself useful to the Kremlin.

After decades of Western economic constraints, the Islamic Republic has become a master of evasion, using illicit markets and manipulating vessel-tracking to circumvent sanctions. Today, Russia is living a similar crisis as the West clamps down on Moscow in an effort to cripple its war effort.

Can Russia follow Iran's lead to circumvent Western sanctions? Some analysts say it already is.

The US, the G7 group of rich nations, and the European Union have imposed a series of unprecedented sanctions on Russia since its invasion of Ukraine on February 24.

The largest blow, however, would be to Russian energy, which by 2020 made up more than half of Russia's exports. The US and Britain have already banned Russian oil. Today, the EU -- which remains highly dependent on Russia's supply -- is considering a similar move, but is yet to reach consensus on the matter.

One way Russia can learn to survive potential sanctions on its oil is to shift vessels and rebrand its blend, a tactic that has been used by Iran.

Iran has in the past hidden millions of oil barrels off little-known ports in Asia to escape Western sanctions, Reuters reported in 2012. Barrel transfers in the dead of night from one vessel to another allowed Iran to masquerade under different flags, selling its oil to keen Asian buyers without catching the eye of Western monitors. Iran didn't respond to a request for comment, Reuters added.

"About 8% of the world's largest tankers are now engaged in the smuggling of sanctioned oil, largely comprising Iranian and Venezuelan product," said Cormac Mc Garry, security expert at Control Risks in London.

"Ghosting" is the most commonly used mechanism, Mc Garry told CNN, whereby ships turn off their automatic identification systems as they switch cargo from one vessel to another.

"The trick here is that the second tanker may look completely compliant [with sanctions], and the trader or consumer can be duped into thinking they have purchased an unsanctioned cargo," said Mc Garry.


Windward, an Israeli maritime intelligence company, said that over the past month it identified Russian crude trading under the radar, where there were ship-to-ship operations between oil tankers departing from Russian ports with other oil tankers. Tankers engaged in this activity arrived in North America, Asia, Russia and Europe, according to Windward.

"While the new restrictions are changing vessel behaviors ... it seems like some companies are maintaining business as usual, by concealing their actions and trying to keep regulatory bodies ... in the dark," wrote Windward in a blog post.

In Iran's case, remote Malaysian territories were used as "blending" or "re-branding" spots, where Iranian oil would be mixed with others and sold as a non-Iranian product to international buyers. "Malaysian blends" have been a known gateway to evading oil sanctions, with Asian buyers -- specifically Chinese -- making use of the rebranded mix to purchase sanctioned oil.

Russia is already taking a similar route, its oil now rebranded as "Latvian blend" -- a 49.99%-Russian mix that is blended with other oil and labelled Latvian. The crude has been bought by UK-based oil and gas company Shell, Bloomberg reported.

Dealing with sanctioned oil risks both reputational and financial damage, but demand for crude could still drive some buyers to the deep ends of black markets, analysts say.

"Commodities markets are already being squeezed due to supply concerns and so it is not clear that Russian supplies can be replaced," said Esfandyar Batmanghelidj, founder and CEO of the Bourse & Bazaar Foundation think tank in London.

Financially, Iran has built a shadowy network that uses front companies and circuitous transactions to launder money and dodge sanctions, analysts say, which some believe may be offered for Russian use.

Those companies are used to give the appearance that there is no Iran connection, said Richard Nephew, a scholar at Columbia's Center on Global Energy Policy in New York who previously serves as deputy sanctions chief at the State Department and director of Iranian Affairs at the US National Security Council.

Front companies are a tactic that Nephew believes Russia would be keen to learn from.

"I think that Iran would be prepared to help Russia with respect to some sanctions evasion tools," said Nephew, "but of course, this assumes that Iran itself has access that it can make readily available."

Sanction evasion is not an easy task, said Batmanghelidj. And while finding complicit partners delays economic collapse in the short-term, it still cuts the chances of long-term profit.

"The main lesson that Russian should draw from Iran's experience is that evading sanctions and resisting sanctions is hard," said Batmanghelidj. "At best, Russia can aim to demonstrate resilience to sanctions, but that just means staving a runaway economic collapse," he told CNN.

"This is why the real cost of sanctions is an opportunity cost of forgone growth."

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
The New Life of Novak Djokovic
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
The Country That Got Too Rich? Public Spending Dominates Norway Election
EU Proposes Phasing Out Russian Oil and Gas by End of 2027 to End Energy Dependence
More Than 150,000 Followers for a Fictional Character: The New Influencers Are AI Creations
EU Prepares for War
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Big Tech Executives Laud Trump at White House Dinner, Unveil Massive U.S. Investments
Tether Expands into Gold Sector with Profit-Driven Diversification
‘Looks Like a Wig’: Online Users Express Concern Over Kate Middleton
Florida’s Vaccine Revolution: DeSantis Declares War on Mandates
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
"The Situation Has Never Been This Bad": The Fall of PepsiCo
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
The Fashion Designer Who Became an Italian Symbol: Giorgio Armani Has Died at 91
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
Druzhba Pipeline Incident Sparks Geopolitical Tensions
Cost of Opposition Leader Péter Magyar's Economic Plan Revealed
Germany in Turmoil: Ukrainian Teenage Girl Pushed to Death by Illegal Iraqi Migrant
United Krack down on human rights: Graham Linehan Arrested at Heathrow Over Three X Posts, Hospitalised, Released on Bail with Posting Ban
Asian and Middle Eastern Investors Avoid US Markets
Ray Dalio Warns of US Shift to Autocracy
Eurozone Inflation Rises to 2.1% in August
Russia and China Sign New Gas Pipeline Deal
×