Smart sanctions for a stupid war: The West finally gets clever about Russia
The
P&I clubs are maritime insurance groups that specialize in open-ended, large-risk claims. P&I insurance is a requirement for all heavy cargo and container vessels. Under the new sanctions, European P&I clubs can no longer offer insurance to a vessel carrying Russian oil at a price higher than
Since
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Read more:
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Then targeted sanctions were imposed on Russian companies and individuals. Roughly 537 firms, 276 legal entities, 1,637 organizations and 3,369 people faced some sort of coercive economic measure between
Going easy on shipping capacity
Only 113 of 3,300 Russian maritime vessels, however, were subject to official sanctions.
Going easy on Russia’s maritime capacity was a blunder for
For example, bananas are locally sourced from cocaine-producing countries, and since the fruit expires quickly, customs officials want to move shipments through borders as fast as possible. Eight tonnes of cocaine worth over
If
With coercive economic measures on only three per cent of Russia’s entire merchant fleet in the first months of the war, these sanctions were sloppy at best and harmful at worst.
Within days of sanctions being imposed on those 113 Russian-flagged vessels, 18 of them switched to “flags of convenience” by registering the ships in the
This is nothing new for merchant fleets. Ship owners regularly register their vessels in countries that charge little tax and overlook poor labour conditions in exchange for payments to register a vessel under their flag.
This is why countries like
Into the shipping shadows
The direct sanctions against a small number of Russian vessels just encouraged nationally flagged ships to go deeper into the shadows and join their buddies under flags of convenience. Should sanctions be levied at
Doing so would put the brakes on hundreds of millions of tonnes of seaborne cargo. The global economy couldn’t handle that, and it would require enormous scrutiny to enforce these measures on guilty vessels.
This is why the latest round of sanctions targeting maritime protection and indemnity insurance companies is clever.
P&I insurance is required for every ship to enter ports to offload goods. The insurance covers the worst calamities, such as loss of life, dock damage and oil spills.
The insured vessel pays into the risk-pooling clubs that can move hundreds of millions of dollars quickly to any country in order to cover the costs of the disaster. Thanks to modern tech, steady tug boats and good harbour pilots, claims on P&I pools are low.
Still, every ship must have it, and the insurance entails massive, collective pots of money. If a sanctioned vessel is in the club, everyone in the club is at risk.
The clubs can also identify disingenuous vessels that might be hiding in their ranks. Data showing the history of flagging and ownership of any vessel is widely available. This allows the clubs to eject the questionable vessel immediately.
Past success
In 2012, the EU denied P&I insurance to
In 2017, I published research that pointed out that
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Read more:
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Within days of the
Now that similar sanctions are in effect against
Putin is scrambling to purchase a “shadow fleet” of about 100 vintage end-of-life tankers to try to get Russian oil to market. That won’t be enough to carry the Russian economy, but it could expose inroads to smuggling markets involving ports that overlook P&I insurance.
Keeping the
Just like how tax evasion brought down
It illustrates why governments and the private sector need to think smarter about sanctions. Don’t sanction the target. Sanction the environment in which they operate.
AXIS Capital to Release Fourth Quarter Financial Results on January 25, 2023
Shifting funds to sister companies hurts Florida insurance industry, GOP lawmaker says
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News