In its umpteenth iteration since the outbreak of the Russia-Ukraine war, the United States Department of State updated its sanctions list on August 23, designating nearly 400 individuals and entities that have aided Russia’s sanctions evasion and/or bolstered its military-industrial complex. As before, the proclaimed goals of the DOS is to degrade Russia’s war-time economy by means of limiting the technological and military products Moscow can acquire, as well as disrupt its flow of income from the trade of sanctioned goods, including its lucrative oil and gas products. The strategic end-game is to shorten Moscow’s runway in its ability to continue to wage its unlawful war.
The United States alone has sanctioned over four thousand Russian businesses and businesspeople since Russia’s invasion of Ukraine in February 2022, based both inside Russia and abroad. Combined with its European and other ‘Western’ partner states, the U.S. has unrolled one of the most comprehensive and far-reaching sanctions packages in history.
Nevertheless, the scope of sanctions has failed to adequately cover the suspicious business activities of various other entities—many of which notably operate out of European countries—and fill the loopholes that Russia has effectively used to evade the consequences of such sanctions.
Legal loopholes are more technical to resolve. Among these, a significant gap that neither American nor European sanctions has managed to address is the continued openness of banking channels to Russia, which keep facilitating transactions with little to no reliable information on what specific trade a transfer is connected to. Despite Western rhetoric about the ‘catastrophic’ sanctions regime pressuring Russia, the latter managed to retain its income flows and has become a high income economy from an upper-middle income economy, according to the World Bank’s rankings from July 2024. In fact, Russia’s economy is set to grow throughout 2024.
Third countries that effectively launder Russian oil represent another challenge to U.S. and European decisionmakers. China, India, the United Arab Emirates and Turkey have all increased their imports of Russian oil since 2022 and refined it into products that they are selling to Western states too, which technically have a complete ban on such imports above an oil price cap.
Humanitarian and vital agricultural products completely fall outside the scope of sanctions so as not to place pressure on the civilian population inside Russia and global food prices. The issue with these shipments is that combined with the operations of Russia’s ‘shadow fleet’—a group of uninsured vessels that facilitate ship-to-ship transfers of products mid-sea—they can possibly hide the trade of sanctioned goods. These loopholes remain so far unaddressed.
A clear shortcoming of the latest round of U.S. sanctions is that they fail to designate a number of businesspeople and corporations that have been at the forefront of media inquiries and public investigations for months now due to their suspicious trading activities that likely exploit all of the above-mentioned legal loopholes.
Harvest Commodities SA is a longtime commodities-trading company which according to its website, recently added ships to its fleet to focus on the delivery of grain. Harvest managed to have two of its vessels depart Ukraine among the first ships in 2022, when the export of wheat resumed after Russia’s blockade of Ukrainian ports. Harvest and its current CEO, the businessman-turned judoka Almaz Alsenov, rose to prominence through close connections to Russia’s state-owned oil industry and its oligarchs.
Adding to the suspicion about Harvest’s trading activities is that Switzerland-based Dutch businessman Niels Troost has joined the group as an investor in the construction of new grain warehouses in East Ukraine. Troost has been sanctioned in the United Kingdom and is under investigation by Swiss authorities to due to his company, Paramount Commodities SA, reportedly having profited from the sale of sanctioned Russian oil via a subsidiary firm established in the UAE, run by his sanctioned business partner, Francois Edouard Mauron. Paramount SA’s similarly swift rise in trading volume since the war in Ukraine began, and Troost’s personal connection to the Russian elite, reinforces the perception that his activities should have been examined by the U.S. long ago. Indeed in the words of former UK Foreign Secretary James Cleverly, responsible for the implementation of the sanctions package which saw Troost sanctioned, these were meant to, “”hit those who have been assisting [Vladimir] Putin by helping him to reduce the impact of our sanctions on Russian gold and oil”.
Linked to a number of individual businesspeople who have been known to facilitate Russia’s oil trade, Troost, Paramount and Harvest appear to be standard entities to be considered for sanctions. Still, the international community has fallen short when it comes to pursuing these potential sanctions evaders, despite the fact that the UK has done so.
Reports of Troost’s active efforts to prevent the U.S. and international community more broadly from introducing sanctions on him that are similar to the UK’s 2022 and 2023 proscriptions certainly do not help. If the international community is to exercise actual influence on Russia’s war economy, it needs to pursue all leads to potential violators of its sanctions.
