How The Greek Shipping Industry Is Cashing In On Putin's War
Moscow relies on international shipping companies to ship its oil, especially tankers flying the Greek flag. To protect its lucrative business, Athens is resisting tougher sanctions — and thus playing right into Vladimir Putin's hands.
ATHENS — The world knows by now how much oil revenues help finance Russia's war against Ukraine. Around one-quarter of Russia's budget is still fed by its sale, compared with around one-third before the war. The country requires foreign companies to ship the oil internationally. Since the beginning of the Ukraine war, one European country has been profiting particularly well from the dynamic: Greece.
Greek tankers in particular ship the oil from Russia, especially from Russian ports in the Black Sea. Athens has also made sure to defend its business interests at the European Union level — and thus helped water down the sanctions against Russia, to the great dismay of Ukraine.
"Shortly after the invasion of Ukraine, Greece deliberately relocated its tanker fleet to Russian ports to transport Russian oil," says Robin Brooks, chief economist at the International Finance Federation (IIF).
In a recent analysis, Brooks examined the routes Russian oil takes through the Black Sea. "Other Western shipping companies withdrew, so margins went up, the business became very profitable," he says.
The Black Sea is the main route for Moscow to bring oil to the world market. Two export points in particular are relevant: Novorossiysk, from where Russian oil is shipped. And the terminal of the CPC pipeline, which brings oil from Kazakhstan to Russia - but not only: "The crude oil comes mainly from productive fields in Western Kazakhstan, in addition to crude oil from Russian producers," says the pipeline's website.
Greece's shipping companies are the most active shippers, according to the IIF analysis. Since Russian oil is subject to Western sanctions and cannot be brought into the EU, Greek ships sail from Black Sea ports through the Mediterranean Sea and the Suez Canal directly to Asia, for example, to India. So the oil ends up in third countries.
Therefore, Greece is not necessarily violating the sanctions. "The practice is perfectly legal. Whether it is morally justifiable is another matter," says Brooks. Transactions involving Russian oil are allowed if they are in line with the price cap.
The instrument was agreed to last December by the seven most influential Western countries, the G7, together with the EU and Australia. The price cap is set at $60 per barrel. Under this limit, Western companies are allowed to transport and insure the raw material. The world's most important shipping companies and insurers are based in the West, and Moscow depends on them.
The cap is intended to prevent Russia from profiting from price increases. But experts criticize two points. First, the cap came too late. Russia earned a lot of money in 2022 thanks to the high prices. Second, it is set too high. Poland, the Baltic States and Ukraine had called for a limit of $30 per barrel. Greece, but also Cyprus and Malta resisted — with success.
Although the Greek government early on sided with Ukraine after the Russian invasion and supplied weapons, its willingness to help appears to have its limits where core national interests are affected. Greece's shipping industry is one of the largest in the world: in 2021, 30% of the world's tankers were Greek-owned. Shipping companies contribute a considerable share to Greece's GDP.
Rail tankers are seen at the Novoshakhtinsk oil refinery in Russia's Rostov-on-Don Region
Greeks and sanctions
At the same time, Athens must balance European interests and public opinion, which differs from public opinion in other EU countries. The majority of Greeks - 60 % - oppose arms deliveries to Kyiv, while only 29 % support sanctions against Russia.
In addition to the legal shipments, a shadow fleet operates, transporting oil above the price limit.
Brooks believes the EU must confront Greek business interests. The oil price cap, he says, must drop significantly to empty Russia's war chest. He also criticizes many shipping companies for selling their old oil tankers to Russia, allowing Moscow to transport its own raw material - without a price cap. "These oil tankers are not currently on a sanctions list. But they belong to it," Brooks said.
In addition to the legal shipments, a shadow fleet operates, transporting oil above the price limit. Old tankers, presumably mostly Greek, avoid Western insurance and turn off their radio systems at sea to disguise their practices. The EU is now trying to crack down on this by banning the ships from entering European ports. This is what the 11th sanctions package, adopted in June, provides for.
This was preceded by months of resistance. Athens, among others, blocked the decision because Ukraine had put five Greek shipping companies on a list of supporters of Russia's war of aggression. After some back and forth, the names were removed and the sanctions package came into force.
A few weeks later, in early August, Kyiv called for the Greek companies to be put back on the list. They had not condemned Russian aggression as agreed, the National Agency for the Prevention of Corruption reported. With their transport of Russian oil, they would fill Moscow's budget and thus "finance the Russian invasion."
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