A tightening and clarification of the European Commission’s (EC) sanctions on Russia now makes it impossible to supply Russian potassium chloride and compound fertilizers to third countries that use European services, such as insurers and shippers. The new prohibition applies even if the cargoes are not transiting European Union (EU) territory.
The Commission on Aug. 29 published an updated text of clarifications on the application of its sanctions for certain fertilizers produced in or exported by Russia. This followed a tightening on Aug. 10 of the EU’s fifth package of sanctions against Russia that were announced and implemented in early April.
On April 8, Brussels imposed sectoral sanctions on the import into the bloc of potassium chloride (CN 3104 20) and NPKs (CN 3105 20) and PKs (3105 60) and other fertilizers containing potassium chloride of Russian origin (GM April 15, p. 1; April 8 p. 1). These sanctions were in the form of a cap on the volume of these products that could be imported into the EU.
The April 8 restrictions did not apply to shipments until July 10 under contracts signed prior to April 9, 2022, the day the sanctions came into force.
While the April 8 measures did not target any other types of fertilizers of Russian origin, they included an entry ban on Russian-flagged vessels and Russian-operated vessels from accessing EU ports. They also banned Russian and Belarusian road transport operators working in the EU.
That initial ban did not apply to the transit of Russian potash and compound fertilizers to third countries that used the bloc’s infrastructure. But on Aug. 10 the EC further tightened the sanctions by extending the ban to include European operators’ activities related to the transit of sanctioned Russian fertilizers – potash and compound fertilizers – that were heading for third countries through the EU’s Member States.
Now, under the new sanctions, the supply of Russian origin potash and compound fertilizers to third countries, even without the use of the EU’s territory and infrastructure, is understood to be considered a violation of sanctions.
All activities relating to the provision of transport, transshipment, and trading services by European companies, as well as related services, such as insurance, financial, and brokerage services, along with technical assistance, are prohibited under the new tightened sanctions.
The latest decisions by Brussels would appear to contradict the EC’s earlier statements about “making exemptions” for what it described as “essentials” cargo, such as agricultural and food products and humanitarian aid. That said, according to some sources, the latest EU measures continue to allow for some exemptions.
The move has taken insurers and shippers by surprise, and according to a circular sent out to its members by the UK P&I club, one of the world’s largest protection and indemnity insurance groups, as cited by the Insurance Journal, the insurance industry had previously assumed the ban on transits and services would not apply to export destinations outside the EU.
The UK P&I club is a member of the International Group of P&I Clubs, which collectively cover about 90% of the world’s oceangoing vessels for risks. Most of the P&I clubs that comprise the international group are subject to the jurisdiction of the EU, according to the circular as cited by the report.
As previously reported, Russian President Vladimir Putin has said Russia is prepared to donate 300,000 mt of fertilizer – mainly potash that has built up in some European ports – to developing countries free of charge (GM Sept. 16, p. 28).