It is clear from the examination in this case study that the unilateral sanctions have had a limited effect for a number of reasons.
First, Russia and Iran have refused to recognize the legitimacy of the measures and have sought to evade the measures. Second, while the sanctions did succeed in offsetting some activity by driving transfers out to sea rather than in European ports, the principles of innocent passage, transit passage, and freedom of navigation mean that the ability of the U.S. and EU to block vessels has been limited.
The case study shows that despite U.S. and EU sanctions, Iran and Russia have been transferring oil and refined petroleum products to Syria. Some western companies and western flagged vessels were wittingly or unwittingly involved in oil and jet fuel transfer to Syria. In late June and early July 2019 there were 5 potential instances of oil/refined petroleum transfers to Syria. OFAC designated Iranian chemical/products tankers DELICE and DEVREZ sailed from the Persian Gulf; Malta flagged chemical/product tankers SHOVKET ALEKPEROVA and MUBARIZ IBRAHIMOV (neither OFAC designated nor in the OFAC 2019 advisory list) sailed from Russian ports; previously Panama flagged crude oil tanker GRACE 1 (neither OFAC sanctioned nor in the OFAC 2019 advisory list) sailed from the Persian Gulf to Mediterranean through Gibraltar. All four Iranian and Malta flagged vessels switched off their AIS before heading towards Tartous Port. The `flag country` and `registered owner company address` analysis of vessels allegedly involved in oil/petroleum products transfer to Syria and listed in the most recent U.S. OFAC Advisory suggests involvement of some EU flagged vessels and EU based companies.
Allegations supported by evidence suggest that Russian and some western companies were involved in supplying jet fuel to Syria despite EU and U.S. sanctions. The jet fuel was highly likely used to sustain Syrian or Russian Air Force Operations in Syria that resulted in the deaths of civilians.
On 12 June 2018, five Russian and three Syrian citizens were indicted by U.S. judicial authorities for violating U.S. sanctions by transferring jet fuel to Syria and making U.S. Dollar transfers to pay for the fuel deliveries. However, Project Alpha’s analysis of the Sovfracht Indictment, civil judicial forfeiture case files for `Petrolina` and `Maritime` and publicly available information suggests there is a broader international network that is enabling the alleged evasion and violations of U.S. and EU sanctions.
The Sovfracht indictment details alleged involvement of two Russian flagged petroleum tankers, MUKHALATKA and YAZ in jet fuel transfer to Syria. According to the indictment, after its designation by OFAC in September 2016, Sovfracht used Maritime as a front company to send U.S. Dollar wires. Sovfracht and Maritime allegedly worked with a Cyprus based oil company (Petrolina), Denmark based bunkering company (Dan Bunkering) and a Canada based oil company (Company C) to supply jet fuel to Russian tankers bound to Syria and in some instances to enable associated U.S. Dollar transfers for shipments.
The case study also briefly examines the recent case of the interdiction of the GRACE 1 on route to Syria. This vessel was seized by Gibraltar on the basis of alleged breaches of EU sanctions. However, a number of questions remain about this case which will be addressed more fully in a future Project Alpha report.
Companies and governments must enact better practices in enforcing and complying with maritime sanctions against Syria. Introduction of best practices outlined in the UN North Korean Panel of Experts (PoE) Report would likely make a difference to the implementation of sanctions regarding petroleum and jet fuel transfers to Syria. PoE recommendations include: for commodity traders and brokers, introduction of effective end-use delivery verification for STS transfers of petroleum products and to perform due diligence on the recipient vessels; for insurance and petroleum trading companies to have “AIS switch-off” clause in their contracts for at-risk vessels operating in the region; for financial institutions to introduce AIS screening and vessel due diligence risk assessment clauses into the letters of credit and loans.
The case study can be read in full here, Sovfracht Indictment and Oil and Jet Fuel Transfer to Syria