Yellen Tells Cyprus, Possibly Skirting Sanctions on Russian Oil, To Toe the Line

Washington reportedly wants Cyprus, a full member of the European Union, to impose  a ban on its vessels transporting Russian oil to third-world countries,

AP/Susan Walsh
The treasury secretary, Janet Yellen. AP/Susan Walsh

The American treasury secretary is looking to a major shipping crossroads of the Mediterranean, Cyprus, for help in stopping Russia from dodging sanctions. In a call yesterday to the Cypriot finance minister, Constantinos Petrides, Secretary Yellen expressed “the U.S. desire to align with the European Union’s sixth package of restrictions and prevent evasion,” according to an official statement from the Department of the Treasury. 

The two also spoke about “the goal of placing a price limit on Russian oil to deprive the Kremlin of revenue to finance their war in Ukraine while mitigating spillover effects for the global economy,” the statement said. What Washington is actually seeking is for Cyprus, a full member of the European Union, to impose  a ban on its vessels transporting Russian oil to third-world countries, the Kyiv Independent said, citing Bloomberg. 

The implication of this assessment is that at least up to the last week of June, Cyprus has been complicit in greasing the wheels of the Kremlin’s cash cow machine: energy. 

Cyprus has a complex relationship with Moscow. As Politico reported in March, “for decades, Cyprus built an economy that courted Russians — Russian tourists, Russian investors, Russian oligarchs,” and it has “long served as a banking home for the gray fortunes of Russian investors, from arms dealers to gambling firms and pornographic websites. In the early 1990s, post-Soviet figures like Slobodan Milošević traveled to the island with cash-filled suitcases.” The environs of the island’s largest port at Limassol, on the south coast, have long been a popular choice for well-heeled Russian travelers and part-time Russian residents.

The island is both a former British Crown colony and currently Europe’s biggest shipping management center. Even though the island is home to two vast and active British sovereign military bases, its membership drive to join the EU in 2004 was widely seen as an insurance policy against renewed Turkish aggression, Ankara having invaded northern Cyprus three decades prior. While it has supported the EU’s sanctions regime against Russia, there is a sense that it is doing so less from a position of fervor than obligation. 

Mr. Yellen’s phone call should be seen in that context. In March, just days after Russia invaded Ukraine, Mr. Petrides told Politico that “the Cypriot economy is disproportionately affected compared to other countries due to its structure and its reliance on Russian tourists.” This month the travel website Simpleflying reported that Cyprus is bracing for a loss of more than $600 million in revenue due to sanctions on flights to and from Russia.

Yet commercial shipping is also big in Cyprus, and no European country is closer to the Suez Canal. With one of the world’s largest merchant fleets and flagging more than a thousand oceangoing vessels, according to the ministry of shipping, the economic stakes of rupturing ties with Russia are evident.

As Moscow actively replenishes its European energy revenues lost to sanctions by selling oil at cut-rate prices to huge alternative markets like India and China, it needs all the available ports it can get. Washington, if not Brussels, is being very clear that those ports should not be Cypriot. Monitoring maritime traffic and policing infractions formulated in distant capitals is notoriously murky work; it remains to be seen just how effective Ms. Yellen’s diplomacy of deprivation management will be.


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