A person who touted a buyer’s cartel sanction success, now complains the buyers cartel leaks like a sieve. 
Tweet of the Day
Foreign Policy: “Since Russia’s invasion of Ukraine, Greece’s mighty shipping sector has continued to earn good money shipping Russian oil. But Greek shipowners have discovered an apparently even more lucrative source of revenue: selling the ships themselves to mysterious buyers linked to Russia. One publication has declared that a “Great Greek Tanker Sale” is taking place, and no price seems too high for a secondhand tanker. But the formerly Greek ships are entering a Hades-like shadow economy.”
Lesson of the Day: Sanctions Create New Markets
Eurointelligence comments on How Sanctions Created New Markets
Sanctions on Russia were meant to stop trade and coerce Vladimir Putin into a U-turn on Ukraine. Instead, Russia continues to bide its time in Ukraine, and Russian oil in particular continues to flow into world markets. The buyers may have changed and the way markets operate. What was transparent before all of a sudden turned opaque.
The west did also not completely cut themselves off from Russia despite all rhetoric. Western firms and banks are still operating in Russia, even if the numbers have dwindled. Russian gas is still flowing into Europe, albeit at much-reduced volumes, and could even increase thanks to a recent deal between Bulgaria and Turkey.
Elisabeth Braw, writing for Foreign Policy, has a cracking story about how Greek shipowners made a fortune selling their oil cargo ships second hand. Since the war in Ukraine started, Greece sold 290 ships. They do not sell at a discount. On the contrary, the story gives examples of where the ship price has doubled or tripled compared to the original price the Greek owners paid. In markets like these where money is not a limiting factor, tankers are a desired object that cause a hike in prices. A whole new tanker market has come alive as a result of the war.
The buyers are much more mysterious than the sellers. Companies based in the United Arab Emirates bought most of the tankers, followed by buyers in China, Turkey and India. In 2022, a stunning 864 new maritime companies with an association or link to Russia emerged according to S&P Global Market Intelligence. Sometimes there is not even an email address linked to those companies. The role of the UAE is not surprising, as Dubai has emerged as the new Geneva for Russian oil trading companies. China and India both have stepped up their imports in Russian oil and need tankers for transport.
The role of the UAE is not surprising, as Dubai has emerged as the new Geneva for Russian oil trading companies. China and India both have stepped up their imports in Russian oil and need tankers for transport.
Lesson Number Two
Countries, political leaders, and market makers act in their best interest.
It is in the best interest of Greek shippers to sell ships so they do. It is in the best interest of India and China to buy Russian oil and Greek ships so they do.
It is in the best interest of Dubai middlemen to make a market in ships so they do.
What this boils down to is simple: It is the best interest of middlemen in Greece, Russia, India, China, and Dubai to tell Biden to go to hell, so they do.
Flawed Policy of Trump and Biden
Both Trump and Biden pretend they can set policy for the whole world. The rest of the world is sick of it.
The US’ best interest is not in the best interest of much of the world. Since the US does not give a damn about anyone else’s opinion, why should anyone else give a damn about the US opinion?
Sure, the US can bully small nations, not that it works (because it doesn’t). US foreign policy failed or worse yet backfired in Iran, Iraq, Libya, Cuba, Afghanistan, Venezuela, even Ukraine.
One should not make excuses for Putin, but one also needs to admit the US foreign policy played a huge role in fomenting the mess in Ukraine.
The US is now finding it cannot bully large nations at all. India, China, Russia, and Brazil have had enough.
Enter the BRICS
The world is sick of leaders like Trump and Biden who both believe they can set sanction policy for the globe. But SWIFT, the dollar routing means to enforce sanctions, is approaching a dead end.
The BRICS countries will not challenge the US dollar. Toss that idea in the trash. Instead, the biggest success of the BRICS will be sanction avoidance.
For discussion, please see What Would it Take for a BRIC-Based Currency to Succeed?
One measure of “success” would be use as a reserve currency in a significant percentage of global trade.
A second measure of “success” involves sanction avoidance. The second measure is far more likely to succeed for many reasons.
We are starting to see a groundswell of sanction avoidance already. And once central bank digital currencies can get around the SWIFT system, the whole idea of the US dictating global foreign policy via sanctions heads straight to the gutter, frankly where it belongs.
If the US minded its own business in the first place, the alleged need for many of these sanctions would never have arisen.
Meanwhile, economists holler for still more sanctions. All that will do is create more innovative ways to avoid them.
US sanctions are great for developing character and ingenuity and resourcefulness – in the targets of the sanctions.
And to an extent, I suspect the real point of the sanctions isn’t the Russian economy, which has proven surprisingly resilient, but the German economy.
The Germans have pushed themselves into recession, and long-term, without access to cheap Russian oil, they’ll be a lot less competitive as a manufacturer, with production moving to India or the United States.
***
So, yeah, the sanctions seem fine; the damage is mostly to the Russian economy (which is now recovering) and the European economies (which are not recovering to the same extent). The Americans are mostly fine, which is all DC cares about.
Nuclear proliferation. Sanctions have limited Iran’s program. They did work to NK but they did make it harder putting it off for years. The threat of sanctions made countries that had been tempted think twice before deciding it wasn’t worth it although the example of Ukraine giving up its nuclear warheads and then being invaded by Russia has some rethinking about the utility of nuclear.
There is a Russian-made alternative to SWIFT: the System for Transfer of Financial Messages (SPFS) which is similar to SWIFT in terms of technology and infrastructure. The system has been in successful development since 2014, when the United States government threatened to disconnect the Russian Federation from the SWIFT system.
In April 2022, Russian Central Bank governor said most Russian financial institutions and 52 foreign organizations from at least 12 countries were successfully integrated with the SPFS.
I have a friend in Novorossiisk who makes and supplies marine parts to ships coming into port. I looked out into the Tsemess Bay and remarked that it looked as busy as it did last time I was there in 2019. He said it was down 10% but his business was as profitable as ever thanks to higher prices for scarce parts. I asked about the sanctions’ effect on the ships coming & going. He said they just change the names of the companies doing business. If some agency catches up to them, they change their name again. Apparently that’s a game they all play, many times over. Lesson: if there’s a market, a profit will be made, regardless of politics.
Sanctions *do* work, they just don’t work miracles
Name some examples where sanctions have worked.
Maybe South Africa except they’re looking more like a failed state. Cuba, definitely not. Iran, no. China, nope.
Nuclear proliferation. Sanctions have limited Iran’s program. They did work to NK but they did make it harder putting it off for years. The threat of sanctions made countries that had been tempted think twice before deciding it wasn’t worth it although the example of Ukraine giving up its nuclear warheads and then being invaded by Russia has some rethinking about the utility of nuclear.
So in fewer words, sanctions on nuclear proliferation haven’t worked.
= ukraine, some history lesson
what is called Ukraine never was a state before 1991!
pretty much all lands were given by Russian empire or USSR communists.!
in 17th century when Ukraine (part of poland then) , by own will, became part of Russian empire and it was small region across middle section of Dnepr river! and in middle of war against POLAND!
Russian Tsar bought Kiev in the end of 17 th century from Poland?
and ‘bought’ meant bought ! he paid money for CITY AND PEOPLE LIVING THERE !
how do you think Lvov become part of ukraine. ?
Stalin , yeah that bloody Stalin, took Lvov and big part of east poland before ww2, and that was result of Molotov -Ribbentrop pact condemned by all countries.
do you know anything about LVOV jew$ish pogroms in 1941? you can look it up , there are a plenty of pictures taken!
western ukraines killed many many many je$ws .
and now many famous je$ws from usa-europe travel into Ukraine to welcome same people those ancestors killed je$ws less 100 years ago in ukraine
(nuland blinken sean penn etc)
you cant make this sh%it up.
alx
It’s not called the bloodlands for nothing. A flat farming region where the borders have constantly changed hands for thousands of years. It can’t be defended and especially not today with modern targeting warfare. No natural cover. Why NATO is attempting this David Copperfield media illusion I have no answer for it. Nobody is fooled. Ukraine is getting hit with real saws and knives and bleeding out but the US says the show must go on…meh. Insanity. Somebody needs to stop it. Nobody is winning anything but a graveyard.
Its more complicated than that. My wife’s Ukrainian, but she and her family all speak Russian. They live in Russia, but speak Russian with a Ukrainian accent. Most of her family likes independent Ukraine and Russia just as it was, but some prefer Ukraine as part of Russia. Nobody likes the war, but neither do they like the Galician Nazis who are purging the Russian element of Ukraine. 67 out of 100 Ukrainians speak Russian at home, including Zelensky. His Ukrainian is terrible. Now, even the most eastern Russian parts of Ukraine feel Ukrainian, not Russian. Crimea, on the other hand, feels entirely Russian and not Ukrainian at all. The fact is, there are extremely subtle differences rather than explicit ones. People have a hard time getting their minds to accept this, especially the war hawks in Washington. The best situation would be pre-2014 Ukraine, when a corrupt but pro-Russian legitimately elected government was in charge of a whole Ukraine. Things weren’t great, but far better than anything since.
Black markets are the free enterprize of the sanctions world.
I love black markets. Always looking for cash deals around town tax free and there are lots of great deals. I can only imagine the deals for an entire government. Wants some oil and gas? Sure. Trade me for a tanker of it for medical supplies. I got it out the ground for basically free so…..
great article and analysis mish. i agree with everything you penned here. i keep hoping our imperial ways will cease, and we just go about trading and minding our own business and taking care of our fellow amerikans and homeland. so many previous examples of imperial over reach all end in disaster. more jaw jaw, less war war.
The Americans had a chance in 1991.
Instead they turned to the dark side and began plotting.
I would like to address Mish to ask him if we can make the dress code for people in the comment section more supple. I for one would like to be able to wear a hoodie and gym shorts while I write comments and I don’t believe doing so will affect the quality of my comments. I would like to note that this is me only and others will still have to wear formal attire as they comment.
did senator of PA say he dresses the way Desanctimonius campaigns? pretty funny.
you should certainly put some clothes on for a change.
Funny that Putin as a condition for peace talks insists we drop the sanctions as a prerequisite. If the sanctions were having no effect then he wouldn’t care but he does so they do.
Funny how you don’t understand how international law works.
Doug78,
Where has Putin mentioned sanctions. I read an article where he talked to Macron and Sunak and he didn’t mention sanctions. This was a month ago but who knows? I was not on the call but regardless, there is no report of Putin begging to stop the sanctions I have read. From what I have seen from videos Russia is doing fine. Sanctions aren’t helpful but they can still get what they need. Not that hard with a friend like China who has all the goods.
To restart the grain deal in talks in Sochi with Erdoğan recently Putin said he would let the grain pass if certain sanctions were lifted.
link to politico.eu
I never said Putin was begging. I said he is putting it as a precondition to negotiations.
As an example for you of Russia’s friends because of trade between Russia and India being settled in rupees has resulted in Russia accumulating Rupees that they can exchange for dollars because India won’t convert it for them. Lavrov brought it up in a trip to India and India said that the only thing they would do is allow Russia to use these trapped Rupees to invest in India. This doesn’t help Russia at all because they need the money now.
Look up trapped Rupees and Yuan and you will find some interesting things.
Doug, look up the modern high quality missiles that India manufactures (developed with Russia). I hear Russia may be in the market for extra missiles purchased with rupees.
=no effect then he wouldn’t care but he does so they do.
cause there are illegal under UN ! same as occyping part of Syria by USA-nato?
mo$ron?
Funny that Voldemort Zelenski as a condition for peace talks demands that everyone do everything his way. No exceptions.
They do a great job in cutting away profits on what they sell and makes what they need to buy more expensive. Put together it makes it harder for Russia to pay for their war they started. The money the middlemen make like India goes in Indian pockets and not Russian. Now Russia has a lot of Rupees and Yuan it can’t use because China and India won’t convert them into Dollars for them. With friends like that you don’t need enemies.
They do a great job in impoverishing the public with debt to support the war in Ukraine that America started, and enriching American demogogue politicians like Biden and Pelosi in insider trading, and flooding the black market with weapons for organised crime and terrorists, and covering up Biden’s corruption in Ukraine. Russia obviously sells more than just oil and gas to countries like India and China… those large populations need fertiliser for food production, as well as metals for manufacturing.
=Put together it makes it harder for Russia to pay for their war they started
mo$ron . russia is ruble based economy!
russia run 2d biggest trade proficit in world , after china! abot $200 bln per year.
and Russia has lowest debt-gdp ratio in g20!
know facts before blithering bs from cnn-bbc!
Russia buys Chinese cars and goods with Yuan.
European car companies lost Russian market totally and permanently.
Yes, permanently.
Europe has friend like this it doesn’t need enemies.
Russia can take the Yuan and buy a few million extra 155mm rounds from the NK stockpile. Then NK can buy stuff from China with those Yuan. Then China buys Russian oil with those Yuan. End result the 3 countries all get things they need, avoid any sanctions and weaken US allies like SK as now they are facing a NK that can modernise its arms factories with the machines they can buy from China now that they have money and friends.
Smart move Biden.
Believe it or not some people take actions against their own interest in service of a greater cause. Not everyone is soulless.
That’s why most of the world supports Russia against America’s proxy war, and hates it’s corrupt sockpuppets like Zelensky, busily piling up gold, and assisting the Bidens in flooding the darknet black markets with American weapons to supply terrorists.
It’s the first time I have heard anyone describe the bloodthirsty neocons as soulful people!
It creates black markets. If you have the coin you get the goods. If you don’t…oh well. Kinda how capitalism works but in a more quasi manipulated way but it still works. If I want something I can buy it. Name your price. Ok…SOLD.
Zelensky in the UN. He blames Hungary and Poland for sanctioning Ukraine
grains.
The pain in Ukraine falls mainly on the grains?
Ukraine is a migraine.
UK sanctions Argentina. Tony Blair sanctioned Zimbabwe. It worked.
It turned them from basket cases into… basket cases… what date did it work on?
The greatest sanctions idiocy against Russia involves selling them entire businesses for nearly nothing. Factories, clothes stores, fast food places. Far from costing Russia, this is a huge present – and the net result is making them more independent of the west. Previous sanctions triggered an agricultural wave of production such as cheese and grains – while dumping EU products.
On a personal level, every year you must certify under penalty that you comply with a lengthy list of sanctions – if you are a Federal contractor ( just trying to sell a few products to Uncle Sam). I am proud not to buy bamboo from Burma nor cheap furniture apparently made by slaves in China. Woo Hoo.
They won’t keep any of that stuff working for long. Drunken corruption will see to that.
Unlike the F-35, the $1.7 TRILLION boondoggle, whose only capability is to get lost??!!
That is the defense budget of Russia for a total of 30 YEARS. And with that, they have managed to successfully hit back at everything NATO has thrown at them the past 2 years.
he is a mor$on! probably Uki or mi5-cnn troll!
dont bother!
mor$on it is not 1985 year!
there are only 3 countries how has own search engines: russia china and usa
you should travel more, and less cnn-bbc!
Drunkenness in Washington is pretty bad, but despite that I do think they will continue to try this silly sanction stuff.
I once read a parable about how stupidity can be worse than theft. A thief may benefit himself, his family, his friends. A stupid person can injure himself and everyone involved with him.
That’s the US right now in a nutshell. Whatever might be said about Russia/China, they’re not stupid. OTOH, Biden, Kamala, Trump, Fetterman, Feinstein, ……….
One should not make excuses for Putin, but one also needs to admit the US foreign policy played a huge role in fomenting the mess in Ukraine.
Be careful some of the sheep here will think you are a Russian asset.
Assette, maybe…
Everyone who uses a computer is burning Russian oil and gas, so even Russia’s enemies are it’s friends and assets, because they can’t stop thrashing around on their keyboards in the face of their obvious [continually postponed] inevitable victory.
=One should not make excuses for Putin,
why? what is called Ukraine never was a state before 1991!
pretty much all lands were given by Russian empire or USSR communists.!
in 17th century when Ukraine , by own will, became part of Russian empire
it was small region across middle section of Dnepr river! and in middle of war against POLAND!
did you know Russian Tsar bought Kiev in the end of 17 th century from Poland?
and ‘bought’ meant bought ! he paid money for CITY AND PEOPLE LIVING THERE !
how do you think Lvov become part of ukraine. Stalin , yeah that bloody Stalin, took Lvov and big part of poland before ww2, and that was result of Molotov -Ribbentrop pact condemned by all countries.
do you know anything about LVOV jew$ish pogroms in 1941? you can look it up , there are a plenty of pictures taken!
western ukraines killed many many many je$ws .
alx
“The buyers are much more mysterious than the sellers. Companies based in the United Arab Emirates bought most of the tankers, followed by buyers in China, Turkey and India.”
Mysterious indeed. When did an oil tanker sail under the flag of US or Great Britain.
Do these idiots get paid by the number of lines or by stupidity of article?
They get paid by how many reactions they get for writing incendiary idiotic things.
They know what they’re doing; and we know what they’re doing too. That’s why they hate memes so much, they undo all that silly typing they do.
Sanctions don’t close the market, but are useful rising prices of ships, weapons, electronics, etc. to Russia. The war is bleeding badly Putin coffers.
…paid for by rising LNG and oil prices that Russia continues to sell to the EU via proxies. All that “bleeding” seems to make those depleted coffers get bigger daily.
=is bleeding badly Putin coffers.
yeah. that is why Russia runs 2 trln budget deficit per year!
just kidding . it is USA runs $2 trln budget deficit!
mo$ron??
Fast forward 5 years. Our incompetent state dept tries to overthrow an African Government and we get sanctioned by BRICS. Walmart runs out of things to sell.
When Abdul Nasser closed the Suez canal (1967- 1976) Onassis became a multi
millionaire. He married JFK widow and bought a building next to St. Patrick’s
Cathedral.
Sanctions work. The closure of the canal caused the 60’s/70’s inflation, the oil
embargo and ARAMCO confiscations.
You are absolutely right . . . Sanctions do not work . . . but they sound Great to the unknowing Public when there is nothing else you can do.
Maybe you should advise the Biden administration that they are creating our next competitors . . .
Sanctions work pretty well at siphoning off income from your own people in the form of collateralised debt obligations to fund Ukrainian politicians squirrelling away gold, and to fund billions worth of black market weapons for the dark web terrorist markets.
Sanctions such as weapons, ammunition, sunk ships, damaged oil refineries, and dead Russians work rather well.
Nothing’s more sanctiony than a bullet headed for your head….
…assuming you can source and afford the metals, power the bullet factories with rising energy prices, and find staff willing to work for the pay and conditions rather than sit a home on helicopter money… best of luck. I don’t see queues of young westerners queuing up to die in a cold muddy field in a faraway place they can’t even pronounce the name of, simply to defend the personal and family interests of a corrupt cult demagogue like Biden and his Demagogue Party henchpersons.
“Countries, political leaders, and market makers act in their best interest.”
I do nt believe the Biden Administration is acting in the best interest of the US wrt the Border, energy foreign policy and many other issues.
Biden isn’t a political leader, he/she/or it, is a cult puppet figurehead with an atrocious record that would make an African despot blush.
The Biden Administration isn’t a country, it’s a deranged cult. It’s too deranged to be called stupid, stupidity isn’t enough to explain it’s decisions.
America is in the grip of a mental illness, one that is and will continue to have devastating economic and social consequences – better get a cure quick!
Easy. You might be called a lying bald faced pony soldier. Pretty serious accusation for those over 75 who understand it.
Hello All, Message from Mish:
Mike Shedlock
September 19, 2023
I am on the road much of the day. Two posts scheduled but I will not be able to approve comments that get caught in any filters.
Someone please repeat that for me on the next two scheduled posts this morning and shortly after noon Mountain Time.
Thanks – I am back – I sure do not get thumbs down since I requested this.
Hiked the Narrows in Zion today, my 5th time.
Hope you post some pics. As for the dislikes, I love them. It means people take the time to read my comments and get triggered enough to click dislike. What an ego boost!
I’m not hear for the ego validation but getting lots of likes and dislikes makes my day. As I said before, I’m here for profit ideas.
Been there. You don’t want to be caught in there with thunderstorms in the area.
Brings new meaning to the phrase “washed up.”