Sanctions and the Russian invasion of Ukraine

2 March 2022: The Government has now legislated to block access to UK ports for ships connected to Russia. This does not affect Russian seafarers on ships not connected to Russia.

Guidance on the sanctions can be found here.

UK ports can get in touch with the BPA here for further advice and support.

28 February 2022: The Transport Secretary, Grant Shapps, has written to UK ports requesting that they deny entry to vessels that are owned, controlled, chartered, or operated by any person connected with Russia or any individuals that have been sanctioned as well as any ships that are Russian flagged or registered.

The ‘open port duty’ and contractual arrangements could make this difficult in some circumstances but we understand the UK Government is working on legislation to underpin this which will be published in the coming days. We expect this to only impact a relatively small number of vessels.

British Ports Association

February 18th Background: Anglo-Russian Trade

The BPA’s Policy & Economic Analyst, George Finch has shed some light on the trading relationship between the UK and Russia:

UK ports handled over 12.6 million tonnes of cargo to/from Russia in 2020. This is predominantly in hydrocarbons – over half of all imports are liquid bulk traffic such as crude and refined oil, and in 2020 the UK imported over 1.5 million tonnes of Russian coal, while in total, the UK imported over £4 billion worth of Russian oil and gas in the four quarters to the end of Q3 2021.

Top UK exports to Russia include cars, medicinal and pharmaceutical products, specialised machinery, mechanical power generators, and general industrial machinery. UK exports of goods to Russia increased by over 20% in the 12 months to November 2021 compared to the same period last year. This was, however, an increase from a year affected by lockdowns and other COVID-19 pandemic measures.

Globally, Russia imports billions in electrical apparatus and industrial parts, with around $43.1 billion worth machinery and mechanical appliances imported in 2020. Russian imports are expected to slow down in 2022 (6.8%), and even further in 2023 (1.6%).

Due to the nature of Russian exports to the UK, it is little surprise that the UK has a balance of trade deficit with Russia. The UK and Russia have no formal trade agreement and trade on WTO terms.

What any potential new international sanctions will do to trade remains unclear although any military activity is likely to impact global oil and gas prices. Economic and political relations have been somewhat temperamental between the UK and Russia in recent years and this looks set to continue.

The UK currently applies a range of trade sanctions on Russia (the breadth of which were expanded on 31 January 2022). The regime is aimed at encouraging Russia to cease actions in Ukraine or threatening it’s territorial integrity. The UK’s economic regime replicated the EU sanctions which were introduced in 2014, before the UK left the EU. Ironically however since the EU-wide sanctions were introduced, the UK’s Russian imports have in fact increased, however exports have stayed at a relatively suppressed level.

Given the importance of Russian gas and fuels to Europe and elsewhere it is probable therefore that sanctions will focus on other areas such as rules on Russian services, business activities and investment, arms and military products as well as certain rights of individuals. As ever the world is watch what happens next.