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Detained Rostock ship raises knotty sanctions questions

NGOs want the US to crack down on Russian timber trade

The detained Atlantic Navigator II shows what happens when sanctions clash

A SHIP detained in Germany over its sanctioned Russian timber cargo raises difficult questions about what happens when Western sanctions diverge.

The Marshall Islands-flagged, 2003-built, 30,346 dwt Atlantic Navigator II (IMO: 9231145) was carrying birch plywood and uranium from St. Petersburg to Baltimore when it stopped at Rostock on March 3 to repair a damaged propeller.

It is still there, with the master under investigation for violations of the Foreign Trade Act. The ship’s owner, Montreal-based CISN Shipping Group, is trying to secure the ship’s release. It has said it complies with all relevant sanctions rules.

The EU sanctions Russian timber but the US does not, despite calls from NGOs to crack down on the trade.

German customs and the Rostock public prosecutor’s office would not comment on the detention.

A shipping lawyer, who asked not to be named, said the case highlights that while there was much agreement about how Western sanctions on Russia should work, they are not uniform.

“It’s the collision between two different sanctions regimes,” he said, adding it put the shipowner in an “impossible situation”.

The lawyer said the detention could deter ships in distress from making emergency stops.

Seafarers’ union the International Transport Workers’ Federation said it is monitoring the detained ship.

“Our inspector is in contact with Zoll [German customs] and there are no charges against any member of the crew at the moment,” said ITF Germany head of agreements Susana Ventura.

“Our contact assured us that the issue should be resolved within the next weeks and without any repercussions for the crew.”

The seafarers have enough provisions and internet and are being paid correctly and on time, Ventura added.

Conflict timber

NGOs welcomed the detention and called for the US to restrict Russian “conflict timber”.

Earthsight, a British group that tracks the trade, claimed at least 650 cu m of plywood in the cargo was supplied by Russian timber giant Sveza, part-owned by billionaire oligarch Alexei Mordashov.

Mordashov, the owner of steel giant Severstal, was designated by the US Office of Foreign Assets Control in June that year. The involvement of a sanctioned person could make the Rostock cargo illegal under US as well as EU law, two sanctions lawyers said.

However, Mordashov reduced his stake in Sveza to 49% in October 2022 by transferring control to management, meaning the company escapes US sanctions.

“The wood is not covered by US sanctions in any way, a ludicrous situation given the risks attached to it,” Earthsight timber team lead Tara Ganesh told Lloyd’s List.

The trade in Russian timber to the EU and US has been diverted, and the origin of some of it disguised, since the war started.

Last year, Earthsight alerted Spanish customs and German container line Hapag-Lloyd about a transhipment of Russian birch plywood routed via a Turkish middleman firm, Ganesh said. It was en route to Mexico via the US but transhipped at Barcelona (by companies unrelated to the Rostock case).

Ganesh said the Spanish authorities did nothing, but Earthsight convinced Hapag-Lloyd to return about $100,000 of wood — also sold by Sveza — back to the firms involved.

“US sanctions on Russian wood are long overdue,” she said. “We are not sure why they haven’t yet banned this blatantly oligarch-linked trade.”

Ofac declined to comment.


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