Lloyd’s Register drops ships of top Indian carrier of Russian oil

Lloyd's Register has told India's Gatik Ship Management, a major carrier of Russian oil since the Ukraine war that it will withdraw certification of 21 of its vessels by June 03, 2023.

It is the latest setback for Gatik, which was also been forced to find new flags for 36 of its ships after they were deflagged by the St. Kitts & Nevis International Ship Registry.

"Lloyd's Register is committed to facilitating compliance with sanctions regulations on the trading of Russian oil," it said in an email to Reuters. "Where supported by evidence, we withdraw class and services from any vessels found by the relevant authorities to be breaching international sanctions."

Classification societies such as Lloyd's Register in London provide services including seaworthiness checks, certification that is vital for securing insurance and entry to ports.

Lloyd's Register said, 11 of the Gatik vessels it was declassifying were also certified by the Indian Register of Shipping (IRClass).

Gatik, which is based in the Indian city of Mumbai according to shipping databases, did not respond to emailed requests for comment.

A major US insurer, the American Club, also told Reuters it was no longer providing cover for Gatik ships, while Russian insurer Ingosstrakh said it would not work with Gatik in future.

Neither the insurers, Lloyd's Register nor the flag registry spelled out exactly why they have dropped business with Gatik.

 

De-dollarizing transactions among ACU members

Governor of the Central Bank of Iran (CBI) held talks with senior banking officials from various Asian countries on the sideline of the 51st Asian Clearing Union (ACU) summit in order to encourage getting new members and de-dollarize the economic transactions among ACU members.

As reported by the CBI portal, Mohammad-Reza Farzin met and held talks with Governor of the Central Bank of Russia Elvira Nabiullina, Governor of the State Bank of Pakistan Jameel Ahmed, Deputy Head of the Monetary Policy and Economic Analysis Directorate of the National Bank of the Republic of Belarus Sergey Kalechits on the sidelines of the summit held in Tehran on May 23-24.

In the meeting with Nabiullina, the two sides emphasized strengthening trade exchanges and using the national currencies of the two countries in bilateral trade.

During the talks with the Belarusian delegation, Farzin said strengthening relations through bilateral and multilateral monetary agreements is a model that can play an important role in the development of trade relations between two countries.

Referring to Belarus’ readiness to join the ACU, the CBI head said, “Belarus's membership with its good capacities in its economy can lead to the development of the activities of this union.”

In the meeting with Farzin, Ahmed, the governor of the State Bank of Pakistan, welcomed the development of the banking relations with Iran by creating a non-SWIFT platform for connecting the bank systems of the two countries and clearing trade under the framework of the Asian Clearing Union and said, “We are ready for the development of banking relations. By introducing representative banks and creating a joint working group, we will provide the grounds for deepening banking relations.”

According to Farzin, accepting new members with the aim of creating synergy and diversifying the currency basket of the union can encourage de-dollarization in trade exchanges among the ACU members. This is one of the major goals of this union in the future, he said.

 

Grounded bulker blocking Suez Canal successfully refloated

A Hong Kong-flagged bulker that grounded in the Suez Canal blocking the key waterway for several hours on Thursday morning has been successfully refloated.

Leth Agencies posted on Twitter that the bulk Xin Hai Tong 23 had grounded at the 159 km mark on the canal at 0400 hrs local time.

In a second tweet a few hours later the agency said that tugs from the Suez Canal Authority had been able to successfully refloat the vessel at 0740hrs.

It was reported that a convoy of four vessels was stuck behind the stricken bulker and an ordinary group was set to enter the canal at 0600 hrs. Leth Agencies said that following the refloating of the Xin Hai Tong 23 a northbound convoy was due to enter at 0930hrs.

The Xin Hai Tong 23 is a 2010-built, 56,708 dwt bulker and flagged with Hong Kong.

The vessel has grounded in a narrow section of the Suez Canal and MarineTraffic shows it stranded diagonally across the waterway in similar way to the containership Ever Given which closed the canal for six days when it grounded in March 2021.

The Ever Given grounding caused chaos to the global supply chain. However, the Xin Hai Tong 23 is a significantly smaller vessel than the 199,000 dwt mega-containership and far less complex to refloat.

 

UAE new hub of Russian gold

The United Arab Emirates has become a key trade hub for Russian gold since Western sanctions over Ukraine cut Russia's more traditional export routes.

The records, which contain details of nearly a thousand gold shipments in the year since the Ukraine war started, show the Gulf state imported 75.7 tons of Russian gold worth US$4.3 billion - up from just 1.3 tons during 2021.

China and Turkey were the next key destinations, importing about 20 tons each between February 24, 2022 and March 03, 2023. With the UAE, the three countries accounted for 99.8% of the Russian gold exports.

Ever since the Ukraine conflict started, many multinational banks, logistics providers and precious metal refiners stopped handling Russian gold, which had typically been shipped to London, a gold trading and storage hub.

The London Bullion Market Association banned Russian bars made from March 07, 2022, and by the end of August 2022, Britain, the European Union, Switzerland, the United States, Canada and Japan had all banned imports of Russian bullion.

The data shows Russian gold producers quickly found new markets in countries that had not imposed sanctions on Moscow, such as the UAE, Turkey and China.

Louis Marechal, a gold sourcing expert at the Organization for Economic Co-operation and Development said there was a risk Russian gold could be melted down and recast and then find its way back into US and European markets with its origin masked.

"If the Russian gold comes in, is recast by a local refiner, sourced by a local bank or trader and then sold on into the market, there you have a risk," he said. "This is why carrying out due diligence is instrumental to end buyers wishing to ensure they respect sanctions regimes."

The UAE government's Gold Bullion Committee said the state operated with clear and robust processes against illicit goods, money laundering and sanctioned entities.

"The UAE will continue to trade openly and honestly, with its international partners, in compliance with all current international norms as set down by the United Nations," it said.

In a bid to further isolate Russia, Washington has warned countries, including the UAE and Turkey, they could lose access to G7 markets if they do business with entities subject to US sanctions.

US aircraft carrier sails into Oslo

The world's largest aircraft carrier, the USS Gerald R. Ford, sailed into Oslo on Wednesday, a first for such a US ship, in a show of NATO force at a time of heightened tension between NATO and Russia over the war in Ukraine.

The ship and its crew will conduct training exercises with the Norwegian armed forces along the country's coast in the coming days, the Norwegian military said.

"This visit is an important signal of the close bilateral relationship between the US and Norway and a signal of the credibility of collective defence and deterrence," said Jonny Karlsen, a spokesperson for the Norwegian Joint Headquarters, the operational command centre of the military.

At one spot on the Oslo fjord, dozens of people of all ages gathered on the shore to observe the vessel as it cruised by, taking pictures and videos.

Norwegian media reported the aircraft carrier would sail north of the Arctic Circle. Karlsen declined to comment on the reports.

The Russian embassy in Oslo condemned the aircraft carrier's Oslo visit.

"There are no questions in the (Arctic) north that require a military solution, nor topics where outside intervention is needed," the embassy said in a Facebook post.

"Considering that it is admitted in Oslo that Russia poses no direct military threat to Norway, such demonstrations of power appear illogical and harmful."

NATO member Norway shares a border with Russia in the Arctic and last year became Europe's largest gas supplier after a drop in Russian gas flows.

The Norwegian military and NATO allies have been patrolling around offshore oil and gas platforms since the autumn, following explosions on the Nord Stream pipelines in the Baltic Sea.

 

 

Iran hosts Asian Clearing Union summit

The 51st Asian Clearing Union (ACU) summit, mainly focusing on de-dollarization, kicked off on Tuesday at the Central Bank of Iran (CBI).

On the first day of the two-day event, expert committees from the delegations attending the summit held meetings to discuss preliminary issues.

The summit is attended by the governors of the central banks of the ACU member countries in addition to Russia.

The Governor of the Central Bank of Russia Elvira Nabiullina arrived in Tehran on Monday to attend the event.

In the 51st ACU summit, the members are set to discuss various issues including the amendment of the Union's statutes in order to facilitate the acceptance of new members, and determining the new currency basket of the member countries in order to settle exchanges without the need for euro or the dollar.

Exploring the feasibility of using digital currencies of central banks for cross-border payments and the unveiling of the interbank messaging network of the member states of the Union are also among the major topics on the summit’s agendas.

Asian Clearing Union is a payment arrangement whereby the participants settle payments for intra-regional transactions among the participating central banks on a net multilateral basis.

The main objectives of the clearing union are to facilitate payments among member countries for eligible transactions, thereby economizing on the use of foreign exchange reserves and transfer costs, as well as promoting trade and banking relations among the participating countries. 

Currently, the members of ACU are the central banks of Iran, India, Bangladesh, Bhutan, Maldives, Nepal, Pakistan, Sri Lanka, and Myanmar.

The central banking authorities of member countries have issued detailed instructions and modalities for channeling monetary transactions through the ACU. Membership in the ACU is open to central banks located in the geographical area of ESCAP and non-ESCAP.

 

South Africa faces threat of becoming a failed state

South Africa could become a failed state but has yet to reach that point, a senior official of the ruling African National Congress (ANC) has said. The admission by ANC Secretary General Fikile Mbalula comes as South Africa experiences power cuts, known as load-shedding, of up to 10 hours a day.

“This load-shedding has just made a mess of our country,” he told the BBC’s HARDtalk program.

The power cuts have worsened South Africa’s economic crisis.

The country is also battling high levels of corruption, all of which has damaged confidence in the ANC government.

“If certain things are not resolved, we will become a failed state, but we are not journeying towards that direction,” Mbalula said in an exclusive interview with BBC HARDtalk’s Stephen Sackur.

“South Africa is undergoing challenges like many other countries but I think to put it into the category of a failed state is an exaggeration,” he added.

While external forces such as global economics, the impact of COVID and the war in Ukraine had all played a role in battering South Africa’s economy, blame also lay partly with “some of our own weaknesses in terms of managing the economy well”, Mbalula acknowledged.

South Africa has an official unemployment rate of about 33%, one of the highest in the world. One in two young South Africans is unemployed and 60% are living under the poverty line.

Yet Mbalula maintained the country was “recovering well” and defended the ANC’s economic record. The party took power in 1994, following the end of the racist system of apartheid.

“We have been able to cushion our people from the worst,” he said, after a legacy of “300 years of deprivation and a mismanaged country and economy”. But he admitted the power crisis was the ANC government’s “Achilles heel”.

According to South Africa’s central bank, it is costing the country at least 2% of gross domestic product (GDP). “We can’t afford that,” Mbalula said.

With elections due next year, the continued blackouts could have seismic political consequences for the ruling party. “It will affect the fortunes of the ANC to receive just an outright majority... if it is not dealt with decisively,” he said.

South Africa’s state-owned power utility Eskom has $26 billion of debt, old infrastructure, and power stations that do not work properly.

It has led to South Africa’s worst-ever power crisis, and Eskom has warned that the situation could worsen in the winter months of July and August.