Traders Determine Allowance of Russian Commodities Deals – Swiss Report by Reuters

By Michael Shields

ZURICH – Trading firms have the discretion to determine whether their commodity transactions with state-controlled Russian entities align with the criteria of being "strictly necessary" to avoid international sanctions, according to the Swiss agency responsible for enforcement.

Last month, the State Secretariat for Economic Affairs (SECO) stated it would evaluate these transactions on a case-by-case basis to ensure compliance with the European Union sanctions that Switzerland has also implemented in response to the invasion of Ukraine.

A SECO spokesperson indicated that transactions deemed strictly necessary for the purchase, import, or transport of specific raw materials from or through Russia to Switzerland, to a member state of the European Economic Area, or to the western Balkans are permissible under the sanctions ordinance.

The agency clarified via email that “as in the EU, no prior authorization or approval by SECO is required for this in Switzerland under the ordinance.”

When questioned about the lack of Swiss oversight in such deals, SECO explained, “SECO does not need to grant an exemption. However, it is up to the economic actors themselves to assess whether the exception applies. If there is uncertainty, they may reach out to SECO for clarification. This aligns with EU regulations.”

Despite the allowance for Russian oil purchases in Europe, prominent global trading companies have reduced their intake of crude and fuel from Russian state-backed firms such as Rosneft and Gazpromneft. This cautious approach aims to avoid potential violations of EU sanctions tied to the "strictly necessary" stipulation that went into effect in mid-May.

Recently, the European Commission proposed an oil embargo against Russia. However, EU foreign ministers were unable to persuade Hungary to lift its veto on the proposal.

Switzerland has committed to implementing EU sanctions against Russia and serves as a significant center for trading Russian commodities.

Russia characterizes its actions in Ukraine as a special military operation aimed at disarming its neighbor.