LAUNDROMAT COUNTRIES - INTERNATIONAL RELATIONS
News: India
leads ‘Laundromat’ countries buying Russian crude and selling oil products to
Europe: report
What's in the news?
● India
leads five countries named as the “Laundromat” countries that buy Russian oil
and sell processed products to European countries, thus sidestepping European
sanctions against Russia, says a Helsinki-based group that cited the latest
figures for the first quarter of 2023.
Laundromat Countries:
● Laundromat
countries are a group of countries that purchase
Russian oil and ‘launder’ the products to countries that have sanctioned
Russian.
● The
‘laundromat countries’ are China, India,
Turkey, the UAE, and Singapore.
Issue of laundering oil:
● The
report suggests that Russia is selling
oil at discounted prices to attract buyers and that certain countries
involved in the money laundering scheme are importing Russian crude oil and
refining it into larger volumes of refined products.
● These
refined products are then exported to countries that have imposed sanctions on
Russia, resulting in a 26% increase in refined oil products exported to these
countries in the year following the invasion, compared to the previous 12
months.
Impacts:
● The undermining of the
sanctions - Although this method of exporting oil
products may be legal, it enables Russia to generate revenue for Putin’s war
chest. By changing the origin of the product through the refining process, the
laundering countries are able to circumvent sanctions and provide financial
support to Russia’s activities.
What is India’s interest in the process?
1. Cheap oil source to fulfill its energy needs:
India is buying cheap oil compared to the high prices raised by OPEC+
countries.
2. Diversification of oil needs:
India can diversify its sources of oil and reduce its dependence on oil from
other countries such as the Middle East.
3. Revenue for the Oil refineries:
India is exporting crude from Russia and exporting the processed oil to
European countries. This is revenue generating for the oil refineries providing
employment and contributing to the economy.