SUPERYACHT SANCTIONS: ETHICALLY RIGHT, STRATEGICALLY FLAWED

Rory Jackson questions the strategy behind the sanctions and detention of Russian-owned assets ...

By now, the impact of the war in Ukraine has been felt throughout the superyacht industry and discussed at length. However, after some fairly transparent political ‘victories’ in the form of superyacht detentions and the initial interest from the mainstream media beginning to cool, the full impact of the war on the industry, and the sanctions levied, have not yet been felt.

At the beginning of the process, attention understandably turned to the sanctioned individuals and the superyachts they own. In this sense, superyachts became the symbols of illgotten Russian wealth, with little to no attention being paid to the various other asset classes acquired and owned through similar means and structures. Spurred on by public support for any and all action against Putin, various authorities began freezing superyachts in marinas and shipyards, primarily in Europe, without much thought for those who work on board nor indeed the businesses that rely on them.

The sanctions, of course, had an immediate impact on many businesses. Some shipyards, for instance, were made to stop work on significant projects with no clear guidance as to when works would resume. However, due to the timing of the sanctions in March, the initial impact could have been far more severe in terms of asset detentions. With most Russian-owned vessels not being in Mediterranean at that time, there were only a limited number of vessels to freeze and most could sail to more accepting locations.

As we continue in this crisis, one of the most concerning elements of it all for the superyacht world is that there is no clear strategy in place, especially in Europe. Will the vessels eventually be seized? Who will pay for their maintenance in the meantime? Will we be able to transact with non-sanctioned Russian individuals in the future? Will the EU, UK and others follow the aggressive approach of the US to forfeiture and seizure? Who would even be willing to buy a seized superyacht?

That there are such large and profound question marks remaining over this whole process showcases exactly how reactionary the sanctions and detentions have been. Ethically, it feels as though politicians have actually got it right for once, but practically the lack of vision or strategy is now damaging businesses that did nothing other than follow the letter of the law and, unfortunately, the end doesn’t seem to be anywhere in sight.