The European Commission (EC) will open an investigation against Bulgaria for allowing a Russian oil company to exploit a loophole in European Union (EU) sanctions that allowed it to earn one billion euros for Kremlin war funds, on Thursday, the 9th of November, reports Politico.
An exemption granted to Bulgaria last year from the EU ban on Russian oil allowed millions of barrels of Moscow oil to flow into a Russian-owned refinery on Bulgarian territory, subsequently exporting refined fuel abroad, including the EU, in violation of sanctions.
“We have asked Bulgaria to explain themselves,”
a senior EC official said, speaking on condition of anonymity, noting that such exemptions can cause problems and that work is underway to phase them out, adding that there are still loopholes in the system.
In addition to the estimated 983 million euros that Russia raised from production and export levies, Politico reports that a secret analysis has revealed that the loophole has also brought nearly 500 million euros in profits to refinery owner Lukoil since the exception began on the 5th of February.
Although Lukoil has not breached the sanctions, according to shipping data, it transported almost three million barrels of Russian refined products by sea between March and July this year, Politico writes.
The revelation of this loophole has sparked political outrage in Bulgaria.
Prime Minister Nikolai Denkov on Thursday expressed shock at the scale of the sanctions-avoidance scheme and pledged to strengthen sanctions in areas where they have proved ineffective.
Prime Minister Denkov also claimed that the government was taxing Lukoil in order to reduce the funds going to Russia, while increasing the contributions to the Bulgarian budget.
According to Politico, last month Bulgaria agreed to end the exemption in October next year, two months earlier than planned. However, recent revelations have prompted them to lift it even sooner.
Bulgarian legislator Delyan Dobrev, head of the Energy Committee, was shocked by the situation and plans to file a new proposal to immediately lift the exemption. Dobrev said that previous attempts did not gain enough support, but Dobrev, determined to succeed this time, expects that there will be no obstacles this time.
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