Traders Can Decide Whether Russian Commodity Trades Are Permitted in Switzerland

The Swiss agency in charge of enforcing sanctions stated on Tuesday that trading firms can determine for themselves if commodity transactions with state-controlled Russian firms fit the "strictly necessary" threshold for avoiding international sanctions.

Last month, the State Secretariat for Economic Affairs (SECO) stated that it would determine on a case-by-case basis if such purchases complied with European Union sanctions enacted by Bern to punish the invasion of Ukraine.

A spokesperson for SECO noted that the sanctions ordinance still permits transactions that are strictly necessary to purchase, import, or transport natural gas, crude oil, and other raw materials from or through Russia to Switzerland, a member state of the European Economic Area, or the western Balkans.

According to the ordinance, "like in the EU, no previous authorization or approval by SECO is required for this in Switzerland," the agency told Reuters via email.

When asked if this meant that such transactions were not subject to Swiss investigation, the agency stated: "SECO is not required to provide an exemption. In contrast, whether the exception applies must be determined in the first instance by the economic participants themselves. Those with questions can contact SECO. This is likewise in accordance with EU regulations."

Even though purchases of Russian oil are still permitted in Europe, major global trading houses have reduced crude and fuel purchases from Russian state-controlled companies such as Rosneft and Gazpromneft to avoid potentially falling foul of EU sanctions under the "strictly necessary" clause that goes into effect in mid-May.

This month, the European Commission suggested an oil embargo against Russia, but EU foreign ministers were unable to convince Hungary to withdraw its veto on Monday.

Switzerland, which has stated that it will accept EU sanctions against Russia, is a key trading center for Russian goods.

Russia refers to its invasion of Ukraine as a unique military operation to disarm the neighbor.