Russian oligarch Abramovich's two superyachts worth a combined $1 billion are escaping sanctions — for now
- Two superyachts belonging to Russian oligarch docked in Turkey this week, avoiding seizure by Western authorities.
- The Chelsea FC owner is subject to EU and U.K. sanctions.
- Turkey, a non-EU country but a NATO member, is opposed to sanctions out of principle, making it an attractive outpost for oligarch assets.
The azure waters of southwest Turkey saw the arrival of a two multimillion-dollar superyachts this week reportedly belonging to Russian oligarch Roman Abramovich, whose voyage to circumvent Western sanctions continues.
The Eclipse, a 533-foot, six-story superyacht — one of the largest in the world — docked in the resort town of Marmaris Tuesday, narrowly skirting nearby Greek islands and the purview of EU sanctions, tracking data showed.
Complete with two helipads, two swimming pools, a disco hall and a mini submarine, it joins the 458-foot Solaris, another luxury yacht linked to the Chelsea FC owner, which arrived at the Turkish tourist resort of Bodrum a day earlier.
They account for two superyachts known to belong to the oligarch, both traveling under Bermuda flags.
With each one worth an estimated $600 million or more, Abramovich is now seen stationing $1.2 billion in the non-EU country as he seeks to move his assets out of reach of U.S., U.K. and EU governments targeting Russia's wealthy elite.
And it's a legitimate move — so long as the yachts remain outside the territorial waters of sanctioning countries, which extend 12 nautical miles out from the coastline. To be sure, Abramovich is not currently subject to U.S. sanctions reportedly because of his role in facilitating talks between the White House and President Vladimir Putin — a position the U.S. is currently weighing.
"Yachts alleged to be beneficially owned by sanctioned individuals are free to travel and operate outside EU/U.K./U.S. waters," Benjamin Maltby, partner at U.K.-based Keystone Law and an expert in yacht and luxury asset law, told CNBC Wednesday.
A neutral outpost for oligarchs
Turkey, despite strongly criticizing Russia's war in Ukraine, has refused to follow its NATO allies in imposing sanctions, saying it opposes them out of principle.
Given its diplomatic and economic ties to Russia, especially as regards Russian gas imports, and its at times volatile relationship with Western partners, that is unlikely to change anytime soon.
"Implicit in this delicate dance is an understanding — as with the annexation of Crimea in 2014 — that Turkey will not join the Western sanctions against Russia," Emre Peker, director and Turkey specialist at Eurasia Group, told CNBC.
Instead, Turkey has positioned itself as a neutral and valued mediator in talks between Russia and Ukraine, with Dutch Prime Minister Mark Rutte praising the country Tuesday for "doing everything that it can do."
That has made it a destination of choice for Russians looking to preserve their wealth and make investments in an increasingly inhospitable global market.
Abramovich, who is not himself traveling on either of the two yachts, was in Istanbul last week, according to flight tracking data.
"He wants to do some work and may buy some assets," a source told Reuters, noting similar moves by other oligarchs. Abramovich's sale of his prized Chelsea soccer club — seized two weeks ago by U.K. authorities — remains ongoing.
Spokespeople for the Turkish government and Abramovich did not immediately respond to a CNBC request for comment.
Outside the scope of sanctions — for now
Meantime, the accommodating environment means his yachts will avoid being seized or impounded for as long as they remain in Turkish waters.
That contrasts with the rapid capture of other oligarch yachts, including Alexei Mordashov's 213-foot vessel in Italy and Igor Sechin's 280-foot yacht in France in recent weeks.
However, Maltby noted that some yachts stationed in neutral waters could yet fall foul of international legal conventions, which could see them detained for other reasons.
For instance, the Lloyd's classification society announced two weeks ago that it would no longer provide services to Russian vessels, while the Isle of Man ship registry said it would deregister certain yachts.
"Recent announcements by certain regulatory bodies ... means that some such yachts may be unsafe and/or uninsured in the eyes of non-EU/U.K./U.S. port authorities, and could be detained on this basis," said Maltby.
Meantime, crew and repair workers — in protest to the war and fearing reputational risk — may be reluctant to engage in the operational and maintenance work required of such large, luxury vessels.
"While Turkey doesn't have sanctions in place, maintenance and supply companies may now want payment upfront — which is not normal practice. Whether and how quickly such payments can be made remains to be seen," said Maltby.