Russian trawlers exploiting a “loophole” in international waters are threatening a wipe-out of a lucrative Irish fishing industry while bankrolling the war in Ukraine, the Government has been warned.

Fishermen say a “purely opportunistic” deal struck between the Faroe Islands and Moscow could obliterate blue whiting stocks around Irish waters, worth more than €10 million a year to hard-pressed coastal communities.

The Killybegs Fishermen’s Organisation (KFO) has urged the European Commission and the Government to impose economic sanctions on the Faroes unless it revokes the agreement, which it has denounced as “immoral”.

Sean O’Donoghue, chief executive of the KFO, accused the Faroe Islands of “aiding and abetting” Russian president Vladimir Putin’s invasion of Ukraine by “bartering” for its own trawlers to be allowed to catch cod in Russian-controlled seas.

The Faroes, which is part of Nato-aligned Denmark but retains autonomy over its fishing waters, shares control with the UK of a stretch of sea between the two jurisdictions known as the “special area”. It is worth €19 million in fishing rights, according to the UK government.

Up to 12 large Russian trawlers, believed to be legally licensed by the Faroese authorities, have been spotted in the special area since the outbreak of the war.

The north Atlantic archipelago has also “unilaterally” increased its own quota of blue whiting which can be caught by more than 225 per cent, from 82,000 tonnes to 267,413 tonnes, says the KFO. Mr O’Donoghue said this increase was “off the Richter scale”.