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Friday, March 16, 2018

The European business has found a loophole to trade with the Crimea

As it turned out, even the fear of punishment for violation of the sanctions regime is not deterred European businesses from trading with the Crimea. The investigation shows numerous instances of visits of ships under European flags in the ports of the Crimea. It turns out that in the Maritime industry there are many easy loopholes that allow secretly to circumvent the EU sanctions.

The company of EU countries continue to trade with the Crimea, despite sanctions, and the ships under European flags come into the ports of the Peninsula, according to the Center for the study of corruption and organized crime (OCCRP).

“The ship of the carrier can be withdrawn from under the sanctions, even if originally it belonged to a European or American companies

According to the results of the investigation, over the past two years in the Crimean ports visited 24 ships under the flags of EU countries, 43 of a ship registered in the European Union and 22 vessels of the beneficiaries from the EU.

To avoid sanctions, companies go to various tricks, writing staff OCCRP. Some companies use their vessels with flags of other States, others resort to outsourcing firms, and others upon arrival at a Russian port just disconnect the positioning system.

So, one of the ships of the German company Krey Schiffahrts GmbH came to Kerch in July 2014. The firm’s management responded to the OCCRP, but said that the company had “huge problems” due to the fact that the vessel called at the Crimean port.

Ships also often change the flags on the approach to the Peninsula, said a former employee of the Turkish Palmali group of companies. First, they use the Ukrainian flag, and after passing the Kerch Strait change for the Russian, RIA “Novosti”.

Sanctions against the Peninsula, was first introduced in June 2014. Restrictions began with the ban on the import of EU goods without Ukrainian certificates, and later the European Union banned entry to the Crimea of a significant number of products and introduced a ban on investment in the economy.

The method of delivery of goods from the EU in the Crimea is potentially one of the easiest ways to bypass sanctions. Because transporters and senders of goods actually not much risk in this case.

“The Maritime industry is probably the most convenient option to bypass sanctions,” agrees Director of the Moscow office of Urus Advisory Alexei Panin. The subtlety is that the ship of the carrier can be withdrawn from under the sanctions, even if originally it belonged to a European or American companies, because a large number of countries have ignored the sanctions against Russia.”

“Trade using ships difficult to regulate in the framework of the sanctions regime. Yes, tankers, barges and dry cargo owners, ports of registry and they go under the flags of sovereign States. But the ship can change the flag at any time, and its owners, as a rule, are offshore companies registered on the Islands, to the coast where commercial vessels could not be approached for decades, and the transportation routes of goods can change in unexpected ways,” says Alexei Antonov from “ALOR Broker”.

In other words, if the port is a ship flying the flag of a country within the EU, yet the fact that it has any relevance to Europe. So what OCCRP counted 24 “European” ship in the ports of the Crimea, does not mean anything. Actually there may be hundreds, or may not be any. To prove that European companies violate in this way the sanctions regime is extremely difficult.

“To accuse a specific company, whether the shipper or the company that implemented the transport, you must be in possession of official evidence, there are papers confirming it. But since the senders and transport companies are well aware of the holes in Maritime law, receive such evidence, as a rule, impossible,” – said Antonov.

In fact, suspicions OCCRP confirm the fact that the Peninsula remains attractive for European business. It is clear that any business does not want to lose market, even such small as the Crimean. Especially when there are safe loopholes.

Foreign company can supply goods to the Crimea in the framework of previously concluded contracts in order not to pay fines for violation of terms. “To date, sanctions have not been recognized as a force majeure, that is a legitimate reason for refusal to supply goods under the contract or delays, by any court in the world. Therefore, in the case of a supply disruption on the responsible party can be fined. It is clear that in such circumstances, European companies are forced to violate the sanctions regime,” – said Antonov.

However, trade statistics represents a significant change in the structure of imports to the Peninsula after the imposition of sanctions. If, before 2015, the largest importers were Romania, Italy and Germany, they accounted for about 66% of all incoming streams, but now the three largest importers are Belarus, Armenia and China, their combined share of 45.5%.

“This, of course, does not mean that the goods disappeared from Europe from the Crimea. They continue to be on the local market, but either through Russia or through third countries that have not imposed sanctions against the Crimea”, – said Antonov.

Purpose from business and politicians are different. Europeans not only want to continue to trade with the Crimea, but also to invest their money here. And in Ukraine, foreign investors did not consider the Crimea as a promising investment region, but after the reunification with Russia, the interest in the Peninsula has increased markedly, even though the sanctions.

“In the Ukraine, the Crimea had absolutely no investment. The volume of investments that were made by entrepreneurs from different countries of the West, the tens of millions of dollars. It’s ridiculous numbers. We can say that we lived in almost complete absence of these investments”, – said recently the head of Crimean Parliament Vladimir Konstantinov. But now, despite the sanctions, Crimea receives a very large amount of investment proposals, he assured.

In the Republic bypass the sanctions business actively comes from Italy, France, Germany, Bulgaria, China, in turn, shared the head of the Crimea Sergey Aksenov. “Businessmen, regardless of the actions and opinions of politicians, peaceful work and live. Yes, they don’t want to advertise, looking for some tools, but they work on the basis of laws of the Russian Federation, and there are no problems. Believe me, relationships are developing”, – assured Aksenov.

Some foreigners are not afraid to admit interest in the Peninsula. Recently, the Crimea was visited by the French delegation, the French MP Nicolas Duic said that French businesses can help the development of the Crimea in such areas as energy, agriculture, tourism and banking. According to him, “there are opportunities for cooperation in the banking sector to withstand the pressure of the dollar.”

Spring Aksenov said about the negotiations with businessmen of Germany on the implementation of the investment project on creation of the Peninsula IT-cluster. Investors from Bulgaria are planning to create in the Crimea the agropark: growing grapes, making wine and gardening. Investors from France expressed their readiness to develop mountain tourism in Yalta and Alushta regions. Foreign investors are generally attracted in the first place the tourism and agricultural sectors.

However, in the context of non-recognition by the EU authorities of the Crimea as part of Russia, foreign investors prefer not to advertise their plans, the names and the work done. Crimean authorities promised to create a reliable mechanism of protection of privacy to the influx of foreign investors did not remain only in words.


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