Flouting Sanctions: Who’s Doing Business with Russian-Occupied Crimea
28 February, 2018

After Moscow illegally annexed Crimea in 2014, the European Union and the United States slapped Russia and Ukraine’s peninsula with sanctions that prohibit companies doing business with the occupied region.

Today, airlines shouldn’t fly to Crimea, ships shouldn’t dock at its ports, and credit cards shouldn't work there. However, in reality, a number of products and services from some of the world’s largest companies have ended up on the peninsula. Some of the largest offenders include Siemens, whose gas turbines were transported to Crimea, as well as Visa and Mastercard, which are now used on the peninsula. The companies claim it’s not their fault.

But the Kharkiv Human Rights Protection Group’s Halya Coynash is skeptical. She believes the most serious breach of sanctions comes from Siemens, which maintains it was unaware its gas turbines would be sent to power Crimea.

The German engineering company was contracted to provide four gas turbines for a power plant on Russia’s Taman peninsula, which had not yet been built. In 2016, it became known that the tender for the project was scrapped because there were no bidders.

“It was clear from 2016 that they were providing gas turbines for nowhere, unless they were indeed going to Crimea, and they just ignored it,” Coynash told Hromadske in a Skype interview.

“Crimea depends on...mainland Ukraine for energy naturally, and this breach of sanctions is a very serious one.”

Furthermore, despite claiming Russia had deceived the company, Siemens signed on to supply a power plant in the country’s Tatarstan region with more gas turbines last December.

While Siemens may be the most prominent case, it is far from the only global goods and service provider to bypass sanctions. Global payment providers Visa and Mastercard left the peninsula for about a year following the annexation, but returned in 2015 after Russia introduced its “National System of Payment Cards.” Under this scheme, all transactions within Russia and Russian-occupied regions would be controlled by Moscow.

READ MORE: Annexation Airlines: Despite Sanctions, Flights From Crimea to EU Continue

“Now Mastercard and Visa are claiming that they have no control over the situation, that this is all about Russia having taken control over their transaction and they cannot control whether somebody is making those transactions in Crimea or in Russia,” Coynash said.

But she believes there are several issues that the payment providers are turning a blind eye to.

“I just don’t believe that Mastercard and Visa hand over their logo...and everything that enables a company to say that they have Visa facilities,” Coynash said.

“I believe they could have threatened Russia that if Russia does not prohibit the use of those cards in Crimea that they would leave Russia, that would be more catastrophic for Russia than for Visa at the end of the day.”

Meanwhile, other companies, like retailer Auchan, continue operating on the peninsula under a technicality, wherein a Russian subsidiary of the French business is trading in Crimea.

According to Coynash, the problem lies in that nobody is willing take responsibility.

“The EU, when you ask them, will say that it’s the business of the individual country. Then the individual country, they seem to pass the responsibility to someone else and nobody is taking full responsibility for this,” she said.

The lack of political will surrounding strict enforcement of sanctions means it’s not only international companies that can get around the ban — Russia can fly under the radar, too.

The European Organization for the Safety of Air Navigation banned flights to Crimea in 2014. But according to Black Sea News and Maidan of Foreign Affairs, who monitor illegal flights to the occupied peninsula, more than half a dozen Russian airlines continue to travel to Crimea regularly.

In the first year of occupation, Dobrolet, a subsidiary of Russian airline Aeroflot, was slapped with sanctions for operating flights between Moscow and Simferopol. The low-cost carrier was added to a list of companies that the European Union was banned from doing business with and subsequently grounded. It later created a replacement low-coster called Pobeda, which has refrained from flying to Crimea.

Ukraine has also issued tens of million of dollars in fines for Russian airlines that continue to fly to the peninsula, but none of the sum has been paid.

READ MORE: Germany To Push for Expanded Russia Sanctions After Turbine Fiasco

So far, nothing has stopped Aeroflot — one of the 20 largest air carriers in the world — along with Rossiya, Nordwind, and Ural Airlines from flying to Crimea on a regular basis.

Furthermore, after making a trip from Crimea, aircrafts would sometimes continue to fly to the United States or the European Union on the same day.

In January, one Aeroflot aircraft flew from Sochi to Simferopol, then returned to Sochi and carried on to Moscow, and from there to the Norwegian capital of Oslo.

According to Black Sea News, on some days around two dozens aircrafts fly to Crimea. For instance, on February 22, 23 aircrafts operated by seven Russian airlines flew to the peninsula.

In late 2017, Aeroflot CEO Vitaliy Savelyev said that, for the first time in four years, he feels like sanctions could actually be imposed against the company. However, for now, Aeroflot’s website shows several flights travelling from Moscow, Sochi or Saint Petersburg to Simferopol on any given day.

/By Natalie Vikhrov