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Crimea: Circumventing Trade Sanctions Via Novorossiysk

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Despite trade sanctions, Crimea is maintaining connections to international markets. Crimean traders are performing some logistical gymnastics to skirt sanctions, in particular transiting goods through the Russian port of Novorossiysk.

On paper, of course, Crimea is experiencing a severe trade crisis. Official statistics indicate that Crimea’s import volume in 2016 shrank by a full third compared to the 2015 level, a drop of $33.6 million. Exports fell by $31.8 million, a 40-percent decline from 2015. The city of Sevastopol, which is not formally part of the Republic of Crimea, reported a 12.6 percent fall in its imports and 66.8 percent fall in its exports in the same period, with volumes shrinking to $33.4 million and $5.9 million, respectively.

Altogether, the peninsula’s total foreign trade turnover has fallen more than tenfold since its annexation by Russia. In 2013, imports stood at $1 billion and exports at $0.9 billion. Today, both volumes combined amount to $153.5 million.

Despite the bleak statistics, however, far from all producers and consumers are feeling the pinch. Large retail stores, for example, have no shortage of imported goods. For one, the Musson shopping center in Sevastopol offers ample foreign products, from pasta made in Italy by Pastificio Gallo Natale, to household appliances made overseas by Bosch and LG.

How these and other goods arrive on the peninsula is not always clear. Official customs data indicates that Crimea now sources some two-thirds of its imports from a handful of countries: Belarus, Italy, Turkey, Switzerland, Armenia, and China. (Ukraine officially ceased all trade with Crimea in 2015). Most of the territory’s imports and exports fall into categories—food products, agricultural raw materials, industrial machinery, equipment, and vehicles—that require complex logistics.

The sea route, usually the most affordable option for cargo transport, is now formally closed. Ukrainian and EU sanctions bar international navigation to Crimea in addition to restricting imports and exports. The territory’s disputed status creates an additional complication for foreign ship owners. Russia now accounts for a vast share of vessels calling on Crimean ports (although, as the European watchdog OCCRP recently found, a much smaller number of European ships still visit the peninsula, violating the sanctions).

Crimean businesses and cargo carriers have adjusted to the new environment by redrawing their maritime routes. One newly prominent destination, it seems, is Novorossiysk, a Russian port that lies roughly 275 miles by sea from Sevastopol and 125 miles from the Crimean city of Feodosia. Apart from extensive facilities, it offers the advantage of avoiding long waits at the currently overwhelmed cargo facility at the Kerch Strait.

An official at the state-owned enterprise Crimean Sea Ports told EurasiaNet.org about a recent customer request to arrange the export of goods from Crimea to India. “No foreign companies agreed to send their ships to us,” he said, but “we solved this by channeling cargo via Novorossiysk.” He added that “most of the peninsula’s importing and exporting happens this way.”

Several regional freight companies openly advertise Novorossiysk as a transit point for export and import, though none agreed to comment on the record. Their online bulletins, however, provide some hints. For example, Yugtrans-Forward, based in Novorossiysk itself, organizes “sea freight transportation from anywhere in the world to Crimea.” The Simferopol-based Import Krym, meanwhile, promises to deliver goods to Crimea “from any point on the globe (including from Ukraine).”

A representative at Yugtrans-Forward was recently asked over the phone if the company could help deliver ceramic tiles from Italy to Sevastopol and replied that it could be arranged: “Generally, we do not ship package freights, but it is possible if requested. It will be very expensive though. Please send the offer to the e-mail address, and we will make all the calculations and map the route.”

Novorossiysk’s role as a way station is confirmed by at least one official source: an international economic forum held in Yalta this past May. One company presenting there, the Hong Kong-based Logistics Consulting Group, reportedly proposed to export Crimean wheat to China on the order of 450 to 500 thousand tons per year.

All this extra trade traffic likely explains the sudden increase in cargo turnover at the Novorossiysk port, which was quite stable for a decade before 2013, staying within the annual range of 110 to 120 million tons. Then it began to swell, reaching 131.4 million last year. In fact, the port is currently in the process of expanding, aiming to significantly boost its capacity in the next three years. It is projected as a nearly $600-million-dollar investment, for which Novorossiysk might have Crimea to thank.

Editor’s note: Alexander Alikin is an independent journalist based in Crimea.

Article by Alexander Alikin, EurasiaNet


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