In Crimea, Russia

By Jack Stubbs and Yeganeh Torbati, Reuters, Sept 1, 2016

Construction of bridge to Crimea from Russia pictured in March 2016 (Wikipedia)

Construction of bridge to Crimea from Russia pictured in March 2016 (Wikipedia)

MOSCOW/WASHINGTON  – Companies building a multi-billion dollar bridge to link the Russian mainland with annexed Crimea, a project close to the heart President Vladimir Putin, were targeted by the United States in an updated sanctions blacklist on Thursday.

The U.S. Department of the Treasury added dozens of people and companies to the list, first introduced after Russia annexed the Crimean peninsula from Ukraine in 2014 and expanded over its support for separatist rebels in the east of the country.

As well as multiple subsidiaries of Russian gas giant Gazprom (GAZP.MM) and 11 Crimean officials, the Treasury named seven companies directly involved in the construction of the 19 km (11.8 miles) road-and-rail connection across the Kerch Strait, dubbed “Putin’s bridge” by some Russians.

Map of Crimea and surroundings

Map of Crimea and surroundings

Chief among those were SGM-Most, a subsidiary of lead contractor Stroygazmontazh which is already under U.S. sanctions, and sub-contractor Mostotrest (MSTT.MM), one of Russia’s biggest bridge builders.

“Treasury stands with our partners in condemning Russia’s violation of international law, and we will continue to sanction those who threaten Ukraine’s peace, security and sovereignty,” said John Smith, acting director of the Treasury’s Office of Foreign Assets Control, which levies sanctions.

Lines show existing ferry to Crimea (blue) and bridge to open in 2019 (red)

Lines show existing ferry to Crimea (blue) and bridge to open in 2019 (red)

The Russian Foreign Ministry was not immediately available for comment, but Moscow has previously said sanctions levied over its actions in Ukraine undermine efforts to resolve the conflict.

Set to be the longest dual-purpose span in Europe when completed, the Kremlin sees its 212-billion rouble ($3.2 billion) bridge as vital to integrating Crimea into Russia, both symbolically and as an economic lifeline for the region. Putin has called the undertaking an historic mission.

But the project has had to contend with Western sanctions since the construction contract was handed to Stroygazmontazh last year, a firm controlled by Arkady Rotenberg, a close ally of Putin’s and his former judo partner.

Rotenberg is already under U.S. sanctions because of his links to the Russian leader, which the Treasury says have helped him win billions of dollars in state contracts. He cannot raise capital in the West or hire Western sub-contractors to help his firm complete the project.

Officials linked to the bridge’s construction say they have all the skills, equipment and supplies required to build it without Western help.

“The sanctions will not affect the construction of the bridge,” Crimea Bridge infocentre, the organization responsible for communications about the project, said in a statement on Thursday. “The contractor has all the resources necessary for the timely completion of the project.”

Rotenberg and his brother Boris have denied getting help from the Russian leader for their businesses.

Gazprom did not reply to a request for comment. The restrictions on the energy giant and its subsidiaries prevent U.S. firms or citizens from providing goods or services supporting the firm’s deepwater, arctic offshore, or shale oil projects. The restriction does not apply to financial services, such as clearing transactions or providing insurance for such projects.


U.S anti-Russia sanctions upgrade ‘changes nothing’ – Moscow

RT.com, Thursday, Sept 1, 2016

Construction of bridge to Crimea as viewed from Russian mainland (Andrew Osborn, Reuters)

Construction of bridge to Crimea as viewed from Russian mainland (Andrew Osborn, Reuters)

The expansion of U.S. sanctions, including entities responsible for constructing a bridge link between Crimea and the mainland, has been met routinely in Russia. As the Kremlin thinks of countermeasures, Russian companies insist their business will continue as usual.

On Thursday, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) added 37 individuals and entities to a sanctions list “related to Russia and Ukraine.” The list, initially introduced back in 2014, now includes an additional 11 Crimean officials, seven firms that participate in the construction of the 19 km (11.8 miles) road-and-rail bridge across the Kerch Strait, as well as vital defense industry firms operating in Crimea were also sanctioned.

A Kremlin spokesperson said that Moscow will analyze the new list, but will most likely respond with countermeasures.

“We have to analyze what was expanded, but usually, in such cases, a principle of reciprocity is used,” presidential pres secretary, Dmitry Peskov, told journalists.

Peskov also stressed that sanctions rhetoric will lead the U.S. nowhere. “We are not talking about sanctions,” Peskov said. “We do not think such a rhetoric is constructive, promising and conducive to the solution of any problems.”

Gazprom, whose subsidiaries were also included in the list meanwhile said that the new sanctions will not affect its business. Some 26 entities of the Russian gas giant, including Gazprom-Media and regional branches of Gazprombank, were placed on the list, which de facto have been on the U.S. sanctions list already.

“All listed companies belonging to the Gazprombank group were already de facto under U.S. sanctions because Gazprombank owns stakes in their capital in excess of 50 per cent,” Gazprombank said. “Thus, the announcement of the Treasury United States does not change anything in the actual state of affairs neither for the Gazprom bank nor fort the mentioned enterprises.”

Gazprom media said that sanctions will only facilitate the reach of its media channel’s expansion abroad. Reminding that parts of the holding were already under U.S. sanctions the company said, “there are no new conditions affecting the conduct of business… the only thing that has changed is that Gazprom-media is now being called by its name.”

The media giant said that sanctions most likely “affect the brand recognition and increase the reach of our channel, broadcasting to foreign audiences.”

After Russia secured the peninsula’s energy independence from Ukraine by completing an energy bridge in spring, construction is continuing on a road-rail bridge connection to span from the Taman Peninsula of Krasnodar region to the Kerch Peninsula of Crimea.

The $3.2 billion project was awarded to Arkady Rotenberg’s SGM Group. While it is projected that the bridge will be opened in December 2018, Washington has now applied more sanctions to complicate the erection of the vital infrastructure.

“Treasury stands with our partners in condemning Russia’s violation of international law, and we will continue to sanction those who threaten Ukraine’s peace, security and sovereignty,” said John Smith, acting director of the Treasury’s Office of Foreign Assets Control, which levies sanctions.

Part of the list includes Rotenberg’s SGM – Most and its subcontractor Mosttotrest, in addition to a number of subcontractors directly involved in engineering and constructing the link. Until 2015, Mosttotrest was owned by Rotenberg, but now it is controlled by the Russian Railways subsidiaries.

But the newly invoked sanctions will not interfere with the construction of the bridge, Crimean Bridge info center reports.

“The contractor has all necessary resources for the timely implementation of the project,” the statement noted.

After the coup in Ukraine in 2014 and the subsequent Crimea’s accession into the Russian Federation, the relationship between the United States, the European Union and Moscow has suffered. The Western allies introduced several rounds of anti-Russian sanctions, blaming Moscow for the deteriorating situation in Ukraine.

Also on RT.com:
Russia’s Eastern Economic Forum to open tomorrow in Vladivostok, expected to attract over $15bn in investment, Sept 1, 2016

Crimean energy bridge completed from mainland Russia , May 12, 2016

 

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