Russia Delivers a New Shock to Crimean Business: Forced NationalizationBy
Business in Crimea has taken a beating since the peninsula’s annexation by Russia. Crimea’s tourism industry collapsed, and companies were cut off from vital suppliers and customers in Ukraine. Now comes the latest blow: nationalization.
From bakeries to shipyards, Crimea’s Kremlin-backed government is moving aggressively to take over businesses that it deems “inefficient,” strategically important, or friendly to the government in Kiev.
Krymkhleb, the peninsula’s biggest bread and confectionery maker, was nationalized on Nov. 12 by government authorities who accused its owners of laundering money to finance military operations against pro-Russian rebels in eastern Ukraine. A company that supplies flour to Krymkhleb also was taken over.
Also on Nov. 12, authorities seized a resort complex owned by the holding company of Serhiy Taruta, a Ukrainian oligarch who replaced the former pro-Russian governor of Ukraine’s Donetsk region for several months earlier this year. Crimean authorities said the resort was seized because its management had illegally blocked public access to nearby park lands.
Another recent target was Zaliv, Crimea’s largest civilian shipbuilder. In late August, men describing themselves as Crimean “self-defense” forces stormed the company’s headquarters in the port of Kerch and demanded that management hand over control to a Moscow-based company. “Currently, representatives of the legitimate government of [Zaliv] are not allowed to perform their functions,” the company said in a statement on its website, adding that its activities have been “completely blocked.” No official reason was given for the seizure, but Russian authorities have said they want to overhaul Crimea’s shipbuilding industry.
“All enterprises on the peninsula that operate inefficiently, are on the verge of bankruptcy, or have been abandoned by their owners, will be nationalized.” Sergei Tsekov, a senator who represents Crimea in the Russian parliament in Moscow, told the Russian-language news service 15 Minutes on Nov. 13.
Crimea also has threatened to seize companies that it claims are in debt to Russian banks. One such case involves Crimean solar-power generating stations developed and operated by Activ Solar, an Austrian company. Sergey Aksyonov, Crimea’s recently elected prime minister, contends that Activ Solar owes $300 million to Russian banks. The company disputes that, saying it has no loan exposure to Russian institutions.
Russia moved swiftly after annexation to nationalize some Ukrainian state-owned enterprises, ranging from pipeline companies to health spas. It also took aim at oligarchs such as Igor Kolomoyskiy, vocally pro-Kiev governor of Ukraine’s Dniepropetrovsk region. Kolomoyskiy’s Privat Bank closed its Crimean branches after the annexation, leaving depositors to seek compensation from Moscow. Besides taking depositors’ money, Crimean prime minister Kolomoyskiy has financed military operations against separatists in eastern Ukraine, Aksyonov told Crimea’s parliament in September, ITAR-Tass reported. “It is our moral right and our moral duty to carry out this nationalization,” he said.
Recent laws enacted by the parliament have expanded the government’s right to foreclose” on private property, and, according to one of the new laws, to seize assets considered to have “particular social, cultural, or historical value.”
In some cases, Crimean authorities have said they were seizing businesses at the behest of employees who were being cheated or mistreated by management. “Employees established control of the enterprise on their own,” Aksyonov said after the takeover of Krymkhleb. “We just helped them a little.”
Such measures are turning Crimea into a “neo-Bolshevik criminal dictatorship,” Russian opposition party Yabloko said in a statement this week on its website. “The action to legitimize robbery must be cancelled, stolen property returned to owners, losses reimbursed.”