For sympathy to Russia Latvia takes away a giant business
Dec 14, 2019

For sympathy to Russia Latvia takes away a giant business

Latvia is experiencing a huge scandal related to the most important sector of the economy. The largest ports of the country came under us sanctions, and it was decided to take them away ("take over") from the owner-the mayor of Ventspils Aivars Lembergs.

Why did Latvia's most important ally plant such a pig in the Baltic state — and how does this relate to Russia?The issue of the" takeover " of the ports of Riga and Ventspils by the state arose after the Office for foreign assets control of the us Treasury (OFAC) imposed sanctions against Aivars Lembergs on the basis of the so-called "global Magnitsky law". Among the organizations controlled by the mayor of Ventspils or owned by him were named the free port authority of Ventspils, the development Agency of Ventspils, the business development Association and the Latvian transit business Association. Sanctions have been imposed on them, suggesting that all US citizens must cease cooperation with them within 30 days. The risks of cooperation with Aivars Lembergs for Latvian banks immediately said the foreign Ministry of the Baltic country.In the materials published on the official website of OFAC, the following justification for the introduction of sanctions against Lembergs is given:"These U.S. actions underscore our determination to hold corrupt oligarchs accountable for their actions against a key European ally. Lembergs has been the mayor of Ventspils since 1988. Since then, he has been repeatedly accused of money laundering, bribery and abuse of office. Lembergs controls various organizations and corrupt politicians through political parties and systematically exploits these organizations and individuals for his own economic gain. Lembergs used his influence over the leadership of political parties to shape the composition of the government and appoint some government officials, as well as to prevent other government officials from gaining leadership positions. In addition, Lembergs used and corrupt law enforcement officials to protect his interests and weaken the positions of politicians he could not otherwise control."In Latvia, the decision to nationalize the country's two largest ports (for 11 months of this year they handled about 50 million tons of cargo, the third port — Liepaja — about 6.7 million tons) caused a surge of discontent among businessmen and politicians. First of all, questions were raised by the logic of the authorities 'actions — why the "takeover" affected not only Ventspils, the" patrimony " of Aivars Lembergs, but also Riga.The official explanation of this was made by the Minister of transport of Latvia talis Linkait, who said that in the port of Riga also "known influence have individuals and legal entities", against which the us sanctions are applied, in connection with which it is necessary to " stop any ties with this person." However, this decision convinced few people. In particular, the Deputy of the Riga city Council, member of the Board of the Riga port Sandris Bergmanis told the news Agency "Sputnik Latvia" that everything that is happening in relation to the port of Riga resembles a raider seizure.Similar suspicions arose in relation to the port of Ventspils. In particular, political scientist Jurgis Liepnieks called the us decision on Anders Lembergs incomprehensible, Recalling that in the list of those sanctioned under the "Magnitsky law" there are still no odious Ukrainian oligarchs Igor Kolomoisky, Victor Pinchuk and Rinat Akhmetov. "It is possible only with us. The strategic partner included the port of Ventspils in the sanctions lists. The expert of the Confederation of employers in social networks pointed out that Ventspils accounts for only 1.9% of the Latvian economy. The head of the Bureau of the Prime Minister Karinsha puts like. Amen, " - ironically former Minister of economy and education of Latvia Vyacheslav Dombrovsky.Post-election revengeDombrowski's assessment of the role of the port of Ventspils in the Latvian economy is really ridiculous, given the role of the port economy for a small country."Ports should be seen as the keys to the entire Latvian economy. In fact, ports determine the load on the Railways, a large number of cash flows through banks and the possibility of exporting wood. Imagine the situation in the forest industry, if the Latvian ports will be closed for a month. And what will Latvian grain producers say if the port is stopped?"- recalls in his article Janis Goldberg from the Latvian edition of "Pietek".One of the versions discussed in Latvia why the "takeover" of the ports of Ventspils and Riga was organized right now, although the "Teflon" Aivars Lembergs has headed Ventspils for more than thirty years, is that it is the result of joint actions of the current Prime Minister of Latvia Krisjanis Karins and the leader of The new conservative party Janis Bordans.Karins, the son of Latvian immigrants to the United States, who moved to Latvia in the 1990s, is a priori perceived as a conductor of Pro-American policy.And the Bordans party raised the issue of nationalization of Latvian ports on the eve of elections to the Latvian Sejm, held in October last year. According to the results of the elections, the "new conservatives" won third place-13.6% of the votes and 16 seats in Parliament, and the victory with 19.8% of the votes (23 seats) was won by the Pro-Russian party "Consent". In addition, almost 10% of the votes (11 seats) gained the Union of greens and peasants, which has long been associated with the name of Aivars Lembergs. Representatives of this Alliance were the previous Prime Minister of Latvia Maris Kuchinskis, as well as the recently incumbent President of the country, President Raimonds Vejonis. However, the new Prime Minister soon after last year's parliamentary elections became Karins-representative of the center-right party "Unity", which took only the seventh place.Relations with Russia traditionally occupy a significant place in Latvian politics, and the appearance of Krisjanis Karins as Prime Minister was a clear signal that Latvia's position in this direction will be tightened. In particular, Karins is an opponent of the existence of Russian-language schools in Latvia. At the same time, Aivars Lembergs never hid his sympathy for Russia and was critical of the United States. For example, last spring, he said that the introduction of us sanctions against the Latvian Bank ABLV led to the outflow of large investments from the country (the Bank itself decided to liquidate), and before that criticized the decision of the Latvian authorities to refuse to participate in the construction of "Nord stream-2".Lembergs himself has already said that the decision to include him in the us sanctions list was lobbied by two people-the leader of the "new conservatives" Janis Bordans, who became Minister of justice of Latvia, and foreign Minister Edgar Rinkevich. The latter's American connections are also well known: in 1999-2000, Rinkevich studied at the us national defense University, and in 2005-2007, he headed the Bureau for the organization of the meeting of heads of state of NATO member States.At the same time, it should be noted that the current claims against Aivars Lembergs clearly did not arise from scratch — suspicions of corruption pursued the mayor of Ventspils for many years and were put forward long before the deterioration of relations between Russia and the United States. For example, at the beginning of this decade, the Prosecutor's office of Latvia investigated the so-called "Ventspils case" on the legalization of illegally received money by officials in the amount of millions of dollars. Among the defendants in this case were Chairman of the Council of Ventspils nafta and President of "Latvijas Naftas transits" Mamert vayvads, as well as a lawyer, a member of the Ventspils Duma and a member of the local port Council Gint Laivins-Laivenieks. They were called people associated with the business interests of Lembergs and the activities of offshore structures in the city.Lembergs himself was charged with bribery, legalization of criminally acquired funds and violation of restrictions imposed on officials-the Prosecutor's office suspected that he was a hidden co-owner of a number of commercial structures. But each time Lembergs managed to get all charges against him dropped. Once again, the Prosecutor's office had questions to the mayor of Ventspils arose in August, when law enforcement officers demanded for him eight years in prison with confiscation of property, as well as a monetary fine — as it turned out, it was "the last Chinese warning" for the unsinkable politician.The Russians won't leaveThe situation around the Latvian ports, of course, causes concern for the interests of Russian companies that operate there. In particular, Rosneft carries out major operations in Ventspils — last year the company signed a contract for 43.4 million euros with the Swiss Ventspils Tank Services SA for the transshipment of 3.2 million tons of oil products until the end of 2020. A major producer of mineral fertilizers holding "URALCHEM" through its structure Uralchem Freight limited in 2014 acquired in the port of Ventspils terminal for transshipment of liquid ammonia for 55 million euros. In addition, container cargoes of Russian companies go through Latvian ports.However, the story of the" takeover " of ports is unlikely to lead to the fact that Russian shippers will quickly leave Ventspils and Riga,according to the founder of the analytical Agency Infranews Alexey Bezborodov. In his opinion, large Russian companies had previously been well aware that their activities in Latvia are of great interest to Americans, and in any case it somehow meets the requirements of the us Treasury. So, in fact, there will be nothing new for Russian business with the nationalization of Latvian ports.At the same time, the advantages of working in Latvian ports are clear, the expert notes: "first, Latvian legislation allows companies to approach the structure of their costs more flexibly — you can write off a lot of things that will not work in Russia. Secondly, for companies that trade with the European Union, it is very important to have their goods on its territory — this allows more flexibility to respond to customers ' requests, gives different prices and other customs regulations. If you brought the container to Riga or Ventspils, you can trade with the European Union as a resident of the European Union, or sell part of the goods in the European Union, and send part to Russia. If you imported a container of goods into Russia, and it did not go, then it will be very difficult to take it back to the EU. Therefore, many companies prefer to work in Latvia, and this segment is unlikely to disappear. By the same logic, Russian business opens companies in China to do business with the Chinese in the same jurisdiction."In addition, adds Alexei Bezborodov, some Russian companies (as the same "URALCHEM") from Latvia is simply nowhere to go — a new turn of the terminal "Ultramar" for transshipment of mineral fertilizers in Ust-Luga is unlikely to appear before 2022.But in the total volume of cargo traffic of Russian ports, Latvia accounts for a very small share. For example, in terms of containers, it is only 50-100 thousand conventional TEU containers (the entire container turnover of Russian seaports last year exceeded 5 million TEU). Latvian ports, Bezborodov notes, are actively trying to attract new Russian customers, but there is still a position of Russian Railways, which does not contribute to a significant increase in this flow.

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