On January 17, Ukrainian Minster of Defense Stepan Poltorak stated that Russia’s ultimate goal in the Azov–Black Sea region is to “force Ukraine to renounce its right to navigate through the Kerch Strait and to annex the Sea of Azov in its entirety” (Telegraf.com.ua, January 17, 2019). Acute disputes between Kyiv and Moscow regarding the Azov Sea, its status and navigation rights broke out immediately after the collapse of the Soviet Union, in 1991. But by 2003, the parties concluded an agreement that proclaimed the Azov Sea an internal sea of Russia and Ukraine, with both countries having equal rights to it and declaring that “no obstruction of maritime traffic from either side [is] allowed” (Sovremennoepravo.ru, accessed January 27, 2019). In 2007, Kyiv and Moscow reached a new agreement stating that “every vessel traveling through the Kerch Strait [which connects the Azov and Black seas] must report the nature of its business to the Kerch port” (Svoboda.org,December 19, 2018). Yet, following Russia’s illegal annexation of Crimea in March 2014, Moscow has assumed de facto control over access to/from the Sea of Azov (Svoboda.org, December 19, 2018), thus essentially transforming this highly enclosed body of water into an “internal lake” (Inosmi.ru, December 11, 2018).
When addressing the issue, the majority of experts concentrate on the military-strategic importance of this area, which, indeed, is inseparable from Russia’s rapid military buildup in Crimea as well as Moscow’s most recent naval provocations (Russian7.ru, December 8, 2018). But what frequently escapes attention is the geostrategic and geo-economic importance of this maritime zone. In fact, it is so vital to Ukraine that, even without firing a single shot, Moscow could economically strangle a sizable portion of southeaster Ukraine, cultivate local anti-Kyiv sentiment, and trigger additional instability, turmoil and the potential outbreak of separatist sentiment there.
Ukrainian economic and geo-strategic interests in the Azov Sea are premised on two major communication/transportation pivots: Berdyansk and Mariupol. The port of Berdyansk handles primarily agricultural cargos and smaller vessels coming to and from Russia, Kazakhstan, Iran, as well as countries in the Mediterranean and Southeast Asia. Whereas, Mariupol (popularly known as “the export gates of Ukraine” due to its former connection to 152 ports worldwide) deals primarily with outgoing shipments of iron, coal and metallurgy product.
Prior to 2014, both of these Azov Sea ports secured virtually a quarter of Ukraine’s maritime exports. But the current output has plummeted by three times (despite an annual capacity of 17 million tons, the actual export volumes are currently 5.8 million), primarily caused by Russia’s “groundless detentions of vessels [traveling to and from Mariupol and Berdyansk] and the proximity of the zone of instability [i.e., the frontline in Donbas]” (Bankomet.com.ua, accessed January 24, 2019). Another limiting factor is the height of Russia’s Kerch Strait Bridge (connecting occupied Crimea to the Russian mainland), which has resulted in Mariupol losing up to 30 percent of its shipping fleet, leading to breaches of contracts with important foreign customers from the United States and Southeast Asia (X-rss.com, November 30, 2018). Since the start of 2019, Mariupol received only five vessels and Berdyansk—three. In 2016, these figures were six times higher (Dnews.dn.ua, January 19, 2019). The present situation is further aggravated by southeastern Ukraine’s poor railroad connections, inadequate infrastructure and the constant risk of new hostilities breaking out nearby (Newizv.ru, December 16, 2018).
In accordance with Ukrainian legislation, the Mariupol and Berdyansk ports are both owned by the state; yet, a closer look at the issue reveals a somewhat different picture. Many Ukrainian sources ascribe these two port facilities to the broader business interests of Rinat Akhmetov (one of the most affluent and powerful Ukrainian oligarchs). He is said to control the port in Mariupol via his relationship with associate Aleksandr Oleynik (its current director). Control over Berdyansk was de facto established in August 2018, when Metinvest Group (an enterprise owned by Akhmetov) acquired 25 percent of the stock auctions of Donetskstal Metallurgical Plant (controlled by Viktor Nusenkis)—an enterprise that reportedly had control of the port in the past (UNIAN, August 9, 2018). The rest of the stock was acquired by “independent players” (such as Altana Limited, Misandyco Holdings LTD, Mastino Trading LTD and Treimur Investments Limited), whose origins may themselves also point to connections with Akhmetov (Delo.ua, October 2, 2018). Another important player is Akhmetov’s business partner Vadim Novinsky (the owner of the Smart-Holding Group), who is interested in Mariupol as an important artery of agricultural exports, particularly given the fact that, in 2019, this port is to receive a major new grain complex. Ukrainian sources argue that the interests of Novinsky and Akhmetov could further converge over the agribusiness entity HarvEast Holding (based in Donetsk region), in which both are stakeholders (Ukraina.ru, December 7, 2018).
While official figures demonstrate the virtual collapse of transportation via Ukraine’s two main ports on the Azov Sea, smuggling is seemingly becoming a viable substitute to legal transactions. A closer look at this opaque issue points to the involvement of Russia, Ukraine and some third parties. One of the most recent and discussed episodes occurred in November 2018, when a Dutch vessel, the Comet, under the flag of Liberia and managed by a Singapore-based company, was apprehended in Mariupol. The vessel, which turned out to have belonged to Russia in the past, was carrying 3,000 tons of metal products illegally transported from Alchevsk Metallurgic Combinate (currently under the occupation of separatist forces) to Antwerp, Belgium (Censor.net.ua, November 1, 2018). Further investigation revealed that the crew consisted of Russian and Ukrainian citizens. This example is by no means the only one—apparently, smuggling in the Sea of Azov is becoming an increasingly lucrative business (Fondsk.ru, November 6, 2018). Some sources have claimed that the cargo onboard the Comet may have effectively belonged to Akhmetov, which raises even more questions regarding the smuggling scheme and private business interests in the Azov Sea today (Nsn.fm, November 2, 2018).
As pointed out above, Russia’s current strategy in the Sea of Azov (the economic strangulation of Mariupol and Berdyansk) is, at its core, an elaborate attempt to morally break down the population of southeastern Ukraine and seed anti-Kyiv sentiment there (Inosmi.ru, December 5, 2018). But a secondary Russian motive, which often escapes observers’ attention, is to concoct artificial antagonism between Mariupol and Odesa. As noted by the head of the Mariupol seaport, Igor Bayskii, “we are losing clients to Odesa, which does not face the same problems that we do” (Inosmi.ru, July 26, 2018).
Reprinted with permission from the Jamestown Foundation
