Putin’s Kerch Bridge to Crimea: No Money, Dodgy Insurance & No Accountability
Russia’s state-controlled media has responded to Wednesday’s reports of problems with financing the grandiose plans for a bridge between Russia and Crimea with a flurry of articles denying any problems or simply acting as if it was business as usual. The upbeat reports are on as shaky ground as the Kerch Bridge itself since a new report informs that the construction work is insured by an obscure Crimean company that nobody has heard of.
The Kerch Strait Bridge has been dubbed ‘Putin’s Bridge’, after Russian President Vladimir Putin. It was he who was behind Russia’s invasion and annexation of Crimea, and he is therefore personally embarrassed by the overwhelming evidence that Crimea really is in every way dependent on and organically linked with Ukraine. Whatever the dangers and the likely damage to the environment, he will not abandon plans for this bridge over the Kerch Strait from Russia to Crimea. As Crimean journalist (in exile) Pavel Kazarin put it after earlier reports of delay, this is “because it’s not only an imperial project, but a personal one”
If Putin could get away with using massive corruption and total lack of concern about the environmentally and economically disastrous consequences for the area and its residents of holding the Winter Olympics in sub-tropical Sochi, the situation now is quite different. However much money Russia may spend pushing its narrative about Crimea, it remains Ukrainian territory.
The entire construction of the Kerch bridge has gone to a firm owned by a Putin crony Arkady Rotenberg because there were not many takers and for good reason.
Ukraine has severed any agreements made between Moscow and Ukraine’s disgraced former President Viktor Yanukovych over construction of a bridge. Since Russia is now building it without Ukrainian consent, it is in breach of Ukrainian and international law. With sanctions in place, it would be very foolish for any foreign investors – or insurers – to have any involvement at all.
As well as penalties for breaking sanctions, Ukraine is fully within its rights to apply the international legal mechanisms outlined by Oleksandr Gavrylyuk in a recent article for the Jamestown Foundation.
Russia appears to go into propaganda overdrive each time there are negative reports about the bridge. Reuter’s Andrew Osborn first reported the delays which Kazarin was responding to on April 13, 2016. 5 days later, the same reporter was already writing – from Kerch which he had doubtless travelled to without Ukrainian consent – in considerably more optimistic fashion. The more positive message from that report also included a much glossed over version of Russia’s annexation of Crimea.
Problems with financing
The article in Forbes.ru on June 8 reported that Rotenberg’s company Stroigasmontazh was asking the government for help since no money had been received for financing the construction since the end of 2015. Money had been allocated, but had not appeared. The article quoted a letter from Andrei Kirilenko, the director of Stroigasmontazh to Russia’s Transport Minister and the head of Rosavtodaor, the Federal Road Transport Agency.
By evening, the Internet was full of humorous responses with many quips recalling Russian Prime Minister Dmitry Medvedev’s recent meeting with enraged pensioners in Crimea who demanded to know why the promised indexation of their pensions had not emerged. “There’s no money”, he answered, telling them to hang on in there and wishing them good spirits.
On June 9, Vedomosti reported that the Kerch bridge “is insured by an unknown Crimean company”. Judging by Central Bank statistics, the publication writes, ‘Crimean First Insurance Company’ [CFIC] has received around 1 billion roubles for insuring the bridge with the amount insured - 244 billion roubles. The construction itself has been estimated at costing 228 billion roubles. 1 billion roubles at present is around 13.7 million Euros.
The deal has been made between Rotenberg’s Stroigasmontazh and this extremely obscure insurance company which appears to be insuring only the risks with respect to fulfilling the contract.
An unnamed source linked with Rosavtodor confirmed that there had been problems finding an insurer. CFIC has not reinsured the construction risks and a specialist Vedomosti spoke with confirmed that it would almost certainly be unable to meet its commitments if required.
This is only the construction of the bridge. The amount of insurance required once it began functioning would surely be huge.
No environmental accountability
As reported earlier, the acceleration of construction of this 19 kilometre bridge was ordered without any environmental impact analyses or public hearings.
The Kerch Strait is an area of seismic activity, with extremely difficult weather and geophysical conditions.
Darya Gorskova, writing for Open Russia, reported in June 2015 that the bill being pushed through parliament made it possible for the bridge to be designed and built simultaneously.
Permits were effectively to be issued on the basis of an unspecified amount of preparatory work – and friendship.
The contract for building the bridge had already been awarded in January that year to Rotenberg’s company. He and his brother are reported to have increased their personal wealth by $2.5 billion over contracts for the Sochi Olympics and state-controlled Gazprom. At that time Dmitry Shevchenko, deputy coordinator for Environmental Watch on the North Caucuses, called the contract a “consolation prize” to make up for Rotenberg’s having come under western sanctions and had property arrested in Italy.
Construction had effectively already begun with everybody given to understand that they could plunge ahead and worry about “the paperwork” later.
Shevchenko warned then of the dangers of doing away with environmental impact analyses for construction of a huge engineering project which could cause major damage to the environment and disrupt the water flow of the Black Sea and Azov Sea. Those warnings appear to have remained unheeded to this day.