The True Cost of Siemens Collaboration in Violating Crimea Sanctions
Germany’s Siemens Company was unperturbed that it was sending hugely expensive gas turbines to equip a non-existent Russian power plant. It only ‘noticed’ that the turbines had appeared in Russian-occupied Crimea after they were reported by the media and has since claimed, with minimum credibility, to be shocked and indignant
It is difficult to believe the claims that Siemens were deceived when report after report repeatedly stated that their turbines were destined for Crimea. Public statements that Siemens observes international sanctions were insufficient when the company, via its 65% owned subsidiary, had sent four gas turbines for a supposed power plant that did not exist. Perhaps it is usual for them to provide turbines so far ahead of the actual construction of a destined power plant, however in this case it was known by the summer of 2016 that no Taman ‘power plant’ was likely in the near future since the tender had been terminated ‘for lack of bidders’.
According to media reports, only two of the four turbines had then been delivered, and the specifications suggested that there was no need for four turbines at this supposed Taman power plant. It seems likely that this is often the case since the four turbines are now going to two different power plants being built in occupied Crimea.
If the reports are correct, Siemens provided four expensive turbines without any proof at all that they would be used on the site. It continued to confine itself to empty assurances about compliance with international sanctions long after it became clear that no power plant was to be built on that site, and that power plants with the same turbine requirements were being built in Russian-occupied Crimea.
A long history of collaboration
Siemens has been in Russia since Tsarist times, but the collaboration now in question is linked directly with Russia’s invasion and occupation of Crimea, the first annexation of a European country since Nazi Germany’s annexation of Austria in 1938 Siemens CEO Joe Kaeser made it quite plain that was not a problem for him or the company he represented by his meeting with Russian President Vladimir Putin at the latter’s residence outside Moscow eight days after Putin signed an internationally meaningless document clinching the annexation.
Sanctions are, nonetheless, binding, and they specifically prohibit any supplies of equipment to occupied Crimea.
The first report that Siemens Gas Turbine Technologies LLC, the St Petersburg subsidiary of Siemens, was to provide gas turbines for new power stations in Crimea was made in a Vedomosti report on June 30, 2015. Vedomosti reported that the deal had been reached in Spring with the Siemens turbines officially contracted for a station in Taman in Russia, but in fact destined for Crimea.
Vedomosti’s unnamed sources suggested a conscious fiddle with a supposed power station in Taman used as a smoke screen. The turbines were to be purchased by Technopromexport, a subsidiary of Rostec which Russia had contracted a year earlier to build power stations in Simferopol and Sevastopol, with 25 billion roubles of the cost funded by the Russian state.
Siemens said nothing except that it complied with international sanctions.
Two years later we see that the Vedomosti report was correct to the last detail.
Nor was it the only such report over the following two years. Take the Reuter’s news story from August 5, 2016, which stated, again quoting three unnamed sources, that a Crimea power project had finalized a plan to use Siemens turbines. Approached by Reuters for comment, the German company “categorically denied” the allegations and said that “its joint venture is making turbines for a separate plant on Russia’s Taman peninsula”
It was already clear that there was no “separate plant on Russia’s Taman peninsula”, nor going to be since the tender had received no bids.
Reuters noted then that they had consulted three legal experts who said that there was no precedent for establishing “whether Siemens would be in violation of the sanctions if its Russian joint venture built the turbines for Taman and then a third party sent them to Crimea.” They did however warn companies to be cautious about technology that could end up in Crimea.
It is worth recalling that the original Crimea Blockade, which eventually turned also into an electricity blockade, was initiated by Crimean Tatar leaders with very specific human rights demands, including the release of all political prisoners. Russia is not capable of providing water and electricity to Ukrainian Crimea and this is a major lever for ending its occupation.
In December 2016, Ihor Maskalevych, from Ukraine’s Dzerkalo Tyzhnya suggested a slightly adapted version of the same smoke screen which the Russian Vedomosti had first reported in June 2015. The scam, he said, was aimed at ensuring the turbines got to Crimea, while protecting Siemen’s reputation.
Maskaevych asserted that there had been a nominal change in contractor for the power stations in Crimea, with Technopromexport officially ceasing to be part of Rostec, and becoming a daughter company, with a share value of under 10 thousand USD. Technopromexport had then suddenly proved to be facing bankruptcy, with Rostec initiating the procedure. At a meeting of the creditors at the end of October 2016, all attempts to avert the move were rejected. The reason, the author asserted, was obvious: the property of a company made bankrupt goes up for sale. That ‘property’ now included four Siemens turbines, worth 167 million EUR.
This would, he believed, make it easy for any company that bought the turbines to refuse to comply with the conditions of the contract between Technopromexport and Siemens. In fact, this contract is still cited by Siemens, so the author was either incorrect in his surmise, or plans changed.
It should be recalled that Siemens has only ever reacted after the turbines – first two, then, all four, were detected in annexed Crimea.
In November 2016 Radio Svoboda’s Krym.Realii quoted the Russian Kommersant as reporting that only two of the turbines had then reached the Taman Peninsula, and that Siemens had put a hold on the other two, and even proposed to check their location. If it did carry out such a check, it presumably considered it sufficient to ascertain that at the moment of checking, the said turbines were still in Taman, without asking such inconvenient questions as why, since no power plant was being built.
Krym.Realii also spoke with Igor Yuskhov, a leading analyst from the Russian Foundation for National Energy Security. He said that the supply of the Siemens turbines to Crimea would “demonstrate the effectiveness of the sanction policy against Russia”. He suggested that the information had been fed to the media to see if there was a reaction from the EU.
There was none from the EU, and only denials from Siemens. Russia also long denied that its soldiers had seized control in Crimea, and is still trying, against the facts, to maintain such denial about its military engagement in Donbas.
Siemens is currently claiming to have been duped, and it is for German investigators to assess the evidence for this.
Whatever its motives, Siemens has given a huge boost to an aggressor state which occupied another country’s territory and has since adopted a policy of repression, political persecution of opponents and other grave human rights crimes.