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In January, a cargo ship flying the Honduran flag disappeared from worldwide monitoring programs off the coast of Cyprus. When it reappeared every week later, the Sea Navigator was heading north to Europe. However the ship had not acquired misplaced – it had slipped right into a Russian-controlled port in Syria to select up phosphates, a key ingredient for making fertiliser.
Low-cost Syrian phosphate exports to Europe have boomed lately. Europe has few phosphate reserves of its personal and European farmers had been already struggling to afford phosphate fertilisers earlier than the warfare in Ukraine despatched costs hovering even larger.
However this secretive commerce comes at a price. Phosphate exports present an financial lifeline to the repressive authorities of Bashar al-Assad, and channel European funds to Syria’s key companion within the phosphates commerce: the Russian billionaire Gennady Timchenko, an in depth buddy of Russian President Vladimir Putin.
Whereas EU sanctions on Syria don’t explicitly prohibit phosphate imports, they do ban offers with the Syrian minister of oil and mineral sources, who’s in control of phosphates. European corporations additionally threat working afoul of the worldwide attain of US sanctions on the Syrian authorities. In the meantime, Timchenko was one the primary oligarchs added to UK and EU sanctions after Russia’s invasion of Ukraine in February.
So European corporations are paying a convoluted community of shell corporations and middlemen to purchase Syrian phosphates, that are surreptitiously shipped on vessels such because the Sea Navigator.
Evaluation of dozens of such voyages utilizing ship monitoring information reveals a sample of ships carrying phosphates from Syria disappearing from the Worldwide Maritime Organisation’s AIS monitoring system whereas heading in direction of Syria and reappearing en path to Europe every week or two later.
Timchenko’s staff have additionally created entrance corporations in Syria to ship phosphates to Europe.
“The Syrian phosphates commerce exhibits why the EU sanctions system just isn’t match for function – sanctions evasion works and it’s not even that tough,” stated Ibrahim Olabi, a Syrian authorized skilled who screens sanctions evasion. “Russia realized how to do that in Syria and might now use that have to keep away from sanctions over the Ukraine warfare.”
An investigation by the Organised Crime and Corruption Reporting Venture (OCCRP), Lighthouse Studies, and Syrian Investigative Reporting for Accountability Journalism (SIRAJ), in partnership with journalists in seven nations, traced phosphate shipments from the desert mines of Syria to Europe’s fertiliser factories, utilizing open supply evaluation and monetary paperwork and commerce information from dozens of nations.
Official commerce information present that Spain, Poland, Italy and Bulgaria all just lately started importing Syrian phosphates. Serbia and Ukraine, which additionally apply EU sanctions on Syria as a part of their agreements with the bloc, are additionally main consumers.
When requested concerning the imports, corporations and authorities companies stated they didn’t violate sanctions as a result of Syrian phosphates should not particularly outlawed, and they don’t seem to be dealing straight with folks beneath sanctions.
“You is perhaps legally in the proper. You’re additionally giving blood cash to a sanctioned human-rights violating regime and a sanctioned Russian oligarch,” stated Irene Kenyon, a former intelligence officer on the US Treasury.
A Russian oligarch’s Syrian entrance corporations
Within the desert surrounding Palmyra, the traditional metropolis vandalised by Islamic State militants, employees bussed in from close by cities dig phosphate rock from Syria’s dusty mines. Few Syrians nonetheless reside within the villages scattered by this arid area the place Islamic State sleeper cells proceed to stage periodic assaults. Russian and Syrian non-public safety contractors guard the phosphates mines and convoys to the coast.
Phosphates are important for crops and animal feed, and European agriculture depends on the roughly $55bn world phosphates business. Syria was one of many world’s largest exporters of phosphates earlier than warfare engulfed the nation in 2011, with the business falling aside when IS captured the realm across the mines in 2015.
Russia despatched forces into Syria that yr, ultimately serving to Assad recapture many of the nation. The federal government returned the favour by handing beneficiant contracts to Russian corporations in a number of the nations’ most worthwhile sectors.
In 2018, the Syrian state-run Basic Firm for Phosphates and Mines (Gecopham), owned by the ministry of oil and mineral sources, handed management of Syria’s largest phosphate mines to the Russian firm Stroytransgaz.
Stroytransgaz is owned by Timchenko, one of many richest males in Russia. Timchenko and Putin have been mates since at the least the early Nineties, when the oligarch was a St Petersburg oil dealer. Timchenko denies allegations he is likely one of the fronts for Putin’s private wealth, saying the pair are simply judo companions.
The US positioned sanctions on Stroytransgaz in 2014 after Russia annexed Crimea, so Timchenko distanced himself from his firm’s operations in Syria, which date again to the early 2000s.
In 2016, senior Stroytransgaz staff took over an obscure Russian logistics firm and renamed it Stroytransgaz (STG) Logistic. On paper, STG Logistic is owned by a Moscow-based firm that manages companies for nameless shoppers. It runs phosphates exports for the Syrian authorities in trade for 70% of the proceeds.
In 2018, Timchenko’s firm bought a subsidiary, Stroytransgaz (STG) Engineering, to 2 Moscow-based shell corporations. Shortly after, the corporate received contracts to run the export port in Tartous and Syria’s state-run fertiliser factories, giving corporations utilizing the Stroytransgaz title management over the whole phosphate provide chain in Syria.
Stroytransgaz now denies any connection to those corporations. “STG Engineering is a separate authorized entity and isn’t a part of our group of corporations. Only a comparable abbreviation of the corporate title,” stated a spokesperson, Natalia Kalinicheva.
However Syrian and Russian firm information present senior Stroytransgaz officers performed key roles within the formation of those corporations, together with the previous Stroytransgaz director Igor Kazak and present Timchenko worker Zakhid Shaksuvarof.
Irene Kenyon, a sanctions skilled and director of threat intelligence on the consultancy FiveBy Options, stated the historical past of those corporations gave her “fairly excessive confidence” that they’re owned or managed by Timchenko’s firm. “These are quite common methodologies: creating layers and layers of shell corporations to assist obscure final useful possession by folks beneath sanctions,” she stated.
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Putin’s man in Ukraine
Syria is Ukraine’s largest provider of phosphates, regardless of Kyiv’s tense relationship with Damascus since Assad backed the invasion of Crimea. Ukrainian fertiliser corporations used to purchase straight from the Syrian authorities, however since imports resumed in 2018 the commerce passes by a community of obscure new corporations.
The overwhelming majority of Syrian phosphates arrive in Ukraine by Nika Tera port within the south-western metropolis of Mykolaiv, now a frontline within the Russian warfare in Ukraine. The port is owned by the Ukrainian oligarch Dimitro Firtash, who additionally controls the most important producer of phosphate fertilisers in Ukraine, Sumykhimprom.
Whereas Sumykhimprom is technically state-owned, it’s run by an in depth enterprise affiliate of Firtash and owes the oligarch’s corporations thousands and thousands of {dollars}, in response to an investigation by Radio Free Europe/Radio Liberty. “It’s not unusual for highly effective gamers in Ukraine to manage state-owned corporations on this method,” stated John Lough, an skilled on Russia and Ukraine on the British thinktank Chatham Home.
Firtash, one of many richest males in Ukraine, owes his fortune to offers with Kremlin-controlled corporations, together with an roughly $3bn scheme reselling underpriced Russian pure fuel in Ukraine and pocketing the distinction. In return, he has bankrolled Russia-friendly politicians in Ukraine. Earlier this yr, he denounced Putin’s warfare in Ukraine, telling NBC: “I used to be by no means pro-Russian, however it’s a must to perceive that I’m a businessman. And my purpose is to earn cash.”
His affect as soon as prolonged to the UK, the place he owns a mansion in London’s costliest neighbourhood and have become a serious benefactor to the College of Cambridge. He now runs his huge enterprise empire from Austria, the place he has spent the final eight years preventing extradition to the US to face trial for corruption.
Sumykhimprom was the most important importer of phosphates to Ukraine till 2020, when it vanished from import information. As the corporate continued to supply phosphate fertiliser, it gave the impression to be sourcing its supplies by third events. Sumykhimprom didn’t reply to a number of requests for touch upon whether or not it was shopping for Syrian phosphates.
The rising European market
Extra just lately, corporations in EU nations have additionally began shopping for Syrian phosphates once more. Italy resumed the commerce in 2020, adopted by Bulgaria final yr and Poland and Spain in January.
The commerce is rising quick due to spiralling costs, in response to European importers and business analysts. “Syrian phosphates are very bloody not solely due to the battle in Syria but additionally what is going on in Ukraine,” stated Glen Kurokawa, a phosphate analyst on the commodity analysis group CRU. “Syria has to promote at a political low cost as a result of its items are so poisonous to deal with.”
European demand is prone to develop because the warfare in Ukraine disrupts phosphate and fertiliser markets.
The sanctions skilled Julius Seidenader stated Syria’s phosphate commerce revealed how Europe’s patchy enforcement of sanctions and problem closing loopholes may undermine its latest sanctions on Russia over Ukraine.
“Whether or not over oligarchs or non-public jets, Russians have develop into masters of layering and hiding belongings in shell corporations,” he stated. “That’s the query haunting sanctions – hiding behind shell corporations makes it very tough to make sanctions work, whether or not in Syria or Russia.”
This investigation led by Lighthouse Studies, OCCRP and the Syrian Investigative Reporting for Accountability Journalism (SIRAJ) was a partnership between journalists from the Mykolaiv Centre for Investigative Reporting (Ukraine), the Centre for Investigative Journalism of Serbia, Bivol (Bulgaria), RISE (Romania) & Investigative Reporting Venture Italy.
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