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Russian vodka factory in Montenegro to circumvent EU sanctions

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Orosz vodka / Russian vodka

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A Russian businessman has established a company in Montenegro with the aim of producing vodka for export to the European Union. The Montenegrin factory, owned by Noblewood Adriatic, founded by Alexander Mechetin, former CEO of one of ’s largest vodka distillers, Beluga Group, will employ around 300 workers and produce approximately 30 million bottles of Beluga vodka annually, with a total value of around 500 million euros. Montenegrin Prime Minister Dritan Abazović attended the factory’s opening on Thursday, April 13th.

The circumvention of sanctions

Last December 7th, the Russian news agency Interfax reported that Alexander Mechetin had resigned from his position as CEO of Beluga Group, which the board of directors accepted at his own request.

Mechetin, who had led the Beluga Group for more than 20 years, sold almost 19% of his shares at the same time as his resignation, reducing his ownership from 58% to 39.38% and consequently losing his majority ownership status in the company.

Following this, the Russian vodka distiller established the company Noblewood Adriatic in Tivat, Montenegro, which naturally and not coincidentally specializes in vodka production, allowing the Russian businessman to continue his previous activities, which had been severely affected by EU sanctions against Russia, through circumvention of these sanctions.

In Montenegrin media and public life, Mechetin is mentioned as the owner of Noblewood Adriatic, but the Montenegrin registry lists a certain Vitaly Enin as CEO, for whom no public data is available, suggesting he may be acting as a frontman.

According to the Montenegrin news portal, Standard, Macsetyin is among the few Russian oligarchs whose name has not yet been added to the European Union’s list of sanctioned Russian businessmen. However, since the list is updated monthly, it is possible that delay does not mean exemption.

The Russian vodka tycoon allegedly took advantage of the economic citizenship program launched by Malta and Cyprus in 2013, earning millions of dollars for the two island nations.

While it is unclear when Macsetyin became a Maltese citizen, it is certain that he acquired it before 2018. It is also possible that he may have appeared in Montenegro as a Maltese or Cypriot citizen, which could complicate the sanctions game.

The Serbian connection

Last August, the Russian businessman, then the head of the Beluga Group, bought the Nikšić-based Neksan company, reportedly investing 50 million euros in it.

The previous owner of Neksan was Miodrag Daka Davidović, who was shot and wounded by a sniper in Belgrade in December 2019 while in exile due to his connections to Serbia and Russia, enjoying the support of the Serbian Orthodox Church leaders.

Davidović was allegedly involved in cigarette smuggling in the 1990s, which was a lucrative industry in former Yugoslavia where tobacco products were in short supply. He was arrested in 1997 after confronting Montenegro’s now-toppled president, Milo Đukanović’s political agenda.

In the 2000s, the Montenegrin politician and businessman was involved in a fictitious petrol delivery case related to the then-newly independent Kosovo, but the Montenegrin prosecutor’s office never confirmed the allegations.

In 2021, Davidović founded a Serbian political party called the People’s Movement in Montenegro, which supported Jakov Milatović, the newly elected president, in the second round of the Montenegrin presidential elections, unsurprisingly since Milatović is a member of the Serbian Orthodox Church.

orosz vodkaMiodrag Daka Davidović campaigned alongside Jakov Milatović on his barely used LinkedIn profile (Source: LinkedIn)

In August of last year, according to a report by Radio Free Europe, the Montenegrin Ministry of Finance did not create any obstacles to the purchase of Neksan. The ministry considered the transaction to be an agreement between two businessmen, rather than a violation of sanctions. Furthermore, they emphasized that the purchase would result in the creation of 300 new jobs.

According to the Standard portal in Podgorica, the opening of 300 new jobs sounds good, and is enough to demonstrate to the population of the Balkan country that Montenegro can attract new investors even in difficult times, even if they come from an „aggressor country” and finance their economic activity with questionable capital.

Russian vodka from Montenegro

The opening of the Russian vodka factory in Montenegro on Thursday was attended by Prime Minister Dritan Abazovic, who emphasized that a large portion of the vodka produced in Montenegro is exported.

– This is a big day for Montenegro because global brands are coming, and the economy will finally become export-oriented. The products produced in this factory will be exported to more than 100 countries this year alone, and the ratio between imports and exports will improve


said Abazovic, who was very enthusiastic and described how much glory awaits Montenegro as bottles labeled „Beluga Montenegro” appear all over the world.

The new management of the factory also supports this idea, stating that the Russian vodka produced in Montenegro will be available at nearly 300 airports around the world, circumventing EU sanctions.

Abazovic pointed to a shipment of vodka in a Montenegrin government video attached to the article, stating that it was headed for New Jersey, USA.

The Montenegrin Prime Minister of Albanian origin emphasized that the Niksic factory employs nearly 200 workers, while 50 are employed in marketing in Tivat.

However, this is just the beginning. Abazović envisions that according to the plans, the company will employ 400 people by 2025.

The executive Montenegrin prime minister believes that the factory is so good that the United States, Germany, or France would not be ashamed to have a factory like the one now established in Nikšić.

Of course, the ceremony did not address how the Russian presence behind the world-class investment can be interpreted in the case of Montenegro, which is declared to be seeking to join the European Union, and how the whole story relates to EU sanctions, whether we like them or not.

English

Dodik travels to Moscow, yet receives money from the European Union

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Dodik pénzt kap az EU-tól / Dodik travels to Moscow and receives money from the EU

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Olvasási idő: 5 perc

The European Commission has lifted the suspension it imposed last year on the disbursement of intended for the Bosnian Serb Republic. Milorad Dodik, the president of the Bosnian Serb entity, expressed his gratitude to his coalition partners for their support in this matter, while the entity he leads is experiencing worsening economic conditions. The upcoming repayment of bonds issued on the Vienna Stock Exchange this year may force Dodik to take on additional significant loans. It is possible that he will seek assistance in Hungary as well.

In Brussels, they loosened their grip

Milorad Dodik, the president of the Bosnian Serb Republic, achieved a significant result on Friday, as the EU revoked the suspension of EU-funded development projects in the Serbian entity.

The disbursement of EU funds intended for the Bosnian Serb Republic had been suspended since February last year, as the EU Commission sought to exert pressure on Dodik’s Independent Social Democrats Alliance (Savez Nezavisnih Socijaldemokrata, SNSD) due to their secessionist tendencies.

Although the European Union did not impose sanctions on Bosnian Serb political leaders at that time, the Commission ordered the freezing of all projects receiving EU support.

It was already known at the time of the halt in investments, mostly related to infrastructure development, that the Serbian entity, burdened by significant debt due to bonds issued on international stock exchanges, would not be able to compensate for the resulting shortfall from its own budget.

In May of this year, several Bosnian newspapers reported that the leadership of the Bosnian Serb Republic could be in trouble if they do not find new external funding to finance their accumulated external debt.

While the risk of technical bankruptcy is not discussed in Banja Luka, it can be assumed that the EU, in plain terms, „didn’t let Dodik off the hook” and resumed the disbursement of previously frozen financial assets.

According to experts knowledgeable in the Bosnian financial sector, the EU’s restart of programs has provided a lifeline to the otherwise grim state of the Bosnian Serb economy.

However, experts agreed that the influx of EU funds alone will not be sufficient to ensure the necessary growth for financing external debt. This is because its impact does not generate enough additional GDP growth in the Bosnian Serb Republic to break free from the debt spiral.

One may ask, why did Brussels yield?

The answer, according to many, is that this step was a significant gesture towards the Bosnian Serb region on the brink of international isolation and economic collapse.

Dodik, in turn, has only earned this by fulfilling the coalition agreement he made with the Croatian Democratic Community of Bosnia and Herzegovina (Hrvatska Demokratska Zajednica Bosne i Hercegovine, HDZ BiH) and the left-wing Bosnian party alliance known as the „troika” until now.

Troubles within the coalition arise

The importance of restarting EU programs is also reflected in Dodik himself expressing gratitude, in front of the press, to Elmedin Konaković, the Bosnian Minister of Foreign Affairs, for consistently keeping the issue of restarting frozen projects in the Serbian entity on the agenda during his visits to Brussels this year.

elmedin konakovic milorad dodik 1

On the right, Elmedin Konaković, the Bosnian Minister of Foreign Affairs, plays the role of a helpful lobbyist, while on the left, Milorad Dodik, the president of the Bosnian Serb Republic, needs to be connected to a financial infusion

Simultaneously with the announcement of the financial good news, Denis Bečirović, the Bosnian member of the Bosnia and Herzegovina Presidency, also held negotiations with members of the Western Balkans Working Group of the European Parliament in Brussels.

Bečirović’s participation in the meeting caused significant disruption within the communication machinery of the Bosnian government coalition. This was because the member of the presidency asked the present EU representatives to impose further sanctions against Dodik, and he described the continuation of the disbursement of EU financial assets as a „terribly bad step.”

Regarding Bečirović’s stance against Dodik, it is worth noting that in previous years, he has repeatedly accused the top Bosnian Serb leader of separatist tendencies and violating the principles of the Dayton Agreement.

His recent actions were particularly uncomfortable for his own party, the Social Democratic Party (Socijaldemokratska Stranka, SDP), as this position completely contradicted the coalition government’s stance, including that of his own party, regarding EU funds.

Although there haven’t been similar levels of communication discord among some players within the five-party government coalition in the past, and the government seemingly continued its work uninterrupted, strong figures within the coalition parties often make comments that indicate underlying tension.

When it comes to separate communication, the SDP takes the lead, as several prominent members sharply criticize the work of the coalition partners organized on the basis of two ethnicities, the Bosnian Serb SNSD and the Croatian HDZ BiH.

The ‘unique word scattering’ observed in the communication of the SDP can be traced back to the fact that the Yugoslav state party’s successor organization in Bosnia, in addition to its traditional center-left orientation, has sought to broaden its support among progressive and neo-Marxist youth groups. These groups find it difficult to accept that the SDP, which represents a multiethnic and atheist approach they support, formed an alliance with the Bosnian Serb and Croatian conservative political forces that were continuously criticized in the previous cycle.

Dodik needs to pay (or should pay)

Regardless of the opening of EU funds, the economic situation of the Bosnian Serb Republic is difficult to assess positively.

The maturity dates of entity bonds issued on the London and Vienna stock exchanges are approaching, and their repayment will pose a significant burden on the budget of the Serb entity.

The numbers speak for themselves.

This year, the Serb entity has a bond-based debt obligation of approximately 1,099 million BAM (convertible mark), which amounts to 208 billion Hungarian forints. In addition, the government of the Bosnian Serb Republic has to pay an additional 900 million BAM (170 billion Hungarian forints) this year based on other commitments.

A significant portion of these obligations is related to certain infrastructure investments. From this year’s upcoming debt pile, a portion of the Bosnian Serb bonds issued on the Vienna Stock Exchange in previous years will mature in June. After this, the Serb entity will have to pay approximately 400 million BAM (75 billion Hungarian forints).

To ensure the financing of the mentioned debt, the Bosnian Serb Republic received a loan of 180 million BAM (34 billion Hungarian forints) from Hungary.

We have previously reported in detail about this transaction and the support program provided by the Hungarian government to Bosnian Serb agricultural entrepreneurs.

According to news reports in the Bosnian press, in order to continue rolling over the high external debt, Dodik may be preparing, or rather, be forced to take on another loan of approximately 2 billion BAM (380 billion Hungarian forints) in the near future.

Most analysts link this future transaction, which has so far been only speculation, to the Chinese development funds that are still leading in the Western Balkans region, due to the drying up of Russian resources. However, it is also possible that Dodik may once again knock on Budapest’s door for a little injection of funds.

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