Citizenship, Land and Nationalization of Property in Occupied Crimea: Rights Deficit

Final Analytical Report

The Report studies problems faced by Crimea after its annexation by Russia, such as forced

renunciation of Ukrainian citizenship, nationalization of Ukrainian public and private property by

occupation authorities and land problems. The document describes violations of citizenship,

property and social rights of Ukrainians and analyzes the related risks.

The Report will be useful for representatives of authorities, activists and the general public

interested in Crimean issues.

Content

Introduction .................................................................................................................................. 2

Summary ....................................................................................................................................... 3

The outcomes of the nationalization: chronology of the annexation of property ...................... 8

Communications ...................................................................................................................... 8

The fuel and energy sector ...................................................................................................... 9

The transport infrastructure .................................................................................................. 10

The agricultural sector ........................................................................................................... 10

Sanatoriums and state villas .................................................................................................. 11

Shipbuilding ............................................................................................................................ 11

The Privat group ..................................................................................................................... 12

The “annexed land” ............................................................................................................... 12

The re-registration or the completion of the registration of property rights to land ........... 13

Opinion on the law “On Allocation of Land Plots in State and Municipal Ownership and

Some Aspects of Land Relations” regarding illegally seized land plots ................................. 14

Conclusions ................................................................................................................................. 16

Introduction

The annexation of Crimea by the Russian Federation not only triggered radical changes at a variety

of levels of social organization but also resulted in numerous violations of human and civil rights.

This study seeks to analyze the actual state of issues of citizenship, private and public property and

land relations in Crimea.

In compliance with the law “On Ensuring the Rights and Freedoms of Citizens and the Legal

Regime on the Temporarily Occupied Territory of Ukraine”1, the temporarily occupied territory

of Ukraine “is an integral part of the territory of Ukraine, to which the application of the

Constitution and the laws of Ukraine shall be extended. The temporarily occupied territory of

Ukraine is defined as the land territory of the Autonomous Republic of Crimea and of the City of

Sevastopol, and the inland waters of Ukraine adjacent to these territories; the inland waters and

territorial sea of Ukraine adjacent to the Crimean Peninsula; the territory of the adjacent area,

exclusive economic zone, and continental shelf along the coast of the Crimean Peninsula, which are

subject to the jurisdiction of Ukraine according to international law; the underwater space within the

Ukrainian territorial sea; and the air space above the mentioned territories.”

The law governs, “The presence of units of the armed forces of other countries on the territory of

Ukraine, in violation of procedures set forth by the Constitution, the laws of Ukraine and other

international legal acts, is an occupation of a part of the territory of the sovereign state of Ukraine

and an international unlawful act, subject to all of the consequences provided for by international

law.” Hence, according to the IV Geneva Convention of 1949 relative to the Protection of Civilian

Persons in Time of War2, the Russian Federation has to comply with certain rules in the

Autonomous Republic of Crimea and the city of Sevastopol, regarding the status of the occupied

territory, the protection of individuals and their property, etc. Article 2 of the Convention reads, “In

addition to the provisions which shall be implemented in peacetime, the present Convention shall

apply to all cases of declared war or of any other armed conflict which may arise between two or

more of the High Contracting Parties, even if the state of war is not recognized by one of them. The

Convention shall also apply to all cases of partial or total occupation of the territory of a High

Contracting Party, even if the said occupation meets with no armed resistance.”

Although Crimea’s occupation met with no armed resistance, the Armed Forces of the Russian

Federation took an active part in it. In a documentary “Crimea: the Road to Motherland”3, Russian

President Vladimir Putin admitted that the plan to annex Crimea was ordered weeks before the

referendum on self-determination.

Hence, Russia has to comply with all restrictions imposed by international law for a regime of

occupation. Yet in reality, Russian occupation authorities ignore them (human rights, security

policy, property issues).

Methodology of the study: data were collected on the basis of analysis of public information,

monitoring of the media, analysis of events and legislation on citizenship, property and land policy.

Also, 35 in-depth interviews were conducted with respondents from all over Crimea, whose rights

had been violated. To more realistically describe the current situation, the study includes analysis of

the Russian legal framework as well as of the so-called resolutions and laws of self-proclaimed

Crimean authorities having a direct impact on Crimea.

On the basis of collected data, the experts made the study over the period August 2014 – April

2015, within the framework of the UCIPR project on “Citizenship, Land and Nationalization of

1 http://zakon4.rada.gov.ua/laws/show/1207-18

2 http://zakon4.rada.gov.ua/laws/show/995_154

3 https://www.youtube.com/watch?v=t42-71RpRgI

Property in Occupied Crimea: Rights Deficit” funded by the UN Development Programme

(UNDP).

The Section “Problems of citizenship in Crimea” highlights the main problems of forced

renunciation of Ukrainian citizenship, problems of acquisition of Russian citizenship, problems of

renunciation of Russian citizenship and problems of getting residence permits. These issues were

studied in September-November 2014 based on analysis of documents, laws, regulatory decisions

and in-depth interviews with different categories of Crimeans (August–September 2014).

The Section “Private and public property: legalization, use and nationalization” covers the actual

situation with property and re-registration of business licenses under the Russian law and relevant

implications as well as the so-called nationalization of property by occupation authorities, the re-

registration of motor vehicles and problems linked to procedures for sale, purchase, donation and

inheritance of real estate.

The Section “Land relations in Crimea” is focused on the two key issues: detailed review and

analysis of land relations after Crimea’s annexation and illegal seizure of land as described in the

laws passed by self-proclaimed authorities after the annexation.

The Summary gives theses and conclusions of the study and summarizes the whole work and

findings.

We express deep gratitude to all those who contributed to the conduct and publication of this study.

Summary

More than a year passed since the illegal annexation of Crimea by the Russian Federation. Crimea

was actually occupied and annexed with the entry into force of the federal constitutional law dated

21 March, 2014 No. 6-ФКЗ “On the Accession of Crimea and Sevastopol to the Russian Federation

and the Establishment of New Constituent Entities within the Russian Federation – the Republic of

Crimea and the Federal City of Sevastopol”. The behavior of the Russian Federation is considered

to be direct aggression against the sovereignty of Ukraine. In the history of frozen conflicts, often

incited and provoked by Russia, there were no precedents of de jure annexation of a part of a

sovereign state. The Russian Federation violated all possible rules of international law and occupied

a part of the territory of a sovereign state.

Crimean authorities carried out the so-called referendum on Crimea’s status on 16 March, 2014,

without relevant law and powers of local authorities and in the absence of international observers.

The formulation of questions put to the referendum did not imply Crimea’s retention within

Ukraine. The referendum was not recognized by international organizations, the U.S. and the EU.

On 20 March, 2014, the Venice Commission of the Council of Europe provided an opinion that the

Crimean referendum contradicts the European law and practice.

The referendum was conducted in the midst of Russia’s military presence in the region, following

the resolution on brining troops into Ukraine.

It is indicative that Crimea was annexed and occupied by the Russian Federation despite the

Budapest Memorandum of 5 December, 1994, in which Russia acts as one of the countries

guaranteeing the independence, sovereignty and territorial integrity of Ukraine.

The annexation of Crimea resulted in total violation of property rights of Ukraine and Ukrainian

citizens (public and private rights). According to the Ministry of Justice of Ukraine, the amount of

losses incurred by the nationalization of property of Ukraine and its citizens exceeds USD 1 trillion,

exclusive of lost profits, the cost of natural and off-shore resources and the sea shelf. Ukrainian

independent experts estimate the amount of losses at around USD 3 trillion.

Before the annexation, Crimea was fully integrated into Ukraine’s economic system. The region

was not economically sustainable in terms of energies, water and foodstuffs. In 2013, before the

annexation, Crimea could cover 52.2% of its financial needs. Crimean taxpayers paid UAH 8.5

billion to budgets of all levels4 and received UAH 16.6 billion. Subsidies to the Crimean Pension

Fund amounted to UAH 3.4 billion. In Crimea, there were more pensioners than in Ukraine.

Specifically, pensions were paid to 28% of Crimeans (or 560,000 people) and about 23% of

Ukrainians.

All these factors are aggravated by economic problems and sanction imposed on Russia. Subsidies

from the federal budget make up some 75% of the Crimean budget income or RUB 47 billion in

2015. Since the annexation in 2014, Crimea received RUB 93 billion, which was much higher than

the amount transferred to other subsidized regions of the Russian Federation.5 In 2015, budget

spending for the Federal Target Program “Socio-Economic Development of the Republic of Crimea

and the City of Sevastopol until 2020” will total RUB 372,960,000,000. The Program will be

funded in the amount of RUB 681,200,000,000, of which RUB 658,200,000,000 are federal funds

and over RUB 23,000,000,000 are extra-budgetary resources.

This socio-economic dependence, together with transport communication problems, poses a

permanent threat of escalation of the military conflict as the possibility of “Russia’s corridor to

Crimea” could not be excluded.

Since the first days of the annexation, the Russian leadership set a task to integrate Crimea into its

economic and legal framework. The law “On the Development of the Crimean Federal District and

the Free Economic Zone on the Territory of the Republic of Crimea and the Federal City of

Sevastopol” came into force from1 January, 2015, marking the beginning of the Federal Target

Program on “Socio-Economic Development of the Crimean Federal District until 2020”.

Russian experts say that Crimea experiences pressure on the economy and infrastructure, first of all,

on the part of Ukraine, the EU and the United States because of sanctions and tools of economic

and political influence.

On 30 July, 2014, the EU imposed sanctions on Crimea6, disregarding the earlier sanctions against

Crimean and Russian public figures involved in the annexation. These sanctions included the ban

for European companies on investment and infrastructural projects, investments in the transport,

telecommunications and energy sectors as well as in oil, gas and mineral production. The delivery

of equipment and the provision of financial and insurance services for the above sectors are

prohibited. Besides, the EU listed Crimean natural resources, including minerals and carbons,

prohibited for purchase. The ban list consists of more than 250 items, inclusive of sea water and salt

liquors. European financial institutions are prohibited from providing loans or participating in

projects in these sectors.

On 20 December, 2014, the above list was ultimately approved, including such prohibitions as, for

example, the prohibition for European companies to work in Crimea.

Ukraine took a number of measures restricting the development of the Crimean economy under the

illegal annexation. In particular, from 27 December, 2014, transport communication with Crimea

was terminated. These measures are severely criticized by human rights organizations as they

restrict the right to free movement.

4 http://economics.unian.ua/finance/895858-krim-buv-i-zalishaetsya-dotatsiynim-regionom-golova-minfinu.html

5 http://www.interfax.ru/business/406731

6 http://eeas.europa.eu/delegations/ukraine/press_corner/all_news/news/2014/2014_07_30_02_en.htm

Violation of the property rights are reported in connection with unprecedented nationalization or

expropriation of public and private property by self-proclaimed authorities at the instigation of the

Russian Federation.

Comprehensive problems of property rights emerged in Crimea as a result of Russia’s occupation

and annexation. Over the year since the occupation, self-proclaimed Crimean authorities

nationalized Ukrainian public and private property. It is difficult to assess the performance of

Ukrainian enterprises and companies in Crimea. In particular, the law of 12 August, 2014 No. 1636-

VII “On the Creation of the Free Economic Zone “Crimea” and Peculiarities of Economic Activity

on the Temporarily Occupied Territory of Ukraine”7 provides for the establishment of the free

economic zone “Crimea” (FEZ “Crimea”) on the territory of the Autonomous Republic of Crimea

and Sevastopol. Under the law, “For taxation purposes, individuals who have tax address (place of

residence) and legal entities (their branches) who have tax address (place of registration) on the

territory of FEZ “Crimea” shall be equated to non-residents and shall not report on their activity and

taxes (except for customs payments).”

The provision of the law that Crimeans automatically become non-residents of Ukraine comes

under strong criticism as it creates difficulties for small and medium entrepreneurs who are

Ukrainian citizens residing in Crimea. The experts emphasize corruption risks of this law and

opportunities for smuggling traffic because some companies carry out their business in Crimea.

Specifically, according to data of the State Fiscal Service of Ukraine, the volume of Ukrainian

goods transferred from mainland Ukraine to FEZ “Crimea” was 1,147,200 tons worth USD

431,600,000 within 27 September-31 December, 2014 and 101,000 tons worth USD 37,300,000 in

January 2015.

Since the occupation and annexation of Crimea by the Russian Federation, radical changes occurred

in all spheres of social life. The study aims to characterize the actual state of affairs relating to

citizenship, public and private property and land relations in Crimea.

The study covers major problems caused by Crimea’s annexation in relation to citizenship:

Forced renunciation of Ukrainian citizenship

Problems of acquisition of Russian citizenship caused by the absence of residence registration in

the Republic of Crimea

Problems of renunciation of Russian citizenship faced by Ukrainian citizens who failed to file

application until 18 April, 2014

Problems of getting residence permits in the Autonomous Republic of Crimea

Political, social and corruption challenges that triggered these problems.

The study also raises problems of the exercise of social rights (employment, healthcare and property

rights). An emphasis is placed on different attitude of Crimean entrepreneurs to their employees: the

majority believes that Russian citizenship simplifies documentation maintenance and helps avoid

possible misunderstandings in the future, though some other entrepreneurs (mostly representatives

of the small business) fired employees who obtained Russian passports. They said that this is their

civil position.

One category of citizens who faced problems of acquisition of Russian citizenship is represented by

Crimean returnees who missed the registration at the place of residence in the Autonomous

Republic of Crimea. The basic reason is that they returned to Crimea only recently and, therefore, it

7 http://zakon2.rada.gov.ua/laws/show/1636-18.

is impossible to prove their place of residence in court (because courts decides applications for

Russian citizenship or residence permits from people applying on the basis of long residence).

These difficulties are experienced mainly by Crimean Tatars who returned from deportation

(Uzbekistan and Tadzhikistan) and looked for the simplified citizenship procedure. Yet in practice,

they face numerous problems, including the threat of repeated deportation from Crimea.

As far as citizenship is concerned, those Ukrainians who did not apply for the renunciation of

Russian citizenship and are not going to obtain it are reportedly in the most precarious situation.

Many of them missed the deadline for technical reasons. According to official data, 3,427 people

applied for the renunciation of Russian citizenship in the Republic of Crimea and Sevastopol.

Bodies of the Federal Migration Service in Crimea and Sevastopol give residence permits only 8-12

hours a week. Those applied for the renunciation of Russian citizenship, those who are to extend

their residence permits, those who had Ukrainian temporary residence permits and those who apply

for residence permits for the first time (including Ukrainian citizens who are registered in

continental Ukraine but reside and work in the Autonomous Republic of Crimea) have to wait in the

same line.

In turn, it is possible to assume that tensions around the citizenship issue will run high after 1

January, 2016. Though even today, in some areas of life, e.g. in the public and municipal service,

dual citizenship may be a reason for denial of employment or dismissal.

***

Since the annexation of Crimea by the Russian Federation, the unprecedented nationalization of the

public and private property by self-proclaimed Crimean authorities at the instigation of Russia took

place. This process is almost identical to the expropriation of property, based not on special laws

but on resolutions of breakaway authorities, which contravenes even the Russian law.

In today’s Crimea, there are: a) Ukrainian state enterprises illegally nationalized by Crimean

authorities; b) enterprises re-registered in Ukraine but operating in Crimea, though they are under

the threat of closure; c) enterprises attempting to get registration in Ukraine and Russia so that to be

residents of both states.

Almost no enterprises of different forms of ownership operating under the Ukrainian law are left in

Crimea. In particular, legal entities that failed to re-register under the Russian law until 1 March,

2015 are deprived of the right to carry out business on the territory of the Russian Federation and

will be closed down.

According to the State Registration Service of Ukraine, 677 legal entities changed their place of

registration from Crimea to Ukraine within the period of March-December 2014. Most of them

moved to Kyiv (182), the Kherson (142) and Mykolaiv (114) regions. The State Registration

Service reported 9 state-owned enterprises that changed their place of registration from Crimea or

Sevastopol to mainland Ukraine and 1 enterprise that was shut down.8

According to unofficial sources, a number of large enterprises re-registered under the Russian law

(re-registered as Russian enterprises or registered their subsidiaries) continue operating in Crimea.

These are: JSC Crimean Fruit Company, STOW and Druzhba Nabokov Nova poultry farm, JSC

Avila Stevedoring Company, JSC Marine Industrial Complex, PLC Kerch Metallurgical Works

Factory, JSC Crimean Titan and JSC Crimean Soda Plant, supermarket chains ATB, Silo, La

Couchette, Aachen, ECO Market and Novus.

8 http://www.bbc.co.uk/ukrainian/ukraine_in_russian/2015/03/150302_ru_s_crimea_economy_business

The beginning of nationalization was announced by the so-called Council of Ministers of the

Republic of Crimea on 17 March, 2014. In general, the self-proclaimed officials reported some 250

nationalized state-run enterprises.9 Yet, their actual number is much higher. According to official

data of the Ministry of Justice of Ukraine, there are around 4,000 enterprises, organizations and

institutions in the temporarily occupied Autonomous Republic of Crimea, though this list is being

updated. On 25 March, 2014, the Ukrainian government ordered the Ministry of Justice to estimate

losses from nationalization of public property. Pavlo Petrakos, Justice Minister of Ukraine, reported

the amount exceeding USD 1 trillion, exclusive of lost profits, the cost of natural resources and the

sea shelf.

In general, the list of property objects nationalized by self-proclaimed authorities of Crimea

consists of the following state-run enterprises and private companies: Krymavtotrans; Crimean Fuel

Alliance and the fuel and lubricant warehouse; Ukrainian Stock Exchange; Yalta Film Studio and

its land parcel; “Hotel on Revolutionary Street”; Feodosia Shipbuilding Company “More” and

Eastern Crimean Energy Company; Crimea’s branch of JSC Ukrtelecom; “Zori Ukrainy”

Sanatorium (Opolznevoye village near Yalta) and “Yaltynsky” Central Military Sanatorium of the

Ukrainian Defense Ministry; objects on the territory of the Kharaks Garden Art in Gaspra; 105 land

parcels in the village of Semidveriye near Alushta; Chornomorsky Recreation Center owned by

PJSC Khlib Ukrainy (Chornomorskoye village); the water line and wells in Baidarskaya Valley;

PJSC Bukhta Dvuyakornaya (Feodosia); LLC Kamysh-Burun Kerch Sea Port; CJSC Aerobud

(Yalta); the Berthier-Delagarde villa (Yalta); Crimean branch of Kyivstar; Kerch Ferry State

Shipping Company and the seaports located in Kerch, Feodosia, Yevpatoriya and Yalta; Simferopol

bus station and its hotel as well as Yalta, Kerch, Alushta and other 58 bus stations, garages and

booking offices, etc. The so-called Crimean State Council nationalized 82 real estate objects owned

by Ihor Kolomoisky, Governor of the Dnipropetrovsk region (premises of the PrivatBank branch

and other units in its ownership). Krymzhelezobeton, the petroleum base and 32 service stations

(Ukrnafta, Sentosa Oil, ANP and Avias) were also transferred into state ownership.

On 28 February, 2015, the so-called government of Sevastopol decreed to nationalize 12 enterprises

within JSC Sevastopol Marine Plant.

The State Council passed the resolution on the nationalization of agricultural enterprises,

organizations and institutions and hunting companies. A total of 141 companies were nationalized,

including Magarych and Massandra Wineries and Novy Svet Champagne Factory. All Crimean

reserves, natural parks and forestry farms changed hands. The Crimean Consumer Union, including

28 markets and other real property on the peninsula, became state property.

Municipal property changed hands as well. The resolution of the Council of Ministers of the

Republic of Crimea “On the Nationalization of Integral Property Complexes of Municipal Medical

Institutions and Organizations” lists 84 municipal-owned units. The Council of Ministers also

passed the resolution “On the Nationalization of Territorial Social Service Centers”.

In April 2014, the so-called State Council of the Republic of Crimea passed the resolution “On

Issues of Managing the Property Belonging to the Republic of Crimea”. In accordance with the

document, “All the public property (state Ukrainian) and “ownerless” property, located in the

Republic of Crimea till the referendum and till the division of property into municipal, federal and

property of the Russian Federation, shall be considered as property of the Republic of Crimea.” By

this act, the Council of Ministers also got the right “to establish, liquidate and convert unitary state

and state-owned enterprises”.

On 21 January, 2015, the above resolution was amended as follows, “All the public property (state

Ukrainian) and “ownerless” property, located in the Republic of Crimea till the separation of

9 http://news.allcrimea.net/news/2015/2/27/vlasti-kryma-natsionalizirovali-250-obektov-32184

property between the Republic of Crimea and municipal property as well as property listed in the

Annex to this Resolution, shall be considered as property of the Republic of Crimea.”

These changes, together with the Annex, give grounds to doubt the legitimacy of the resolution

since they run counter to the Constitution of the Russian Federation – the property is nationalized

exclusively on the basis of a regional document, which is all the time amended by breakaway

authorities of Crimea.

Since late 2014, owners of the nationalized objects are attempting to return their property through

Russian arbitration courts. Some Ukrainian companies try to prove their rights to property

independently or using front parties, whereas others reopen, in the Crimean Arbitration Court, the

cases initiated by Ukraine’s Office of the Prosecutor General, appealing against the nationalization

so that a judge will recognize the disputable units to be the property of Ukraine or of the appellants.

Ukrainian oligarchs Serhiy Taruta and Ihor Kolomoisky are among the appellants.

In the Black Book of the Kremlin presented by Danylo Lubkivsky, Advisor to the President of

Ukraine, the overall sum of losses is estimated to be UAH 1.180 trillion. The state budget did not

get UAH 9.8 billion from Crimea; in particular, the agrarian sector lost UAH 16 billion.

The outcomes of the nationalization: chronology of the annexation of property

On 27 February, 2015, the so-called Crimean State Council made a list of enterprises subject to

nationalization and prohibited to expand it after 1 March, 2015. Apart from the below-listed

enterprises, the list included the property of the Ukrainian Stock Exchange, the water line

and wells in Baidarskaya Valley.

On 28 February, 2015, Sevastopol authorities passed the resolution No. 118-пп “On Some Issues of

Nationalization of Property”. The list of nationalized enterprises included: PJSC SevMorZavod,

State Enterprise VneshEconomService, JSC Korabel, JSC SevMorDorStroy, JSC SevMorNeft,

SevMash JSC, JSC Nova Era, JSC InkerMebli, JSC SevMorRemo, JSC YugSevMorService, State

Enterprise SevMorEnergo and State Enterprise “Radio Communication Design Bureau”.

Communications

On 1 September, 2014, JSC Ukrtelecom received written notifications from the

Telecommunications and Information Technologies Office of the Sevastopol Government and

Sevastopol Telecom State Unitary Enterprise referring to the decree No. 99 “On the Transfer of

Property to Sevastopol Telecom State Unitary Enterprise” in relation to the fact that the property

portfolio of the duct bank of Sevastopol will be transferred to Sevastopol Telecom. “A large part of

the telephone duct bank of Sevastopol belongs to JSC Ukrtelecom on the rights of private property.

The Operator sees no legal grounds for the forced transfer of its infrastructure, assets or subscribers

to other business entities,” Ukrtelecom representatives emphasized. The number of subscribers of

Ukrtelecom in Sevastopol is 129,000.

On 22 September, the Sevastopol Government passed the resolution No. 314 “On the Inventory of

Property of JSC Ukrtelecom”. The Director of the Sevastopol branch was suspended from the

exercise of duties for the period of inventory. On the next day, JSC Ukrtelecom announced the

termination of its operations in Sevastopol.

On 27 February, 2015, the so-called State Council nationalized JSC Ukrtelecom (owned by

Ukrainian oligarch Rinat Akhmetov; the Company has a 40% share of Internet traffic, with some

370,000 subscribers in Crimea), Crimea’s branch of Kyivstar (a subsidiary of Vimpelcom; operated

in Crimea under the Ukrainian license until 11 August, 2014) and Vega Telecommunications

Group.

Movable and immovable property of JSC Ukrtelecom as well as assets, including intangibles, on

balance-sheet accounts was transferred into state ownership. Furthermore, breakaway authorities

expropriated LLC TriMob, a Crimean subsidiary of JSC Ukrtelecom. Sergey Aksenov explained

that the decision on nationalization was made because of “Ukrtelecom’s failure to re-register under

the Russian law and a malware that allegedly had to shut down the subscribers’ database on 11

February and leave Crimeans without communication”.

In accordance with the Explanatory Note of the so-called State Council, Vega Telecommunications

Group “endangered the personal data protection of Crimeans” and “illegally placed its facilities in

residential buildings, thus, violating the integrity of framings and damaging the property of Crimean

cities”. In the opinion of Oleg Stefanyuk, SV-Consulting CEO, Vega and Ukrtelecom in Crimea are

estimated at around USD 50 million. “Vega held strong positions in Sevastopol, with some 30,000

subscribers, and Ukrtelecom had the branched network of cable lines laid in the mountains. The

Crimean government will not do without this Company. It is almost impossible now to lay such

network,” he underscored.

Under the Explanatory Note of the so-called State Council, “On 11 August, 2014, Kyivstar

terminated its Internet and communication services in Crimea without prior notice. As a result, in

Simferopol alone, 10,000 subscribers suffered losses worth RUB 2.5 million. Kyivstar property is

abandoned, base stations are de-energized and the Company is deep in debt.” According to

Kyivstar, its Crimean branch is estimated at USD 13 million.

The fuel and energy sector

At a special session on 17 March, 2014, the so-called State Council passed the resolution on

nationalization of Chornomornaftogaz and Ukrtransgaz and Feodosia Oil Products Supply

Company.

Under the resolution “On Issues of Energy Security of the Republic of Crimea”, “The State Council

resolved that movable and immovable assets of Chornomornaftogaz Public Joint Stock Company,

its continental shelf, exclusive (sea) economic area claimed and unclaimed in authorized capital (of

Chornomornaftogaz), inclusive of state-owned (Ukraine) property transferred for the free use and

recorded in off- and on-balance-sheet accounts is the property of the Republic of Crimea.” Hence,

two deep-sea platforms, informally known as Boyko Towers, were also nationalized by the State

Council, despite a Chornomornaftogaz’s loan from Naftogaz Ukrainy for their purchase. On the

basis of the above resolution, the State Council of Crimea transferred nationalized assets to newly

established companies, Crimean Republican Enterprise “Chernomorneftegaz” and Crimean

Republican Enterprise “Feodosia Oil Products Supply Company”.

On 19 August, 2014, the so-called State Council set up State Unitary Enterprise Krymgazset to

manage the nationalized gas distribution system. “The matter concerns gas networks handed over

for the free use to Krymgaz. Now, these gas networks are taken back into republican ownership,”

Sergey Aksenov stated. The provisional administration of Krymgaz was appointed. The company

was formerly owned by Dmitry Firtash through Gaztek, with a 23.989% share of Krymgaz, and

Lasfano Ukrainy, with a 14.9286% share; Naftogaz and Chornomornaftogaz had a share of over

40%. In December 2014, Crimea’s Ministry of Fuel and Energy appointed provisional

administrations to 4 Crimean gas distribution companies, Dzhurchi (Feodosia), Ukrgazprom

(Partenit), Trans-Continental Association (Kirovskoye) and Kerchgaz (Kerch), until the end of the

heating season or their purchase.

On 3 September, 2014, the petroleum base and 32 service stations (Ukrnafta, Sentosa Oil, ANP and

Avias) were nationalized as part of property owned by Ihor Kolomoisky.

On 21 January, 2015, the so-called State Council nationalized DTEK Krymenergo, part of DTEK

Energy Holding owned by Rinat Akhmetov. “We believe that the energy sector should be

controlled by the state. I am confident that this state-owned company will bring more benefit to

Crimea,” Sergey Aksenov said. He noted that the decision on nationalization is linked to recent

actions of DTEK Krymenergo. “You all know how Krymenergo worked. It extorted money from

different companies under various pretexts and extorted money from Crimeans,” the Head of the

Republic stressed. According to the press service of DTEK Energy Holding, the nationalization was

unexpected and groundless. “The nationalization of Krymenergo has been a surprise for DTEK as

there were no grounds for this decision. We have not received court orders mentioning violations

that could have caused such a turn of events. We will see into the matter and announce our official

position,” the statement reads.

On 27 February, 2015, the so-called State Council nationalized Crimean Fuel Alliance (former

petroleum base in Feodosia, with a fuel and lubricant warehouse and a network of service stations)

and Eastern Crimean Energy Company.

Note:

Sevastopolenergo Energy Company shifted its place of registration from Sevastopol to Kherson

(now its registered office address is in Kherson, while its subsidiary operates in Sevastopol). The

company, with the authorized capital of UAH 6.7 million, supplies electricity to enterprises and

households of Sevastopol and neighboring resort districts. Sevastopolenergo operates as a

subsidiary of VS Energy International NV that holds a 95.182% stake.

The transport infrastructure

On 26 March, 2014, the so-called State Council adopted the resolution on the establishment of a

state-owned enterprise, Crimean Railway Company, to manage property of enterprises, institutions

and organizations that ensure operation of railway transport in Crimea. In accordance with the

document, Crimean Railway Company “has the status of strategic object and therefore has

unlimited access to energy, heat and other necessary resources”. The same day, the State Council

set up Krymaeronavigatsia and Universal-Avia on the basis of the Simferopol International Airport

and the Belbek Airport near Sevastopol.

Kerch Ferry State Shipping Company and the seaports located in Kerch, Feodosia, Yevpatoriya and

Yalta were nationalized as well. It was resolved to set up Crimean Sea Ports State Enterprise and

Lotzman-Crimea State Enterprise instead.

On 27 February, 2015, the so-called State Council nationalized Krymavtotrans, intercity bus

services provider and owner of Crimean bus stations. In particular, Simferopol bus station and its

hotel as well as Yalta, Kerch, Alushta and other 58 bus stations, garages and booking offices were

transferred into republican ownership.

The same day, Crimean authorities nationalized PJSC Bukhta Dvuyakornaya in Feodosia and LLC

Kamysh-Burun Kerch Sea Port; CJSC Aerobud (controlled by Cypriot companies; implemented

construction projects by order of Privat Group), including the Berthier-Delagarde villa in Yalta

(former Young Technicians Station; in 2004, labs and workshops for sports vehicles, with a total

area of about 1 hectare in the center of Yalta (Kirov Street), were sold for UAH 1,256,000).

The agricultural sector

On 26 March, 2014, the so-called State Council passed the resolution on nationalization of

agricultural enterprises, organizations and institutions and hunting companies. A total of 141

companies were nationalized, including Magarych and Massandra Wineries and Novy Svet

Champagne Factory. All Crimean reserves, natural parks and forestry farms changed hands.

According to some sources, right after the nationalization, the wines from a collection held at

Massandra were taken away. In summer 2014, Magarych and Massandra Vineyards started to

transfer production facilities to the Odesa region. The Investigative Committee of Russia opened a

criminal case against Yuriy Kosmachevsky, Massandra Acting Director General, on charges of

obstructing investigation into thefts at the Winery.

On 3 September, 2014, the so-called State Council passed the resolution on nationalization of the

Crimean Consumer Union, including 28 markets and other real property on the peninsula. “We

received many applications from share holders. I would like to assure them that they will not suffer

from nationalization and the change of owner. We check up amounts of shares paid by every share

holder and how effectively these funds were spent,” said Andrei Skrynnik, Crimean Minister of

Industrial Policy, in an interview in mid-October 2014.

On 12 November, 2014, the Crimean government nationalized Simferopol Bread Products Combine

and PJSC Krymkhlib, a part of Golden Harvest Trading House owned by Oleksandr Leshchynsky

(the company, with a 36% share of the Crimean bread market, has structural units in Bakhchisarai,

Dzhankoi, Yevpatoriya, Kerch, Simferopol, Feodosia and Yalta; according to its owners, the

company managed to transfer production to mainland Ukraine). As stated by Vladimir

Konstantinov, both companies were nationalized “to maintain strategically important objects and

Crimea’s food economy”.

Sanatoriums and state villas

Before summer 2014, the so-called State Council of Crimea nationalized 10 state villas and

residences: the state villa No. 11 “Zarya”; the state villas No. 5 “Mayivka” and No. 7 “Chair” in

Gaspra; the two dachas and two residences in Oliva village (Mukhalatka) near Foros; the state villa

No. 10 used for guests or rented (Kirsan Ilyumzhinov, President of Kalmykia, often visited it); the

residence No. 3 “Malaya Sosnovka. Shatyor” in Massandra used for informal receptions; the

hunting lodge in the Dubrava-2 refuge on the territory of the Crimean natural preserve; and the

residence known as the Yusupov Palace and Park Complex in Koreiz (over the last few years, the

Yusupov Palace was used for VIP celebrations, not as a state dacha).

Besides, four facilities of the Ukrprofzdravnitsa Trade Union Association in Yalta, the Research

Institute of Children’s Balneology and Physiotherapy in Yevpatoriya, the Dynamo Training and

Sports Camp in Feodosia and the Oryol Recreation Center of the Ukrainian Defense Ministry in

Alushta were nationalized. The list also included office premises in Yalta and production center in

Livadiya.

The Aivazovskoye Wellness Center owned by Donetsk oligarch Serhiy Taruta and the Massandra

Recreation Center owned by Ihor Kolomoisky were transferred into state ownership.

On 27 February, 2015, Crimean authorities announced the nationalization of the “Zori Ukrainy”

Sanatorium in Opolznevoye village near Yalta and the “Yaltynsky” Central Military Sanatorium of

the Ukrainian Defense Ministry; “Hotel on Revolutionary Street” and Feodosia Shipbuilding

Company “More”; objects on the territory of the Kharaks Garden Art in Gaspra; 105 land parcels in

the village of Semidveriye near Alushta; and the Chornomorsky Recreation Center owned by PJSC

Khlib Ukrainy in Chornomorskoye village.

Shipbuilding

On 25 June, 2014, the so-called State Council nationalized “More” Shipbuilding Company,

inclusive of current and fixed (including intangible) assets (both off- and on-balance-sheet) of

Feodosia Shipbuilding Company “More”. The Company was a part of Ukroboronprom that

specializes in production of high-speed dynamically supported vessels (hydrofoils, hovercrafts,

vessels with air-cavities), pleasure yachts and boats with hull made of aluminum-magnesium alloy.

On 24 August, 2014, Crimean Self-Defense forces seized Kerch Shipyard Zaliv owned by

Kostyantyn Zhevago. The Director was forced to sign a lease contract with a front company, JSC

Zaliv Shipyard (registered a couple of days earlier in Moscow) with an authorized capital of RUB

10,000. All documents and papers were confiscated.

At a special session on 28 February, 2015, the so-called government of Sevastopol decreed to

nationalize 12 enterprises within Sevastopol Marine Plant (Sevastopol Marine Plant is one of the

largest ship repair and shipbuilding facilities of the Azov-Black Sea region, with a total area of 53

hectares. It was privatized in the late 1990s and in 2003, a 26% state-owned stake was offered for

sale. In 2006, Sevastopol Marine Plant was sold to Petro Poroshenko).

The Privat group

On 3 September, 2014, the so-called Crimean State Council nationalized 82 real estate objects

owned by Ihor Kolomoisky, Governor of the Dnipropetrovsk region.

The matter concerns premises of the PrivatBank branch and other units in its ownership.

Krymzhelezobeton, the petroleum base and 32 service stations (Ukrnafta, Sentosa Oil, ANP and

Avias) were also nationalized.

The “annexed land”

The land issue in annexed Crimea is characterized by the following five problems:

- The absence of a legal framework: laws adopted by breakaway authorities do not fully

regulate terms and procedure for the acquisition and registration of land plots. The exclusive

right to make explanations on these issues is given to the so-called Council of Ministers,

whose resolutions could be amended or cancelled as they do not have the same force as legal

acts. This, first, limits opportunities of citizens to legally protect their rights and, second,

gives rise to corruption in this area

- The complex procedure for free acquisition of property in land: main difficulties are

linked to the enormous number of official documents to be submitted and terms that are

difficult to comply with, e.g. five-year residence on the territory of a respective

municipality. Furthermore, the procedure for the acquisition of land plots is unclear. Hence,

many citizens categorized as privileged persons with the right to the free acquisition of land

cannot exercise this right in practice. Some citizens who can exercise it may get land plots

not in right places. This especially acute for participants in the “fields of protest” who have

buildings on illegally seized land plots but may get other parcels

- The unsolved issue of the completion of the registration of land plots allotted earlier:

main difficulties are linked to the absence of legal explanations on decisions to allocate land

plots that expired prior to 18 March, 2014. Another problem is that all decisions on the

allocation of lands dated prior to 14 October 2008 are recognized invalid. This means that

many Crimeans who got land plots and developed property will not be able to get title

documents. Besides, the only resolution No. 313 that gives permission to complete the

registration of land parcels contradicts the Russian law and, thus, may be appealed in court

and cancelled. So, people may lose even this opportunity to complete the registration of land

plots

- Problems of the acquisition of land plots with constructed buildings: the main problem

is to prove that a capital construction object built on an illegally seized land is a residential

building “without additional construction”. For most participants in the “fields of protest”, it

will be difficult, if not impossible, to prove this. Hence, the problem of the acquisition of

developed land plots arises and conflict potential is seen in relations of participants in the

“fields of protest” with Crimean authorities

- Problems of property nationalization: along with enterprises, offices, buildings and

other units, Crimean and Sevastopol authorities nationalize land parcels of Ukrainian owners

and cancel decisions on the allocation of land made prior to 18 March, 2014. Redistribution

of property is under way, in violation of the rights of owners undesirable for authorities or

those who cannot stand upon their rights.

The re-registration or the completion of the registration of property rights to land

On 2 September, 2014, the self-proclaimed Council of Ministers of the Republic of Crimea passed

the so-called resolution No. 313 “On the Approval of the Procedure for the Re-Registration or the

Completion of the Registration of Rights to Land Plots in the Republic of Crimea”.10

The document

was to ensure the re-registration of rights to land plots accrued prior to the coming in force of the

federal constitutional law.

In the opinion of an expert, whose work is linked to the registration of land plots, the current law

has some unclear aspects relating to the registration procedure. In particular, this concerns decisions

that lost their validity prior to the coming in force of the federal constitutional law. “As for

decisions that were valid at the moment of the referendum, their application was stated to be

extended. Again, there is no certainty about decisions that lost their validity before this date, as to

whether people will be able to continue the registration of rights to land plots,” he stressed.

The expert listed procedural difficulties that impede land registration. “We expected that there will

be people willing to re-register land plots and to apply to the State Registration Committee.

Though, too many people filed applications, whereas not all departments of the Committee work

properly. Not all people can submit documents on the date of application. It is because of a lack of

experts or maybe because such the state of affairs suits some bureaucrats. People are waiting in

line. Officials do not work with waiting lists and receive applications on a first-served basis. Just

imagine a first come first served line of 500 persons,” he complained.

The expert pointed out that some people try to earn money in this situation through intermediary

functions of waiting in line. In Russia, as he said, this process is organized much better because

people may apply to multifunctional centers that deal with different issues.

The expert noted that the resolution No. 313 “On the Approval of the Procedure for the Re-

Registration or the Completion of the Registration of Rights to Land Plots in the Republic of

Crimea” runs counter to the Land Code of the Russian Federation. “Under the Land Code, land

plots shall be allocated on the basis of decisions of an authorized body. However, decisions made

prior to the referendum are now considered by Russia as those of a foreign state. And this is correct

from the legal point of view. The federal constitutional law No. 6-ФКЗ establishes the list of valid

legal documents passed before the referendum. Though, this requires amendments to be made in the

Land Code of the Russian Federation and some other regulations.”

The expert said that even the above resolution gives Crimeans the opportunity to complete the

registration of land because, as reported by the self-proclaimed Republican Committee for Land

Resources of Crimea, over 60,000 Crimeans obtained land development certificates in 2014.

10

http://rk.gov.ru/rus/file/pub/pub_233237.pdf.

In his opinion, one of the most serious problems faced by people who want to complete the

registration of their rights to land plots is the period of validity of decisions on the allocation of

land. Specifically, decisions made by authorized bodies of the Autonomous Republic of Crimea

prior to 14 October, 2008 and not implemented are recognized as such that lost their validity. This

happened because of changes introduced to Ukrainian legislation on land relations. However, no

mention about this is made in legal acts of the Republic of Crimea, apart from an explanation posted

on the site of the so-called Ministry of Property and Land Relations. “The Council of Ministers

ordered to vest the Ministry of Property and Land Relations of the Republic of Crimea with the

right to explain normative and legal acts. Though, I cannot understand how it is possible to explain

things that are not written in the law,” the expert said.

Anyway, in compliance with these explanations, many Crimeans, including Crimean Tatars who

got decisions on land plots under the Program for the Resettlement of Deported Citizens in the

1990s, cannot now complete the registration of their rights to land. “People come to me, say, from

Ai-Vasil in Yalta. They got land plots under the Resettlement Program but could not register them.

Some people have decisions dated 1992. Earlier on, they could connect their homes to water and

electricity supply systems. They paid utility bills for 20 years. And what shall they do now?

According to the explanation of the Ministry, their documents are not subject to the re-registration.

Will their homes be demolished?" the expert asked.

Opinion on the law “On Allocation of Land Plots in State and Municipal Ownership and

Some Aspects of Land Relations” regarding illegally seized land plots

The law of 15 January, 2015 No. 66-ЗРК “On Allocation of Land Plots in State and Municipal

Ownership and Some Aspects of Land Relations” set the following conditions, under which

citizens, who illegally built constructions on land plots prior to 18 March, 2014, have the right to

acquire the title to them:

1) If a land plot is owned by the state or municipal authorities and is not allocated to other people

2) If there are objects of capital construction built before the entering into force of this law

3) If there is a conclusion of a so-called local self-government body that this capital construction

object could be recognized a residential house “without additional construction”

4) If a capital construction object is registered by self-proclaimed authorities of the Republic of

Crimea before this law entered into force

5) If construction of a residential building is allowed on this land plot in accordance with urban

planning documentation.

“A person, who does not have the right to free acquisition of a land plot, has the right to purchase

the said land plot without tender or to lease it within six months from the date of filing of an

application. After expiration of this period, the illegally seized land plot shall be vacated.”

“Persons, who illegally constructed buildings, are obliged to apply until 1 January, 2016 for the

acquisition of land plots in compliance with requirements of this Article or to demolish illegal

buildings at their own expense. If they fail to apply until 1 January, 2016 or if they are denied the

acquisition of land plots with illegal buildings on the grounds provided for by this law, the land plot

shall be vacated by local self-government bodies at the expense of persons who illegally built

capital construction objects or other illegal constructions.”

“Local self-government bodies also shall have the right to apply to court concerning the forced

demolition of illegal buildings as prescribed by civil law. If a person who illegally constructed a

building is not identified, a land plot shall be vacated by a local self-government authority at its own

expense.”

“The state registration of the right of property to a residential building, recognized as such on the

basis of conclusion of a local self-government body, shall be completed until 1 January, 2020 based

on the said conclusion and a technical plan.”

The expert noted that conditions listed in the law for citizens, who constructed buildings on illegally

seized land plots and are willing to obtain title to them, may appear to be impossible. Specifically,

the law demands a conclusion of a local self-government body that a capital construction object is

recognized a residential building without additional construction. “In accordance with republican

standards, a building is deemed to be completed, if it has storm drains (a rainwater downpipe

system), to say nothing about the completion of a façade, interior finish, etc. What should do those

who reside in unfinished buildings but suitable for living? Besides, how will a local self-government

body issue a conclusion? This should be done by the State Construction Inspectorate,” he stressed.

The expert emphasized yet another condition set by the law, “A capital construction object should

be registered by executive authorities before this law comes into force. What does it mean? This

provision is unclear and no explanation has been given so far. How could citizens report illegal

buildings and to what authority? Moreover, how could they do this without knowing that such a

requirement will appear in 2015?”

He said that the procedure for land acquisition by participants in the fields of protest is very

complicated. Apart from papers for registration, they have to submit documents confirming their

residence in relevant municipality for more than 5 years. “How this can be possible? This is not

enshrined in the law or the resolution of the Council of Ministers. This poses a serious problem. If a

place of registration of an applicant does not coincide with a place of his/her residence, he/she

should submit a court decision. This means that this person should confirm the fact of permanent

residence in court. And this is not an easy thing to do. How will they be able to prove this? Will they

have to prove that bricks were on their land plots or a shed?”

The next problem is that neither the law “On Allocation of Land Plots in State and Municipal

Ownership and Some Aspects of Land Relations” nor the resolution of 10 February, 2015 No. 41

“On Approval of the Priority Procedure for Acquisition of Property (Lease) to Land Plots in

Ownership of the Republic of Crimea or in Municipal Ownership” establishes responsibilities of

authorized bodies, in particular terms for consideration of applications. “These documents only say

that if a land plot is formed (meaning that its location is described in the cadastral plan of the

territory), an authorized body is obliged to notify an owner within two months. Hence, people could

wait for five, ten and more years. And there are no legal grounds for holding officials

administratively liable,” the expert said.

He compared this aspect with the provision of the Ukrainian law, under which an authorized body is

obliged to either refuse an applicant or allot a land plot within one month.

Another problem is the deprivation of citizens of the right to independently select land plots. This

problem will be especially acute for those who have illegal buildings on their land plots. He asked,

“What should do those belonging to preferential categories, if they developed (even illegally) land

plots and constructed buildings? What should they do, if an authorized body selects a land plot on

its own?”

The expert said that despite assurances of self-proclaimed authorities that these citizens can acquire

the developed land plots, this has a conflict potential since officials are guided, first of all, by the

law and the law says nothing about this. “If a citizen submits an application, an official should

consider it in accordance with the procedure established by the law. Yet, the law does not govern

that a citizen may file an application with an authorized authority. Yes, I have heard from the media

about agreements but I do not see them enshrined. Will such a legal act be valid, if it runs counter

to the law in force?” the expert asked.

In general, some land regulations of the self-proclaimed Council of Ministers of the Republic of

Crimea contradict the legislation of the Russian Federation, considerably complicate the procedure

for land acquisition even for privileged categories of citizens and make it impossible to obtain

ownership of land.

Conclusions

Despite that Russia occupied and annexed Crimea without a military conflict, it triggered numerous

problems and challenges in the area of international security, international law, international

relations, human rights standards, inter-ethnic relations and property rights:

- Crimea’s annexation undermined the fundamentals of international law and the

international security architecture. For the first time after the WWII, we face a precedent of

annexation of a part of the territory of a European sovereign state. The Russian political leadership

actively attempted to erode the common position of the European Union and the United States on

Ukraine, which could create a precedent in the system of international relations

- Crimea’s annexation and the hybrid war in the Donbas pose a threat for the post-Soviet

states because some political leaders may view it as a kind of “payment” for aspirations for

integration into the EU and departure from the geo-political influence of the Russian Federation

- Crimea’s annexation is not sustainable; it potentially escalates the Donbas conflict, in

particular, as an opportunity for Russia to make a land corridor to Crimea by means of war

- Crimea’s annexation threatens the non-proliferation of nuclear weapons. Risks concern not

only violations of the Budapest Memorandum but also a precedent for deploying nuclear weapons

in Crimea by Russia. Specifically, many experts and politicians addressed this issue last December

Russia’s vision for the future of Crimea poses a problem as well because one of the possible

scenarios is the further militarization of the peninsula, which, in turn, threatens the stability of the

Black Sea region

- Crimea’s annexation resulted in total violation of the property rights (public and private) of

Ukraine and Ukrainian citizens. According to the Ministry of Justice of Ukraine, the amount of

losses of nationalization of property of Ukraine and its citizens exceeds USD 1 trillion, exclusive of

lost profits, the cost of natural and off-shore resources and the sea shelf

- Crimea’s annexation is a manifestation of the hybrid war unleashed by Russia (military,

humanitarian and information components as well as the use of political technologies). In terms of

Crimea’s annexation and the hybrid war, Ukraine may be interpreted as a kind of a testing area for

the use of identical scenarios in other Eastern European countries of the post-Soviet space

- Russian and breakaway authorities commit gross violations of human rights (forced

renunciation of Ukrainian citizenship, abduction of people, violation of the principles of freedom of

speech, opinion, religion and faith, peaceful assemblies and associations, discrimination and

prosecution of members of national minorities and indigenous peoples, violation of freedom of

movement, the right to fair trial, etc.)

The above challenges threaten not only the international security of the region in general but also

lay foundations for conflict potential, possible deterioration of the situation in the socio-

humanitarian area and in the area of inter-ethnic relations.

Ukraine lacks a clear-cut strategy for Crimea’s de-occupation, opportunities to solve the problem of

nationalized property and to effectively respond to human rights violations. The issues of Crimea’s

occupation and annexation by Russia call for political decisions, monitoring, negotiations on de-

occupation under the auspices of the international community and special sessions of the UN

Security Council, although Russia may impede these initiatives.

Ukraine needs to lodge complaints on the expropriated property.

At present, Ukraine has limited opportunities to impact the situation in annexed Crimea, in

particular, as regards the protection of the rights and interests of Ukrainian citizens in Crimea.

Systematic violations of human and collective rights create preconditions for new conflicts in the

region, in particular, in the area of inter-ethnic relations. In this respect, it would be expedient to

expand western economic sanctions against Russia, taking into account the situation of human

rights violations in Crimea.