Massive corruption at Ukraine’s Naftogaz funnelled through western banks

Graham Stack in Istanbul
April 2, 2014

Italian banking giant UniCredit ignored money-laundering allegations to deal in funds connected to a controversial $400m deal between Ukraine’s corrupt state energy company Naftogaz and Latvia’s Riga Shipyards, according to documents obtained by bne.

As bne has previously reported, the  Norwegian financial company Ferncliff revealed that its subsidiary Standard Drilling directly sold an offshore drilling platform to Ukraine’s national gas company Naftogaz in 2011 for $220m, contradicting claims by the Ukrainian state-owned oil and gas company that it acquired the rig for $400m from Latvia’s Riga Shipyard via an open tender.

This wasn’t the first time that Naftogaz was involved in a deal involving such a huge discrepancy in the price it paid and the price quoted by the makers of the drilling platform. A previous, nearly identical acquisition of a similar drilling platform by Naftogaz in 2011 had raised widespread accusations of corruption and sparked investigations in Ukraine. But whereas the first deal in early 2011 involved shell companies and a controversial Latvian-owned bank Trasta Komercbanka, the second looked superficially cleaner: using an intermediary supplier of the drilling platform that was a bone fide ship-builder, Riga Shipyard, albeit one with no connection to drilling rigs; and instead of using the Latvian-owned bank, bnecan reveal the second deal was executed via the Latvian subsidiary of CEE banking giant UniCredit.

To complete the deal, bne has obtained documents that show Riga Shipyard used a newly registered UK subsidiary Northsale Logistics Ltd with an account at UniCredit Latvia, and set up another account for itself also at UniCredit Latvia – parallel to the shipyard’s main account at the Latvian branch of Finland’s Nordea Bank. The shipyard at the time disclosed an “agency and freightage” agreement with Northsale for implementing the rig deal. Northsale enjoyed small company status in the UK, exempting it from independent audit.

According to bne sources close to Riga Shipyard, these parallel bank accounts at UniCredit Latvia obscured the details of the deal and made proper oversight by the independent board members more difficult. Naftogaz paid the total contract value of $400m to Riga Shipyard’s main bank account at Nordea Bank. The funds were then transferred to the shipyard’s new account at UniCredit Latvia, and moved from there to the Northsale account, also at UniCredit Latvia. Northsale then made payments for the rig acquisition and to other suppliers. For instance, accounts seen by bne dating October 2012-March 2013 show around $50m in payments made to the Northsale UniCredit accounts from Riga Shipyard’s UniCredit account.

Riga Shipyard disputes any wrongdoing and says that details of the deal including payments are confidential. In a statement issued March 25, the Latvian company complained of a media campaign organised against it by Latvian creditors trying to have the company declared bankrupt. “Unfair information and statements are being distributed in the community, which fundamentally slur Riga Shipyard,” reads the statement.

Istanbul connection

 

Between October 2012 and March 2013, Northsale transferred a total of $46.5m from its UniCredit Latvia account to the Turkish account of the tiny Istanbul ship repair company Emarine, operated by a Turkish citizen called Murat Bayrak.

The money was ostensibly transferred for work performed on the B319 rig. But there are good reasons to doubt this because bne enquiries revealed that Emarine and Bayrak performed no significant work connected to the rig. “Emarine was not part of the B319 project,” Salih Fidan, B319 installation site manager in Turkey, tells bne.

In an interview, Bayrak declined to say what his role in the operation had been, citing confidentiality clauses in the contract. Emarine has share capital of only around €30,000, a glaring mismatch between the size of the funds transferred and the size of the company. Moreover, bne sources in the industry estimate the total cost of the work performed – reassembly of the rig legs – at not more than $5m.

Riga Shipyard sold Northsale in the last days of 2012, which the shipyard claimed absolved it from consolidating the subsidiary on its accounts for 2012. Most of the payments to Northsale that were wired on to Emarine took place in 2013 after sale of the subsidiary. Between January 2013 and February 2013, Riga Shipyard transferred $39.5m in multiple instalments to Northsale, which forwarded the same amount to Emarine.

Latvian police in late 2012 announced a money-laundering investigation into the UK shell company Highway Investment Processing, which was involved in Naftogaz’s equally controversial rig acquisition in early 2011. Highway Investment Processing had implemented the deal via a bank account at a controversial local Latvian-Ukrainian bank called Trasta Komercbanka. Trasta Komercbanka has denied any wrongdoing.

In May 2013, UniCredit declared it was pulling out of Latvia and winding up its bank there. As late as January 2013, the bank had said it planned to centralise its Baltic operations in Latvia. “In the Baltics we had only a tiny presence and decided to gradually downsize and close activities,” UniCredit in Vienna tells bne. The decision concerning the Baltics was taken in 2013 and had “nothing at all” to with money-laundering concerns regarding the Riga Shipyard or any other transactions, the bank explains.

The new administration in Ukraine has moved quickly to probe the corrupt dealings during the four years of ousted president Viktor Yanukovych. Naftogaz, long a nest of murky deals, has been at the centre of the investigations, with Ukrainian police arresting the former head Evhen Bakulin on March 21. Acting Interior Minister Arsen Avakov alleged that losses to the company under Bakulin’s watch “on just three counts” exceed $4bn.

Rum Company

Another angle to UniCredit’s involvement with the controversial Naftogaz deal relates to UniCredit’s former long-serving head of Ukraine operations, Boris Timonkhin. Timonkhin in July 2013 unexpectedly quit UniCredit’s Ukrainian unit Ukrsotsbank, to head banking operations for controversial 28-year-old Ukrainian businessman Serhiy Kurchenko.

There was surprise at the hitherto respected Timonkhin’s choice of new employer, who on March 20 was placed on Ukraine’s wanted list by the Prosecutor General on charges of embezzlement of around $120m of Naftogaz funds, offences described in detail in media since 2012. Timonkhin joined the supervisory board of Kurchenko’s newly acquired Brokbiznesbank and in this capacity, as bne has reported, he apparently signed off on an over $70m loan to a sham firm linked to Kurchenko, which had also received millions of dollars in procurement orders from Naftogaz.

Kurchenko has since fled Ukraine. Ukraine’s security service SBU detained Brokbiznesbank supervisory board chairman, Denis Bugai, on March 21 on charges of fraud and forming a criminal organisation. Interior Minister Avakov has accused Kurchenko and his gang of defrauding Naftogaz of around $200m.

Timonkhin himself is currently in France, but denies he is on the run. In an interview published inUkrainskaya Pravda on March 24, the former UniCredit banker denied belonging to what the SBU calls “Serhiy Kurchenko’s criminal group.” Timonkhin also criticised the arrest of Bugai, the Brokbiznesbank chairman, saying that Bugai was “clean.”

UniCredit declined to comment on whether Timonkhin had influenced UniCredit’s decision to take on the Naftogaz-Riga Shipyard business. Timonkhin could not be reached for comment by bne.

Cash siphoned from Ukraine’s Naftogaz traced to Turkey ship repairer

Graham Stack in Pendik, Turkey
March 24, 2014

Ukraine’s new authorities are moving against alleged massive corruption at state energy company Naftogaz carried out during the presidency of Viktor Yanukovych. bne’s own investigations have traced nearly $50m in suspicious payments by Naftogaz made to a one-man ship repair business in Istanbul, Turkey.

Traditionally every change of power in Ukraine leads to the swift arrest of the incumbent management of state energy company Naftogaz – and 2014 and the fall of the Yankovych regime is no exception. On March 21, masked and heavily armed special police swooped on Naftogaz headquarters and marched out long-serving CEO Yevhen Bakulin, whom acting Interior Minister Arsen Avakov accused of complicity in the theft of over $4bn from the company.

On the same day as Bakulin’s arrest, a long way from Kyiv in the Pendik port area of Istanbul, Murat Bayrak looks nervous and knocks his fork onto the floor when he hears of the arrest. Bayrak runs a small portside ship-engine repair outfit called Emarine. He says he has spent the day up to his elbows in oil on an engine repair operation, and displays photos on his smartphone of the rusty “patient”. But in the evening, he shows himself to be a convivial 30s-something with perfect English.

Assembly of Bed Plate

Murat does not hide his surprise to have a British business visitor. “I only have had the website up since 2013 and you are the first person to have contacted me via it,” he says over dinner at a quayside fish restaurant. “You are also probably the first person to have ever simply come by my office without an appointment,” he adds, which is unsurprising given that a local taxi driver had difficulty locating the small premises, that lack of a nameplate on the intercom, let alone a sign. “It is a small company,” acknowledges Murat. “For instance, I don’t have my own workshop.”

Emarine’s share capital totals just over $30,000, and Bayrak’s is the only name and face featured on the Emarine website. But over a six-month period in late 2012 and early 2013, Emarine hit boom time – $46.5m was paid to its Turkish account in multiple instalments by a UK company called Northsale Logistics from a Latvian bank account, according to extracts from the accounts seen by bne.

Northsale was a subsidiary of Latvia’s Riga Shipyard, and the $46.5m paid to Bayrak came out of $400m paid by Ukraine’s Naftogaz to Riga Shipyard for supply of an offshore drilling platform. Given Emarine’s tiny size, the $46.5m that flowed to Bayrak, out of the $400m paid by Naftogaz to Riga Shipyards, looks suspiciously like part of the $4bn allegedly siphoned from Naftogaz during the presidency of Viktor Yankovych 2010-2014.

Rigged in Riga

Riga Shipyard used Northsale – a company set up only in 2011 – to handle the controversial $400m deal that saw it supply Ukraine’s Naftogaz with a semi-submersible offshore drilling platform. The deal was controversial because Riga Shipyard had acquired the newly built B319 rig from Norwegian leasing company Standard Drilling for only $220m weeks earlier. Riga Shipyard played no further significant role except as intermediary; the company claims it made only around €5m on the deal.

Even allowing for cost of transport from Singapore to Ukraine, engineering work needed to transit the Bosphorus and extras such as a helicopter, the $180m discrepancy in prices was so enormous as to raise more than just eyebrows. Given the reputation of Naftogaz as one of the world’s most corrupt companies, the smell of dodgy dealing was strong. But apparently all of officialdom in Latvia was holding its nose – the signing ceremony in Ukraine was even attended by the then Latvian economy minister, who later told bne he hoped the deal would boost Latvia’s economy.

In fact the opposite has happened. Riga Shipyard, one of Latvia’s largest companies with workforce of around 600, may be nearing bankruptcy and is rapidly turning into a political hot potato. Former member of the management board Igor Komarov was quoted by local press in early March as saying there remained just “three to six months” until the shipyard went bankrupt. Riga Shipyard dismissed these comments and other reports as “informational attacks with the purpose to discredit the oldest company in the country.”

Riga Shipyard has also consistently denied any wrongdoing in connection with the Naftogaz deal, referring to the fact that in Ukraine no enforcement action has been taken over it. “The authors of this wrong information are fulfilling someone’s order,” says the company.

Straitened circumstances

Bayrak says he received the funds for work he had performed “according to his business profile,” but says he cannot speak about the contract due to confidentiality clauses. Bayrak denies that there was anything improper about his receipt of $46.5m and says his company has been independently audited with no questions from Turkish authorities. He hints that he may have forwarded the funds to unspecified “subcontractors”.

The logic of using a Turkish company for the siphoning of funds from Naftogaz’s deal with Riga Shipyards appears simple – the rig transited the Bosphorus on its way to Crimea, involving extensive transport and engineering work, which were used to justify the payments to Emarine. The Northsale accounts also show smaller direct payments being made to genuine suppliers such as Singapore’s Keppel Fels, which supervised the Bosphorus transit.

Some details suggest the firm may have been primed to transit funds. Although Bayrak founded the company in 2008, it was only in 2013 that he launched the amateurish website – perhaps to satisfy cursory anti-money laundering checks. Since November 2011, Bayrak is no longer Emarine’s owner or manager on paper, with some partners taking over those roles, although he left no doubt in the interview that Emarine is his company.

Bayrak says his career got off to a promising start, heading the diesel engine sales division in Turkey of German engineering giant MAN, while studying for an MBA. But after a dispute over allegedly misappropriated money, he left the company in 2008. “It was impossible for me to work in a Turkish company after this, and so I had no choice but to start my own business,” he explains. Bayrak declined to say where his contacts to Riga Shipyard come from.

Loss of “Independence”

Naftogaz renamed the B319 rig “Independence” upon its entering service at its offshore drilling unit, the Crimean-based Chornomornaftogaz. The name Independence referred to the high hopes placed on the rig, and a sister rig B312 purchased earlier, which centred on reducing Ukraine’s dependence on Russian gas by exploiting domestic reserves in the Black Sea.

But since Russia’s blitzkrieg annexation of Crimea, Chornomornaftogaz and its new drilling platforms have been “nationalised” by the secessionist Crimean government, and in a bitterly ironic twist of fate are now under Russian control.

On March 23, Ukraine’s energy minister from 2010-2012, Yury Boiko, said on television that any corruption schemes at Naftogaz had cost the country “100 times less than the loss of Crimea”. Boiko – widely regarded as the mastermind behind the Naftogaz schemes – blamed the loss of Crimea on the Maidan anti-corruption protests that ousted president Yanukovych in February and on Ukraine’s new government that came to power on an anti-graft ticket.

But in fact there is a close link between corruption under Yanukovych and the loss of Crimea: at the time of Yanuovych’s fall, Crimea was run by his cronies, implicated in endemic corruption and badly exposed by their boss’ sudden departure. Russia offered Crimea’s elite security and the retention of their assets, in return for handing over control of the peninsula without a shot being fired. They gladly took up the offer, proving that while the price of liberty may be eternal vigilance, the price of corruption is loss of independence.

Ghosts of Yalta Conference haunt Crimean referendum

Graham Stack in Yalta
March 16, 2014

The Crimean town of Yalta is not just a sleepy seaside resort fallen on hard times, but once the site of a historic conference that shaped Europe for half a century. As citizens of the town flock to a referendum on whether the peninsula should gain more autonomy from Ukraine or be annexed by Russia, the ghosts of the Yalta Conference are returning to haunt Crimea.

The day of the referendum, March 16, Yalta is in a relaxed mood. On Roosevelt Street – named after former US president Franklin Roosevelt who attended the 1945 Yalta Conference – a steady flow of voters visit the polling booths at the ferry station, from which in the summer months Black Sea cruise ships dock, bring valuable revenue to the impoverished town.

The only thing out of the ordinary today is the strength of the wind gusting through the city. The “winds of change,” jokes Pavel Schnitke, 45, on his way to cast his vote in a referendum that provides no option for the status quo, has not been agreed with the central government in Kyiv and is regarded as illegal by the international community.

There are no overt signs of voter incentivization, and most citizens of Crimea that bne has spoken to since the referendum was declared two weeks ago, have stated their intention to vote – and indeed for reunification with Russia. Electoral authorities have put voter turnout in Crimea at around 64%, news agency AFP says.

The only perk to voters comes from a karaoke stall offering free singalongs for those who fulfill their “civil duty”. Most choose to abstain from the offer, but the song chosen by Svetlana – a 45-year-old cook with two children – might be symbolic, although she says it’s not: a hit from the Russian rockers Time Machine, the song’s lyrics, “Another twist in the road, and the motor roars – what will it bring us – will we soar or will we fall?”

Most voters believe they are about to soar. “Life will be better,” reckons Oksana Buryachko, a 23-year-old accountant, who went to vote with her daughter. “More stability, higher pay, one will finally be able to regard oneself as a person.”

“Crimea was Russian and will be Russian, and is soaked in Russian blood,” says Sergei Salo, 55, an engineer. “Russia is where my family is, and we need Russia back here now to rescue us from the 20 years of Ukrainian craziness. We are very grateful to [Russian President] Vladimir Putin that he has finally answered our call.”

“It was very surprising,” says Pavel Schnitke, speaking of Russia’s out-of-the-blue takeover of Crimea that started three weeks ago. “A very pleasant surprise as well. We thought they had forgotten about us. Ukraine is at an economic dead end, things at least cannot get any worse if we join Russia.”

Apart from the Crimean Tatar minority, estimated at around 15% of the population, the overall impression is that there is indeed an absolute majority in Crimea in favour of joining Russia, although there are no reliable exit polls or opinion polls. The last opinion poll data on the question from 2012 showed only 41% in Crimea in favour of joining Russia, but predates the option becoming in any way realistic.

But the extraordinarily tight timeframe of the referendum, the lack of fully-fledged election observation or of political opposition, and a large number of reported irregularities in the run-up to the poll, mean the results of the referendum will not be taken seriously internationally or indeed in the Ukrainian capital.

Indeed, the Crimean secessionist government don’t appear even to be taking it seriously themselves. Apart from giving only two options – a very high degree of autonomy formally within Ukraine, or full-scale absorption into the Russian Federation – Crimean officials have publicly stated they expect 70% of voters to decide in favour of Crimea’s joining Russia. Indicating that the result is a foregone conclusion, Crimea’s controversial prime minister, Sergei Aksyonov, declared March 17 would be a public holiday to celebrate the results.

“The referendum may be very rushed and probably even unnecessary, but we are happy to be going home,” says the 64-year-old pensioner Svetlana Solovieva.

Ghosts of Yalta

Yalta was the site of the crucial Yalta Conference, where in February 1945 the leaders of the US, UK and Soviet Union met to discuss the post-war order, as German armies retreated all over Europe and the end of World War II was only a matter of time. The Yalta Conference has become notorious for dividing up Europe into spheres of influence between the West and the Soviet Union that lasted for half a century.

Memories of the Yalta – or in Russian Crimean – Conference are kept alive by its venue, the museum complex in the splendid Tsarist-era Livadia Palace, perched on a headland looking over the Yalta bay – apart from the natural beauty of the town’s location, one of the main attractions that brings Yalta much needed tourist money.

On the day of the referendum, the palace is eerily empty, leaving visitors alone with waxworks of Stalin, Franklin Roosevelt and Winston Churchill at the negotiating table, so lifelike that someone might have pressed pause. “The locals are all voting, and there are no tourists currently for obvious reasons,” explains a warden with a shrug.

“Stalin, Churchill and Roosevelt basically agreed: the Crimean Conference system would last 50 years and what would come after was unknown,” explains Serhiy Jurcenko, Ukraine’s leading historian of East-West relations and a researcher at the Livadia Palace museum. “International systems in conditions of communications and other 20th century factors last only one or two generations.”

Therefore, this referendum on March 16, engineered by Russia’s military takeover of Crimea, might mark a new international order dawning that still lacks any “Yalta Conference” to define its contours, some believe. “Tragically, we are entering a new period with some important differences, but many similarities to the Cold War,” former US ambassador to Russia, scholar Michael McFaul, wrote on March 16. “Protection of European countries from Russian aggression is paramount again.”

How did we get here?

The current Crimean conflict results precisely from Russia’s failure to find a role for itself in a post-Yalta Europe, argues Putin’s former economics adviser, now one of his foremost critics, Andrei Illarionov – the only international expert to predict that Putin would move on Crimea after “losing” Ukraine to Europe.

According to Illarianov, Putin’s early foreign policy 2000-2003 also aimed – unsuccessfully – at joining the West. “Putin’s personal conviction was that for Russia the most secure and comfortable place would be membership of the western alliance,” Illarianov said in a lengthy interview in Ukrainskaya Pravda in October 2013. “Putin said on several occasions that he wanted Russia to join Nato – both privately and in public. For one and a half years this was Russia’s official position.”

Putin also secretly knocked on the EU’s door, according to reports at the time. “A few weeks ago, when President Putin’s visit to Brussels was prepared, his officials asked me what I thought of a possible Russian accession to the Union,” then EU president Romano Prodi told Dutch paper De Volkskrant in 2002. “There had been a poll that showed that more than 50% of Russians favored joining the EU. When President Putin was visiting us, he asked again. I immediately made clear to him, no, you’re too big.”

“EU representatives said quite bluntly that they would never regard Russia as a candidate for EU membership,” recalled Illarianov.

“A number of events caused a radical shift in Putin’s world view,” Illarionov went on to explain in the interview. “First of all, the EU’s rejection of potential Russian membership. Secondly, Nato’s rejection of potential Russian membership. Thirdly, the abrupt break-up between [former president George W.] Bush and Putin over Iraq. Then came the Georgian Rose revolution and Ukraine’s Orange Revolution.”

Putin’s paranoia about a lack of security guarantees in the post-Yalta world only grew as the EU and Nato expanded deep into the former Soviet bloc and planned further expansion. “And we have the right to ask: against whom is this expansion intended? And what happened to the assurances our western partners made after the dissolution of the Warsaw Pact?” Putin notoriously railed in a no-holds-barred speech at the 2007 Munich security conference.

In 2008, then president Dmitry Medvedev proposed a pan-European security agreement – effectively a new Yalta Conference – but it was declared dead in the water. “The Putin leadership gained confidence and came to believe their country was not being treated as the great power they still considered it to be,” says Phil Hanson of Chatham House. “This chip on the shoulder is crucial, and I don’t see that there was much we could have done about it.”

The ousting of the pro-Russian Ukrainian president Viktor Yanukovych in late February and the prospect of Ukraine – including Russia’s centuries-old Crimean navy stronghold of Sevastopol – being fast-tracked to EU membership may have been the last straw for Putin. “Putin can’t get a new Crimean Agreement, so he now wants at least to have Crimea,” says Andrei Klimenko, chief editor of Yalta-based Black Sea News.

 

Crimea Tatar head threatens partisan movement if Russia annexes

Graham Stack in Bakhchysarai for Business New Europe (www.bne.eu)
March 11, 2014

Given the collapse of Kyiv’s power on the Crimean peninsula, the Tatar population remains a bulwark of resistance to the plans of Crimea’s Kremlin-backed secessionist leadership to join Russia. bne visited the heartland of Crimean Tatars at Bakhchysarai and spoke to its leader, Ilmi Umerov, who threatened “an underground partisan movement” if Russia annexes the region.

Umerov is head of the state administration in the Crimean town of Bakhchysarai – the historic heartland of Crimea’s Tatar population – and one of the leading stalwarts resisting the Russian occupation of Ukraine’s Black Sea peninsula. With Crimea’s secessionist leadership gearing up to hold a referendum of dubious legality March 16 on whether to quit Ukraine for Russia, Umerov is one of the few to stand up to the Russia-backed authoritarian rule of Crimea’s prime minister, Sergei Aksionov. Umerov is refusing to hold the referendum in his region.

“The referendum is illegal and being held under the gun sights of occupying forces,” Ilmi Umerov tells bne, referring to incognito Russian forces that are roaming the peninsula, penning Ukraine’s servicemen in their bases. “There is no question for me of holding it. Those responsible will later be held to account.”

Umerov says this is his “personal position, based on principles”. “They will probably find some mechanism using the local election committees to circumvent my boycott,” he acknowledges, “so that the referendum will be held in the district, although not to the full extent.”

Umerov’s position may be personal, but it derives from his ethnicity as Crimean Tatar – the people with the oldest historical roots in Crimea, but decimated after deportation to Central Asia by Soviet dictator Stalin in 1944. Umerov, like many of his townsmen in Bakhchysarai, grew up in Uzbekistan, before returning to Crimea in the 1980s and 1990s.

The leaders of newly independent Ukraine embraced the return of the Tatars in the 1990s, cementing an unlikely alliance of Ukrainian nationalist politicians with the Muslim Tatars. Crimean Tatars constitute only 14-15% of the roughly 2.2m population of Crimea, compared with around 70% ethnic Russians. Since their return, they have looked to Kyiv for protection against the Russian majority in Crimea, while Ukrainian politicians have cultivated allies in Crimea to keep Russian separatist tendencies in check. The Crimean Tatars have their own representative body, the Medzhlis, which has likewise urged a boycott of the referendum.

According to Umerov, the March 16 referendum will be a farce intended to legitimize Crimea’s secession. So what happens after the referendum? “I think we all know what the result of the referendum is going to be. There will need to be an adequate reaction to that result on the part of Kyiv, as well on the part of the international community,” says Umerov. “Adequate, in this context, means an equivalent response to the fact that a foreign country has occupied part of Ukraine. There has to be use of force structures, there is no alternative.”

“But the process will take time and we will be patient,” Umerov adds.

Ominously, Umerov lays out what will happen if a lack of help is forthcoming. “If nothing is done to turn back the occupation, our only remaining option will be to launch an underground partisan movement against it,” he says. “This is the land of our ancestors and we are united in our desire to resist the invaders.”

Bakhchysarai blues

Bakhchysarai is the former capital of the Crimean Khanate, and boasts the Khan’s magnificent palace of Hansaray. Many Tatars settled here on returning from deportation in the lands of their ancestors in and around Bakhchysarai.

Ethnic Russians often express positive views about the proposed annexation by Russia, but the opposite is true of Bakhchysarai’s Tatars, independent of age and education. Two Tatar law students, Dzhennet Seythalilova and Evelina Ametova, both 19, may chat in Russian with each other in a Bakhchysarai café – but they are far from wanting to join Russia. “If you want to go to Russia, then it’s perfectly possible to emigrate,” says Evelina. “Just because you don’t have the money to emigrate, that doesn’t mean you should simply transfer Crimea to Russia,” she says emotionally. “Crimean Tatars want Crimea to stay in Ukraine and join the EU,” her friend Dzhennet underscores.

The topic is a hot potato in a mixed Russian-Tatar town like Bakhchysarai: when other customers hear the students’ views, they get involved. “Russia is where all my family live,” says one woman, “and Crimea has always been Russian. What has Ukraine ever done for us?” “No one’s keeping you here,” retorts Evelina. “And by the way, before the deportation, we were in the majority here.”

The Kremlin has been trying to neutralise Crimean Tatar resistance to its annexation plans, by leveraging its own Kazan Tatars, concentrated in the Russian constituent republic of Tatarstan. The president of Tatarstan flew to Crimea on March 5, offering to be a guarantor of Crimean Tatars’ rights within the Russian Federation, and promising investment. In addition, the pro-Moscow first deputy prime minister of Crimea, Ruslan Temirgaliev – regarded by many as the brains behind the current operation – is of Kazan Tatar descent.

But this cuts no ice with the law students. “The Kazan Tatars have a very different language and culture,” says Evelina. “We are related, but we don’t want to be their little brother within Russia – we want to join Europe.”

Growing alarm

The town of Bakhchysarai is mixed Tatar-Russian, but some surrounding villages are almost entirely Tatar, due to land distributed to the returning population in the 1990s. In the village of Viktorovka, 65-year-old Enver Zaidullaev, says: “We have just got things set up here after returning [from Uzbekistan]. That was many years of hard work. Now they want to change everything again.” He says he is nevertheless convinced that “Crimea will never belong to Russia again.”

Enver describes increasing threats against the Tatar population of Bakhchysarai: poison-pen letters and stories of Tatar houses being marked. “These are not done by locals,” he says. “We have good relations with Russians, ethnicity has never played an important role here, except when politicians from outside have tried to fan the flames.”

Mother of the village’s Imam, Aziz, tells bne that her son had prayed for stability and a Russian pull-out. “We can’t do anything to stop them, we are a small minority now. Our only hope is international help – and especially Turkey,” she says. There are an estimated 5m Turks of Crimean Tatar descent. “If things go further down this road, we will call on Turkey to help us. They will come.”

Ten days that lost Crimea; crucial state organs defect to secessionists

Graham Stack in Simferopol for Business New Europe (www.bne.eu)
March 10, 2014

The Crimean flag is flying over the headquarters of the local security service and interior ministry in the capital Simferopol, following the crucial but largely unremarked defection of their leadership to the secessionists. With Crimea’s machinery of state power now fully under the control of its new Russia-backed masters, Ukraine has lost its purchase on the Black Sea peninsula, casting further doubts on Kyiv’s ability to bring the secessionist republic back under its wing.

Ukraine’s now ousted president, Viktor Yanukovych, had an Ozymandias moment on February 13: unnoticed at the time, one of Yanukovych’s last acts as president was to declare 2014 a year of national celebration to commemorate the 60th anniversary of Crimea’s joining Ukraine, transferred by Soviet chief Nikita Khrushchev from Russia in 1954. The purpose of the celebration, Yanukovych decreed, would be to “consolidate Ukrainian society,” and the jubilee would be marked with special events throughout the peninsula, commemorative coins, and a series of international conferences and exhibitions on the topic.

However, just three weeks later on March 9, with Yanukovych hiding in Russia, a White House official acknowledged to journalists that, “Russian forces now have complete operational control of the Crimean peninsula”. Crimea’s 60-year Ukrainian interlude that Yanukovych had planned to celebrate had effectively ended.

Ukraine and international media have rightly focused on the heroism of pockets of unarmed Ukrainian servicemen who refuse to disperse, despite impossible odds, as well as the villainy of the Russian intervention that has been so swift in its aims and, in stark contrast to previous Russian invasions of Chechnya in the 1990s or Georgia’s South Ossetia in 2008, has still to lose a man or even inflict casualties on opposing forces. Russian President Vladimir Putin cynically told his German and UK counterparts on March 9 that the intervention was “within the framework of international law.”

But the other side of the story is how Ukrainian state structures in Crimea have switched loyalty to the Russia-backed secessionists – a switch so fundamental that like the “dog that did not bark in the night” it has gone largely unremarked.

Stabbed in the back?

The speed with which Russia has taken over Crimea has left the world playing catch-up. When the Russia-backed secessionist Crimean prime minister, Sergei Aksionov, announced on March 2 he was subordinating all military, security and law-enforcement structures in Crimea to himself – including the Ukrainian navy – many ridiculed him: Aksionov had only come to power on February 27 as a rank outsider, after a vote of the Crimean parliament behind closed doors and under pressure of armed intruders.

But by March 5 leaders of the key Ukrainian security and law-enforcement organs in Crimea were lining up before the Crimean government to swear oaths of loyalty to the secessionist leadership – and apparently enjoying the backing of their respective structures in doing so. Thus the sinews of state power in Crimea, under Russian protection, switched loyalty to the secessionist authorities with not a blow struck: in particular the Ministry of Internal Affairs – which commands feared special police units and thousands of interior troops – and the Security Service of Ukraine (SBU), Ukraine’s successor to the KGB and the very organisation tasked with combating secessionism. “The media are showing the heroes who refuse to surrender, but let’s not forget the traitors,” growls Gennady Moskal, a former head of the Crimean interior ministry, former deputy head of SBU, and a leading member of now governing party in Ukraine, Batkyvschina.

“Whereas it took two to three years for secessionist entities to gradually and painfully secede – de facto – from Georgia and Moldova, it took three days for the same to happen in Crimea,” notes scholar Nicu Popescu of the European Union Institute for Security Studies. “The moment Russia moved in militarily and disrupted the normal functioning of the Ukrainian state institutions – from the army to police and border guards – there was not much that could be done to reverse this fait accompli.”

According to Moskal, Kyiv’s control over state structures in Crimea collapsed after Yanukovych’s flight from Kyiv on February 22. Yanukovych’s ousting left a political vacuum both in Kyiv and in Crimea, and the Crimean political elite he had built up since 2010 realised the game was up, and started looking for guarantees of personal security, says Moskal. Yanukovych’s cronies in Crimea spinelessly handed control of state power structures to the new Russia-backed secessionist authorities, likely receiving guarantees or rewards from the Kremlin in return. Apparently their last orders before resigning were often to lock up the weapons’ arsenals.

Moskal chronicled how the structures he used to command slid out of Kyiv’s grasp in a series of posts on Facebook. “The directorates of the [interior ministry] and SBU in Crimea have distanced themselves from performing regular duties and are just watching how events unfold,” Moskal wrote despairingly on Facebook on February 28. “I am particularly surprised at how the SBU in Crimea and Sevastopol and the military intelligence directorate in Sevastopol could simply sleepwalk through all this.”

According to information published by former SBU spokesman, Stas Rechinksii, the leadership of Crimea’s border guards were equally passive during the decisive days in late February-early March, allowing coast guard vessels to be trapped in harbour.

Mistakes made

The new authorities in Kyiv, in the initial euphoria of victory in Kyiv, the throes of setting up a government and faced with a financial crisis, also took their eye off the ball in Crimea, allowing the Kremlin to get a foot in the door. “Why have security council secretary (Andriy) Paruby, interior minister (Arsen) Avakov, SBU head Nalivaichenko not travelled to Crimea? How long will they sit in Kyiv and say that everything is under control?” asked Moskal.

Some of the initial decisions of the new Ukrainian government also played directly into Russian and secessionist hands, such as repealing on February 24 a language law that strengthened the rights of Russian speakers. Disbanding notoriously brutal riot police units was inevitable, but many former officers made their way to Crimea, and provided crucial initial support to the secessionist movement. It is widely believed that it was these units, acting in coordination with Russians, who seized control of the Crimean parliament on February 27 – initiating a crucial behind-closed-doors session that voted in secessionist Sergei Aksionov as prime minister of the peninsula.

As bne reported on March 1, initial appointments made by the new government in Kyiv were also disastrous. Top commanders named by Kyiv defected to the Russia-backed secessionists within hours of their appointments, including the newly appointed head of Ukraine’s navy, Denis Berezovsky. This defection gave the Russians time to block the Ukrainian fleet from sailing for Odesa.

Similarly, on March 2 the new authorities in Kyiv appointed Igor Arvutsky, deputy mayor of the Crimean town of Feodissiya, to head the interior ministry in Crimea. “Within hours of his appointment, Arvutsky fully handed over power to the ‘government’ and parliament of Crimea,” says Moskal.

The now Minister of Internal Affairs Avakov acknowledged the critical errors and apologised on Facebook March 9: “I won’t publish the names of those who lobbied for these appointments, and who claimed the candidates in question had high levels of integrity and professionalism. The final responsibility lies with me.”

Cut adrift

In the Crimean capital Simferopol, it is now hard to find the yellow and blue of Ukraine’s national flag. Not only does it no longer fly over the representative buildings of parliament and government, where alone the Crimean flag flies – a horizontal blue-red-white tricolour almost identical to the Russian flag, but Ukraine’s flag no longer flies over the sprawling local headquarters of the SBU and Ministry of Internal Affairs.

Not that many people have noticed the change, so swift and silent has it been. “To be honest I never even noticed that the flags had changed,” said a barista of a small cafe opposite the local SBU headquarters. “There has been absolutely no fighting, trouble or excitement of any kind here… The SBU officers still come in here as always – speaking Russian amongst themselves, like everyone else here.”

Currently, the government in Kyiv communicates with the renegade power structures in Crimea mainly through the media. “Perform your duties strictly according to the law and constitution of Ukraine. The whole sovereignty and strength of the Ukrainian state and people is with you. You must be on the side of the Ukrainian people,” new SBU head Valentyn Nalivaichenko appealed to his Crimean officers in a March 4 press release. Avakov’s media message to Crimea’s interior ministry on March 9 was: “Be worthy of your people and true to your duty and oath, defend the honour of an officer.”

Kyiv is still keeping up appearances. Avakov formally fired Arvutsky on March 9, despite Arvutsky having resigned a week earlier, according to media, but he failed to announce the name of Arvtusky’s successor. Acting President Oleksandr Turchynov fired SBU head Kalachev on March 8 – also a week after the latter is believed to have resigned – appointing in his place Oleg Absalyamov, a Crimean SBU officer believed to be pro-Kyiv, thus challenging Simferopol’s appointee, Petro Zima.

The announcement may have triggered mild alarm at SBU headquarters in Simferopol: an hour after its publication,bne saw an unmarked bus arrive at SBU headquarters, apparently bringing reinforcements. In the morning of March 9, a “self-defence unit” composed of shabby-looking locals patrolled outside SBU headquarters, as a temporary power outage raised tension. But by early afternoon, the alarm had passed and the “self-defence units” disappeared. “You see, this is one of the quietest and calmest places in Ukraine,” says the barista. “And you journalists are always writing that there’s a war on here.”

Russia wins “hearts and minds” as information war rages over Crimea

Graham Stack in Sevastopol for Business New Europe (www.bne.eu)
March 6, 2014

Citizens of Sevastopol and Crimea believe the West and Ukraine are conspiring against them – and only Russia can help.

“We are peaceful demonstrators,” says pensioner Aleksandr Ivanov, 60, “we’re not throwing Molotov cocktails or stones, this is not Maidan,” he says, referring to the square in Kyiv that was the epicentre of the recent pro-EU protests. “Why do western journalists not give a true picture of how things are here? We want peace, we don’t want Banderovtsy [catch-all term for West Ukrainian nationalist activists with alleged fascist ideology] here. We don’t want the USA here. We want Russia.”

45-year-old hotel owner Mariana Savina is equally upset. “What gives the Banderovtsy the right to seize power – with foreign backing, mark my words – but for us not to do the same here?”

“It is good that the Russians have come, who else is going to keep order here?” asks Aleksei Bulatov, 52, a former aviation engineer. “This has been a long time coming and is long overdue.”

And 24-year-old lawyer Ivan Gorshkov: “I would consider it only natural if Sevastopol, and the entire Crimea, would now return to Russia. Ukraine has failed as a state in its current borders. The new government is illegitimate, no one knows where they came from, but everyone knows who put them there. It’s time for Crimea reloaded.”

Clash of ideologies

Inhabitants of the peninsula of Crimea and in particular its largest city Sevastopol, home to Russia’s Black Sea fleet, may have reason to be aggrieved with Ukraine’s restrictive language policy, which foresees official communication and state education in the only state language, Ukrainian: the peninsula as whole is predominantly Russian speaking, In Sevastopol, just under 75% of the population identify themselves as ethnic Russian.

Unfortunately, one of the very first acts of the new parliamentary majority in Kyiv on February 28 was to repeal a 2012 language law that had strengthened Russian language rights. “This repeal was the last drop,” said Aleksandr Mantyuk, 30, unemployed. Ukrainian acting President Oleksandr Turchinov has since vetoed the repeal of the law, but that cuts no ice here.

More fundamentally, behind the language clash there is a clash of ideologies. Patriotic Ukrainians revere the memory of nationalist organisations of the 1930-1950s, and their leader Stepan Bandera and his ‘Banderovtsy’ followers. But Bandera remains anathema across most of Crimea, where he is regarded as a henchman of the Nazis. Many shudder on hearing Kyiv protestors acclaim him with shouts of “Glory to the heroes”. In Sevastopol, on every street corner there are memorials to the naval port’s role in the Soviet defeat of Nazi Germany. Residents readily tell of their grandparents who fought and often fell in the war, and parents who grew up during it.

During the 22 years of Ukraine’s independence, Crimean discontent at “waking up in a foreign country” after the collapse of the Soviet Union in 1991 never grew into support for open revolt. However, the Euromaidan protests, sparked when ousted president Viktor Yanukovych welshed on a deal to bring Ukraine closer to the EU, have flipped a switch in the minds of ethnic Russian, changing discontent into a strongly structured ideology.

From a western perspective it may seem bizarre, but in the pro-Russian discourse memories of the Nazi occupation blend effortlessly into resentment of perceived Nato designs on the strategically important Black Sea peninsula. With the West now seen as backing a “fascist putsch” in Kyiv, for many here the difference between NATO and the Nazis is splitting hairs.

Hearts and minds

The crucial ingredient equating the Euromaidan protests with fascism, and by extension the West with the Nazis, has been Russian domination of public discourse in the city, say media specialists. In particular, leading Russian news anchorman Dmitry Kiselev has become notorious for his distorted reporting on the protests in Kyiv.

“The information war in Crimea has already been lost. While we were busy campaigning in Kyiv, others were taking care of the ‘right’ propaganda on the peninsula,” Sevgil Musaeva, a prominent Kyiv-based journalist from Crimea, tellsbne. “The leading Ukrainian TV channel Inter has for the last six weeks been reporting on radicals, and RTR Planeta [the leading Russian international channel] has led the way with the Kiselev-madness. And now imagine that all this time in Crimean public transport they showed recurrent clips of ‘Banderovtsy’ and fascists in Kyiv.”

Tatiana Rikhtun, head of local western-supported journalism NGO IRS Media Centre, explains the anti-western world view has come here from Russia. “It did not use to be like this here… The media sphere is very controlled,” says Rikhtun. “Local television is almost entirely in the hands of the current Russian-backed authorities. Most of the population watch the Russian state-controlled TV channels.”

“The propaganda coming from Russia – epitomised by Dmitry Kiselev – is very well done technically, it looks good and is exciting to watch. It plays on all the traditional sore spots – from the Great Fatherland War, to the transfer of Crimea to Ukraine by Kruschev in 1954, the collapse of the Soviet Union and the expansion of Nato. People buy it.”

A tapped phone call, leaked onto the internet on March 5, in which EU foreign affairs chief Catherine Ashton and the Estonian foreign affairs minister discuss allegations that the snipers who shot and killed protesters and police in Kyiv in February were hired by elements within the Maidan protests will no doubt get a huge amount of airplay on the pro-Russian propaganda machine.

A leaf out of the West’s book

It’s not just media, though. Russia has taken a leaf out of the West’s books and poured money into funding pro-Russian NGOs in Sevastopol, which far outnumber their Western counterparts here. “Russia has been supporting a large number of NGOs in Sevastopol, which together create a powerful pro-Russian movement,” Rikhtun says. “My organisation receives western grants, but we submit international and Ukrainian audits for all the funds we receive. In contrast, the pro-Russia NGOs receive bundles of cash in large quantities.”

These NGOs now appear to be a driving force behind large city-centre demos and round-the-clock pickets of Ukrainian military bases. Activists from Russian-sponsored NGOs are not the same as the sullen and silent bussed-in attendees of pro-Yanukovych demonstrations in Kyiv. At pro-Russia demos in Crimea, activists actively, and sometimes even eloquently, propagate pro-Russian views and confront western journalists. At the same time, they operate hand-in-hand with incognito Russian troops, whom they call their “self-defence units”.

The internet doesn’t compensate for the double whammy of slanted TV coverage and Russian NGO activity: Russian social networks such as Vkontakte and Odnoklassniki are far more popular in Crimea than Facebook, one of the main platforms for the Euromaidan movement. As a result, there has been segregation of pro-western from pro-Russian users, and the Russian networks have acted as multiplicators of support for Russia.

Rumour does the rest, says Musaeva. “In the cities ‘word of mouth’ is at work. People tell how they travelled in the train with people from Lviv, who in the morning gave Nazi salutes,” says Musaeva. “People are genuinely scared of the ‘Banderovtsy’ – and I quote verbatim – that they will arrive and occupy their homes. It’s difficult to believe all of this in the 21st century but this is the reality.”

According to Musaeva, only the Crimean Tatars, who constitute around 12% of the Crimean populations, have proved immune to Russian propaganda, due to historical experience of deportation by Soviet dictator Stalin in 1944.

All this makes the pro-Russian discourse strong and compelling locally – so that even those who do not buy it keep their voices down. “There is no good arguing with them,” says Eva Khilmanova, a video journalist from Moscow, based in Sevastopol. “They have an answer to everything. The internet doesn’t help either, since they only use resources that support their views. They can tell you in the same breath that they are against fascism, and that the Euromaidan is an anti-Russian Gay-Jewish conspiracy. There’s a siege mentality.”

Dark side of Crimea

There is also a growing dark side to the information war in Sevastopol and Crimea. When Rikhtun filmed a pro-Russian demonstration at the gates of the Ukraine naval headquarters in the evening of March 3, she was struck over the head by pro-Russian activists, and her camera was taken from her. One hour earlier a bne reporter was also attacked and had a camera phone taken and broken, after recording how activists accosted and beat a man who disagreed with them.

Exemplifying the news control in the city, a leading Sevastopol online news portal almost immediately posted a different version of events. Under the title, “The information war continues,” the site reported: “We are already used to provocations from western journalists, which is why they are chased from our meetings. But like rats they crawl out of cracks to prove ‘military aggression by Russia’.” The site also insinuated that Rikhtun’s beating was staged.

Colourful Kyiv liberal and former MP Gennady Balashov expressed alternative opinions to a small pro-Russian meeting on a central square in Sevastopol on March 4. Self-appointed vigilantes quickly hustled him away, and later hit him and knocked a camera off one of his assistants, according to online videos and eyewitness accounts. According to posts by acquaintances on his Facebook timeline, Balashov was detained by police in the Crimean capital Simferopol on March 5, beaten and a bag placed over his head, before being released.

These events do not bode well for the future governance of Crimea, should power remain with the current Russia-allied authorities. And perhaps a majority of Sevastopol residents believe that precisely this will be the case. “There is no going back,” says lawyer Ivan Gorshkov , “Sevastopol will never again come under Ukrainian control.”

 

Russia moves into Ukraine navy HQ in Crimea after naval chief defects

Graham Stack in Sevastopol
March 3, 2014

Russia tightened its grip on Ukraine’s Crimea region on March 3, with Russian forces entering Ukraine’s navy headquarters in Sevastopol with the apparent intention of disarming the base. Despite western demands to withdraw, Russian military forces have secured full control of the peninsula without firing a shot.

Ukraine’s attempts to defend itself against a Russian attack on the Crimean peninsula are in disarray after Russian forces on March 3 entered the territory of Ukraine’s navy HQ, according to bne sources, and are currently negotiating the disarmament of the base. No shots have been fired as yet, and no Russian armour is present.

The development follows picketing by pro-Russian groups of the naval HQ on March 2, and the defection of Ukraine’s naval commander-in-chief, Denis Berezovsky, to the Russia-allied authorities in the Crimea in the evening. The defection and potential loss of the navy command is a huge blow to Kyiv’s attempts to resist Russian seizure of the peninsula, as well as being an embarrassment for the new government, one week after attaining power following the ousting of former president Viktor Yanuovych.

After a day of talks, the news of the defection struck like a thunderbolt: at a news conference held at the headquarters of Russia’s Black Sea Fleet in the Crimean port of Sevastopol – and attended mainly by Russian press – the commander-in-chief of Ukraine’s navy, Rear Admiral Berezovsky read out an oath “to obey the orders of the commander-in-chief of the autonomous republic of Crimea” and to “bravely serve the security and life of the people of Crimea and the city of Sevastopol.”

Berezovsky read out the oath by the side of his new “commander-in-chief” – Sergei Aksionov, a little known Crimean politician appointed prime minister of the peninsula by the regional parliament last week after armed men linked to Russia entered the parliament building. Aksionov declared March 2 as the “birthday” of an independent Crimean naval force, and said that almost all Ukrainian military bases on the peninsula had now come under the control of the “Autonomous Republic”.

Meanwhile, Ukraine’s parliament, the Verkhovna Rada, together with acting President Turchynov and head of the Security Council Andriy Parubyi launched on March 2 a general mobilisation of Ukraine’s conscription-based army, where all men have one year’s military training and then join the reserves to be mobilised in the event of war. Media reports speak of many Ukrainian men voluntarily showing up at their local military commisariats – charged with organising the call-up of reservists to their units – starting March 2. However they were mostly sent home after leaving contact details, to await their call-up after some days preparations, during which their units will receive the necessary uniforms, arms and other equipment.

However, given Ukraine’s current parlous financial state following years of neglect of its military, many are questioning as to whether the general mobilisation plan is realistic. In addition, the top military leadership has changed twice over the last month, creating confusion at the very top: The current chief of staff of all branches of the military, Lt. Gen. Mykhailo Kutsyn, was like Berezovsky only appointed recently on February 28, and his predecessor Yuriy Ilyin had only been appointed by former president Yanukovych on February 19.

Any attempt to retake Crimea would also have to contend with the peninsula’s geography – accessible from the Ukrainian mainland only by a narrow easily defensible isthmus. And with the Russian seizure of Crimea until now largely bloodless, any attack by Ukrainian forces could play into the hands of Russian propagandists alleging Ukrainian aggression and “fascism”.

Defections

Berezovsky’s move on March 2 followed a day of the Ukrainian fleet’s headquarters being picketed by around 100 pro-Russian demonstrators. The pro-Russian city authorities had cut off electricity to the HQ, and smoke rose from inside the Ukrainian base as documents were burned, charred scraps carried by the wind over the perimeter fence. There was no open sign of the presence of Russian forces, as has been the case elsewhere in Crimea. But Ukrainian naval reserve officers watching from outside the grounds told bne that a squad of Russian special forces had taken up position in a building near the perimeter of the naval HQ.

According to unconfirmed reports, the leadership of the Russian Black Sea fleet – based in Sevastopol – called at the Ukraine fleet HQ in the morning of March 2, and Berezovsky left with them for negotiations. During the day, the picket of the naval base by pro-Russian groups declared Berezovsky a potential war criminal, for allegedly having given Ukrianian naval units a “shoot to kill” order. Berezovsky was next seen at the press conference in the evening of March 2, alongside newly installed Crimean PM Aksionov.

Igor Talaver, a retired Ukrainian naval officer in telephone contact with serving officers at the base, told bne that Berezovsky proved to be weak. “He was afraid the Russians would storm the naval base. His officers are showing a different calibre and are holding out and staying loyal to Ukraine.”

Indeed, Oleksandr Smolar, a navy capitain, confirmed to bne by telephone that, “Morale is excellent and we will stay true to the oath we took.”

“We will be back at work tomorrow,” officers leaving the headquarters told bne.

The loyalty of the rest of the Ukrainian navy may be lower. “I would serve in the [Russian] Black Sea fleet if possible,” Sergei, a rating who declined to give his last name, told bne over the perimeter fence surrounding the navy headquarters. “I get paid $100 per month, and they get $400.” With the Ukrainian navy based in Sevastapol, its officers and men are closely integrated in the city’s pro-Russian pulse, and are often in fact natives of the town.

After Berezovsky’s announcement of his defection, the pro-Russian picket of the base immediately disbanded, and electricity was switched back on, indicating an agreement had been reached about disarming the base. According to media reports, Berezovsky ordered Ukraine’s only battalion of marines, based at the Crimean coastal down of Feodosia to surrender to Russian forces, but the batallion refused, and is currently negotiating with the Russians. According to the Facebook feed of Miroslav Mamchak, a former Ukrainian naval captain and pro-Ukrainian publicist, the marines have decided to stand with Ukraine down to the last man.

Berezovsky’s defection is all the more embarrassing for Kyiv because he had been appointed head of Ukraine’s navy just 24 hours earlier on March 1, by acting Ukrainian president Oleksandr Turchynov. Berezovsky replaced a naval head appointed by the ousted president Viktor Yanukovych, and Kyiv may have believed him to be a pro-western officer, since he had overseen Ukraine’s participation in the joint Nato-Ukraine “Sea Breeze” exercises in 2013. Turchynov fired Berezovsky as head of the navy in the evening of March 2, and Ukraine’s prosecutor general opened a criminal case against him on charges of treason. Turchynov also issued a reprimand to acting Defence Minister Ihor Teniukh, apparently in connection with the Berezovsky debacle.

Ukraine’s fleet is tiny, comprising only one frigate, one submarine, a handful of corvettes and a battalion of marines. The frigate is currently in Cyprus, “and continues to proudly fly the Ukrainian flag,” Ukraine’s defence ministry announced March 2. The defection of Berezovsky may be more damaging for domestic morale and Ukraine’s international standing as it attempts to rally support for its plight and for concerted action against the Russian moves.

The collapse of Kyiv’s grip on the peninsula already became clear March 1 when the self-proclaimed PM Aksionov subordinated to himself all Ukrainian military and security structures on the peninsula, including the Ukrainian navy. Russian forces without insignia moved to disarm Ukrainian military structures across the peninsula, largely without encountering resistance.

Law enforcement structures on the peninsula seem to have subordinated themselves to the new Crimean authorities largely without protest. Self-proclaimed mayor of Sevastopol, Aleksei Chaly, issued an order on March 2 creating a “Municipal Security Service.” Chaly’s press secretary confirmed to bne that the new “Municipal Security Service” in fact comprised the former Sevastopol branch of the Security Service of Ukraine (SBU). The flag of Sevastopol was the only flag flying at the SBU offices in the city centre March 2.