Politics 2021-03-09T04:02:44+02:00
Ukrainian news
Why Ukraine loses transit cargo flow

Why Ukraine loses transit cargo flow

Морпорт. Фото: transport-journal.com
Морпорт. Фото: transport-journal.com

While Ukrainian officials state that Ukraine has a huge transit potential, our country is still losing ground in this direction. Moreover the one is left behind the global transit flows during the last years. It is the processing of transit cargo in 2020 that is at the greatest disadvantage, because the famous international transit infrastructure project for the delivery of goods from China to the EU serving multibillion-dollar commodity flows has been bypassing Ukraine along alternative routes for many years. A significant contribution to the decline of Ukraine's transit potential was made not only by its poor-quality roads but also by customs arbitrariness: once overcoming the barriers of Ukrainian customs, any transit country will choose alternative routes for the future — Turkey, Belarus, or Romania.

What happens in the field of transit?

According to the Association of Seaports of Ukraine, in 2020 Ukrainian seaport operators handled 158.86 million tons of cargo, which is 1.14 million tons or 0.7% less than in 2019. The share of transit cargo in the total volume of loading by the seaports of Ukraine reached just over 6%, while five years earlier it was 30%. And it was a transit that became the most failed direction at the end of 2020 — "minus" 9.1% of the indicators of 2019.

The Ministry of Infrastructure of Ukraine expresses modest forecasts that in 2021 it will be possible to restore the volume of cargo transit through the territory of Ukraine to the indicators of 2019. However, no one remembers the ambitious goal of returning to a 30% share of transit through ports.

"In order for it to grow, we need the economies of the countries involved in sending goods to develop as well", says Vladyslav Kryklii, Minister of Infrastructure of Ukraine in an interview with Interfax — Ukraine. He acknowledged that transparent digital solutions that would reduce corruption at customs and speed up the processing of transit cargo are still a prospect that Ukraine is striving for. In fact, the Minister admitted the failure of digitalization at customs, and the "manual" intervention of its representatives into the activity of the international transit operators that create huge corruption risks. Is is easier for any operators to carry out through Turkey, Romania Poland or Belarus where have been created actually hothouse conditions for transit. On the other side they will spend corruption fees in Ukraine which even can not boast of the qualitative of the developed transport infrastructure.   

However, officials persist in trying to shift the blame for the downturn to either the economic crisis, or the pandemic. At the same time, the Chinese railway regularly reports on record volumes of cargo shipments to the EU countries, and ports of the People's Republic of China not only talk about record loading but even face a shortage of capacity: a lack of containers, workers and time to service the growing flow of goods. An increase in the cost of freight is also recorded. The entire transport infrastructure of the countries adjacent to Ukraine literally takes the best from the growing flow of goods. And only Ukrainian officials are still complaining about the economic crisis and the pandemic.

The increase in transit from China to the EU, part of which could have passed through Ukraine, is measured in double digits. In monetary terms, the volume of transportation of goods over the Eurasian continent from China's Guangzhou and Shanghai towards the Baltic countries, the countries of Northern and Western Europe is measured in hundreds of billions of dollars, and this flow is only growing: in 2020 the volume of the trade turnover between China and European reached almost record-breaking 600 billion Euro.  

As we can see, there is no global decline in the sphere of goods transit, so it is difficult to blame any external circumstances for its decline through Ukraine, the reason is not in them. For instance, it can be in the bad reputation of our country for transit. The most vivid illustration of the "outstanding transit potential of Ukraine" can be considered the official maps of the international infrastructure project "One Belt. One Road", or as it is more often called "Silk Road", the route for the supply of goods between China and the EU.

As you can see, on all official maps the global transit route bypasses Ukraine through the Turkish corridor, through the Black Sea countries of Eastern Europe, or through Romania, Poland and Belarus — this is a direct route to the EU, or to the Scandinavian countries and the Baltic States.

Why Ukraine has become a white spot on the transit map of the world

During his recent visit to the UAE, Ukrainian President Volodymyr Zelenskyi invited Arab entrepreneurs to develop business and port infrastructure in our country. He reminded that Ukraine has adopted laws on "investment nannies" and praised the Ukrainian investment climate.

But those who encounter it in reality realize that this climate is quite harsh. Take, for example, the latest scandal, which clearly does not present the transit opportunities of Ukraine in the best light: the international grain trader was forced to appeal to the Ukrainian business ombudsman and the European Business Association to save its transit cargo from illegal arbitrariness of Odessa customs officers and fiscals. For the third month, the international grain trader from the UAE has been trying literally to recapture in Ukrainian courts the cargo seized from it by Odessa customs officers - one and a half thousand tons of sunflower seeds worth more than half a million dollars.

The cargo was transited through the port of Odessa from Moldova to Turkey by SSA Agri DMCC (United Arab Emirates) for OILAMEN TRADE LTD, a buyer from Great Britain.  Suddenly, the law enforcement officers with gross violations of the procedural requirements have blocked the customs clearance of transit without any objective reasons. At the same time, almost instantly, the representatives of the customs and fiscal officials literally "squeeze" the cargo under the guise of physical evidence. The appeal of customs officers and fiscals to the first instance court in the criminal case №32020100110000063 to search and seize hundreds of tons of sunflower seeds was ineffective - the judge rejected the request because he did not consider convincing vague arguments of customs officers and fiscals. And there were no questions to the shipping documentation. Also, the judge did not consider it necessary to issue a sanction for the seizure of cargo, moreover, investigators could not explain exactly what and why they were going to find during the search, and could not explain to the judge why they had to seize hundreds of tons of sunflower seeds, stored in a customs warehouse. It is noteworthy that the company-owner of the cargo from the UAE "SSA Agri DMCC" initially does not appear at all in publicly available court decisions in this criminal case.

Despite the lack of connection between SSA Agri DMCC and the events and persons in the mentioned criminal case, the fiscal authorities confiscate all the cargo due to it. At the same time, despite the court's initial refusal to file an arrest petition, the fiscal authorities arrive at the search with trucks to seize "material evidence" - hundreds of tons of sunflower seeds that a foreign company transported through Odessa from Moldova to Turkey for a British buyer. Subsequently, prosecutors helped customs officers and fiscal officials to legalize the illegal seizure of goods in another court - in the Shevchenkovsky District Court of Kiev: here the judge authorizes the arrest of all cargo that was previously simply seized. During the special operation to seize the cargo, the security forces did not bother to record its quality and indicate the storage location. Where and in what conditions the seized goods are now located for almost three months, and what the owner will receive after the end of the epic in Ukrainian courts is still an open question.

The special operation to seize "material evidence" with a search and trucks prepared in advance for the removal of seeds "law enforcement officers" carried out at night, which involuntarily prompts associations with the legendary Odessa raiders of a century ago or their descendants of the 90s. It seems that in this way, the Odessa customs officers and fiscal officials are conducting for Arab and British businessmen “a presentation of the unique transit potential of Ukraine,” which President Zelensky spoke about so colorfully last week in the UAE.

It is only the beginning that's hard to get over - lawyers representing the interests of the foreign companies in Ukraine are trying to challenge the dubious decision of the Odesa customs and fiscal officers, but the appeal instance in the proceedings № 761/39069/20 completely ignores the legal arguments of the company's lawyers and leaves in force the doubtful decision of the Shevchenkivskyi District Court, issued on the basis of doubtful arguments of customs and fiscal officers.

Since the case has gained serious resonance, and the documents on it are already available in public open sources, we asked attorney Denys Kytsenko, PhD in Law to comment on the incident. The lawyer points out that the customs officers, fiscal officials, the prosecutor and the Shevchenko District Court of Kiev committed a whole series of flagrant gross violations, thanks to which it became possible to illegally block the transit cargo of international trader companies.  Among the most obvious ones, the lawyer named the conduct of a search at night, in addition, the prosecutor missed the deadline for applying for an arrest, and the Shevchenkovsky District Court missed the deadline for making a decision on the arrest. “But the most interesting thing is that the company-owner of the cargo SSA Agri DMCC, its officials or other employees are not involved in the criminal case № 32020100110000063, they were never even summoned for questioning by the investigator. With a high probability, this may indicate that the ultimate goal of this dubious "special operation" of customs officers and fiscal officials is by no means a search for the truth, but, perhaps, illegal seizure of 1,500 tons of sunflower seeds worth half a million dollars", the lawyer said about the peculiarities of the Ukrainian business climate and law enforcement.

Their illegal actions of the Ukrainian officials against international traders have already become the subject of an investigation by the State Bureau of Investigation. Information about the initiation of criminal proceedings has already been entered in the register of pre-trial investigations on the grounds of a criminal offense "intentional actions that go beyond the limits of authority, entailing serious consequences for the legally protected interests of legal entities". Foreign companies have already received the official status of the victim party from the actions of Odesa customs officers and fiscal officials.

The outcome of this case will be one of the vivid illustrations of whether Ukraine really wants to improve its transit potential, or the authorities will continue to blame the economic crisis and the pandemic, covering up the illegal actions of their officials.

In this case, Turkish, Romanian and Polish ports will be grateful to Ukraine for confidently confirming and decisively defending its status as a "white spot" on the global transit map.

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