UCIPR Report Crimea en

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 http://zakon4.rada.gov.ua/laws/show/995_154 3 https://www.youtube.com/watch?v=t42-71RpRgI 2

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 reregistration 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.

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http://economics.unian.ua/finance/895858-krim-buv-i-zalishaetsya-dotatsiynim-regionom-golova-minfinu.html 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 5

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. 1636VII “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.

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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

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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 ReRegistration 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 sociohumanitarian 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 deoccupation 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.