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Grundfos says it has taken all precautions to prevent the violation of Crimean sanctions and this raises questions

Grundfos says it has taken all precautions to prevent the violation of Crimean sanctions and this raises questions

Danish company Grunfos says it took every precaution to prevent its water pumps from going into occupied Crimea, where they were spotted at the opening of the Beshterek-Zuisky water pipeline station on March 18, 2021.

04/29/2021 – 03:51 am •


Editor’s note

In an interview with the Danish Broadcasting Corporation, an official from pump company Grundfos said this Danish firm was “just as surprised” as everyone else that their equipment was in Crimea, violating EU sanctions adopted in response to the Russian occupation of Ukraine peninsula.

This statement, if true, raises questions about the effectiveness of the EU sanctions regime, which appears to be unsuccessful in its stated goal of preventing the use of Western technology to solidify Russia’s hold on the illegally annexed Ukrainian land.

The seven pumps produced jointly by Grundfos and Siemens that will provide groundwater for Simferopol, the capital of occupied Crimea, were captured on Russian state TV cameras on April 18 and spurred allegations of sanctions violations.

Violation of sanctions suspected as Siemens and Grundfos equipment were spotted at a water station in occupied Crimea

Speaking with the Danish Broadcasting Corporation, Peter Trillingsgaard, Head of Communications and Public Affairs of Grundfos, assured that Grundfos was not aware of a violation of sanctions: “We were surprised how much the majority [were], when it was announced on Russian TV, “he said, adding that the company is looking into the matter but has not yet found out exactly how the pumps in Crimea ended up.

“Despite our rather strict internal guidelines and an export control program in which our employees are trained, which is controlled by a third party and an IT system that prevents us from selling products to sanctioned people and areas, they still have is presented there. We know that we have not delivered the pumps, equipment or consulted for the project in question “, Mr. Trillingsgaard said.

He suggested that the pumps could have been sold multiple times by a Russian customer before ending up in occupied Crimea and noted that Russian customers are not bound by EU sanctions, and therefore it is impossible for Grundfos to sue in Russia against the customer.

However, according to the Grundfos representative, the company “[does] what we can to ensure that our customers do not supply the Crimean peninsula. “

How exactly does this happen? Mr. Trillingsgaard said the company checks if it sees anything “suspicious or problematic” in correspondence with the customer, and if that happens, the customer is required to make an “end user statement” that “guarantees” that the pumps won ‘I go to the Crimea.

Apparently, there was nothing in the correspondence with Grundfos’ Moscow customer that made the company suspicious of the products used in the Crimean peninsula. “If there had been, we would have acted,” Trillingsgaard said, arguing that the company has done everything it can to comply with the sanctions.

What will the company do in response to this violation of sanctions? Mr. Trillingsgaard promises that during 2021 Grundfos will add export control clauses to all of its contracts and stop doing business with the customer which turned out to be a “getaway” to occupied Crimea.

Which customer could it be? Mr. Trillingsgaard doesn’t mention it in the interview, but Russian media say the company that installed the pumps near Simferopol is VDK, located in the Special Economic Zone “Technopolis Moscow”. But it is worth remembering that Grundfos is no newcomer to Russia: in 2015, the Danish company had opened a pump factory in the Moscow region. Therefore, the technology and experience of using Grundfos pumps have been around for some time.

Siemens case repeated

This latest case of violation of sanctions recalls the 2017 saga with Siemens turbines.

How Siemens chose to ignore the obvious. An investigation into the breaking of sanctions in the Crimea

Hence, Siemens said it had no idea that the turbines it sold to a Russian customer were destined for Crimea and that it had been duped by its partner, who sold the turbines to Crimea in breach of the contract. However, as we reported back then, Siemens needed to ignore many flashing red lights in order to “not know” what was really going on, and therefore is, at the very least, guilty of criminal negligence.

The German firm then attempted to sue its Russian partner in Russian courts, with predictable negative results. This story points to an obvious weak link in EU sanctions regulations: Russian retailers. And in this case, it’s unclear how Grundfos’ export control clause will differ from the end-user statement – neither is inapplicable, as Russian courts are unlikely to take a serious stance on Crimean sanctions violations.

So the question is: if EU sanctions were and continue to be violated so easily, is the problem with their application or with their architecture? As it is unrealistic to expect Russian retailers, with whom EU companies can do business freely, refrain from selling prohibited goods to Crimea.

The bitter irony of Grundfos-Siemens’ sustainable water goals

Water is Russia’s last, and seemingly insurmountable, infrastructure problem in Crimea, which depended completely on mainland Ukraine prior to the 2014 occupation.

Western technology has helped Russian President Vladimir Putin solve others. Dutch firms were involved in connecting Russia and the occupied peninsula via the Kerch Strait, and German technogiant Siemens sent high-capacity gas turbines to the Crimea. The latter allowed the occupation authorities to finally end the disruption regime and provide stable food for the inhabitants of Crimea – as well as the military bases that are now growing like weeds on the strategic outpost.

Yet there doesn’t seem to be a sustainable solution to the water problem. The arid peninsula receives enough rain to meet the needs of Crimean residents before 2014, but not enough to support Russia’s rapidly expanding agriculture, military infrastructure, and the relocation of ethnic Russians to the peninsula.

Thus, the Siemens-Grundfos pumps, produced under a partnership to “address global water challenges”, were of particular value to Vladimir Putin, who virtually cut the ribbon on the new water pipeline station near Simferopol. Similar efforts to procure water have been made across Crimea: a Russian state program has set the goal of tackling the last remaining obstacle to fully absorb Crimea into Russia.

However, it is a bitter irony that the two companies’ environmentally friendly technology is helping to promote an environmental catastrophe in Crimea. There is only so much groundwater that it can be pumped sustainably. Subsequently, groundwater depletion inevitably occurs, leading to further desertification of the arid peninsula, salinization of the soil and destruction of ecosystems.

The concerns of the Crimean occupation authorities are about turning the peninsula into a military base, not sustainability. And thus, Grundfos and Siemens’ innovative equipment will only serve to prolong the environmental agony of Crimea, supporting the rule of Russia’s authoritarian leader in the land it is transforming once again into a military stronghold to be used against the West.

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Tags: Crimea, Denmark, EU sanctions against Russia, Grundfos, sanctions, Siemens