Friday, February 23, 2024

[Investigation] Belgium worried about jobs if EU blacklists Russian steel baron

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Belgium is weighing up concern for lost jobs at home with lost lives in Ukraine as it ponders relations with Russia’s royal-friendly richest man.

When Ukrainian MP Alex Goncharenko buttonholed Belgian prime minister Alexander De Croo at the Munich Security Conference (MSC) last month, the Ukrainian urged him and the EU to blacklist the Russian steel tycoon — Vladimir Lisin.

  • NLMK majority-shareholder Vladimir Lisin (l) speaking at an industry congress with Russian president Vladimir Putin in Moscow in 2018 (Photo: kremlin.ru)

“He [De Croo] said the problem is that Lisin is responsible for a lot of jobs in Belgium. And that these jobs are in areas which are already deprived. But he understands the situation and Belgium’s veto on sanctioning Lisin is temporary,” Goncharenko told EUobserver.

Lisin’s NLMK group owns two factories in southern Belgium, which employ about 1,200 people.

His Cypriot holding firm also hired a Belgian prince.

When asked by EUobserver, De Croo’s spokesman confirmed almost every word of Goncharenko’s version of their MSC conversation.

But the last line on “Belgium’s veto” was “phrased differently,” De Croo’s spokesman said.

“The PM understands the situation ‘and Belgium is committed to align with EU sanctions as soon as possible and no later than the winding down period agreed’,” was the correct version, his spokesman said.

Existing EU sanctions include a ban on imports of some grades of Russian steel, with “winding-down” exemptions for old contracts valid until October 2024.

This what De Croo’s office was referring to.

But it’s a far cry from what an EU asset-freeze and visa-ban would mean for Lisin’s European empire, which also includes factories in Denmark, France, and Italy.

That’s what hawkish EU countries and Ukraine first proposed late last year, according to three diplomatic sources.

EU institutions, which draft sanctions lists, never took it forward after learning that Belgium as well as a handful of other EU countries were against it, diplomats said.

Belgium’s EU embassy said it couldn’t comment because internal sanctions talks were “highly confidential, for obvious reasons”.

But it has form, after previously speaking up against a proposed EU ban on Russian diamonds, which would have cost its Diamond Square Mile in Antwerp some 10,000 jobs.

Denmark said it “could not confirm or deny” if it had ever blocked EU action against NLMK along with Belgium.

France and Italy declined to comment.

The EU’s 10th round of sanctions, imposed on 25 February, also didn’t designate any new Russian oligarchs.

In fact, Australia is the only Western country to have blacklisted Lisin so far.

It did so in April 2022 “on the basis that the [Australian foreign] minister was satisfied that he [Lisin] is, or has been, engaging in an activity or performing a function that is of economic or strategic significance to Russia,” an Australian foreign service spokesperson said.

But despite the European resistance, Kyiv is still piling on pressure for Lisin to be listed in future EU measures to help hinder Russia’s war effort.

“Ukraine has evidence that NLMK supplied Uralvagonzavod [a Russian tank-factory] and Russian state-owned company Sever, which is involved in production of Russian nuclear weaponry. I’d be only too happy to go to court to prove it if Mr Lisin wanted to sue me,” Goncharenko said.

“Russia has a war economy and NLMK is its largest metals supplier, so where else will [Russian president Vladimir] Putin get the steel and so forth for his military-industrial complex?,” he added.

Vladislav Vlasiuk, an adviser on sanctions to Ukrainian president Volodomyr Zelensky, told EUobserver: “Lisin was always communicated with both Belgium and the UK for being blacklisted. He is one of the primary targets for the Ukrainian government”.

Ukraine shared classified intelligence with EU countries on Lisin’s links to Russia’s military-industrial complex, Vlasiuk said.

“We supplied some evidence and now it’s up to them to decide,” he said.

“Any disruption of supply chains of metals to Russia would help,” Vlasiuk added.

Russians deny

NLMK denies the accusations.

“NLMK does not supply Russia’s Uralvagonzavod tank-making factory and does not have any contractual relations with this company,” its lawyers told EUobserver in a statement on 1 March.

“NLMK has never supplied products for military intended purposes in Russia. The Russian operations of NLMK are not capable of producing steel intended for military application,” its PR office added.

That being said, it did sell steel to Russian ballistic-missile manufacturers between 2014 and 2019 — five years after Russia’s first invasion of Ukraine.

Those contracts were documented in an investigation published in leading European media last year.

But this was an “attempt to paint minuscule sales of civilian-steel grades as a meaningful relationship with the military-industrial complex, which is essentially an inaccurate and manipulative presentation of facts,” NLMK told this website.

“At present, no products are supplied to these enterprises,” it added.

There is no way to check via open sources if this is true because Russia stopped publishing details of defence procurement contracts in the run-up to the war.

Lisin also called Putin’s invasion “impossible to justify” and voiced “compassion” for Ukrainian victims in an internal letter to NLMK employees last March, leaked to the Reuters news agency.

But for all his contriteness, NLMK has not entirely severed ties with Putin’s security sector.

According to one contract found by EUobserver, NLMK supplied steel to Federal State Institution Correctional Colony No. 1 of the Department of the Federal Penitentiary Service — Kostroma Region [CC-1] until December 2022 — nine months after the invasion.

And Russia is “highly likely” using prisoners to manufacture arms and ammunition, according to a UK intelligence assessment published in January.

But when asked if there was a risk its steel could end up being used that way, NLMK said the penal contract concerned “steel for the production of household appliances and instrument transformers, which are, to the best of our knowledge, the main specialisation of CC-1”.

Royal friend

The 66-year old Lisin was born in Ivanovo City, north-east of Moscow, and started out as an electrical fitter in a Siberian coal mine.

He rose to be Russia’s richest man, with a personal fortune of $23.3bn (€21.8bn), according to Forbes magazine.

And he now lives in a Scottish castle, owns a super-yacht, and moves in Europe’s highest circles, as well as providing thousands of blue-collar jobs.

Belgium’s Prince Lorenz, who is married to Princess Astrid (fifth in line to the throne), was a director of Lisin’s holding company, the Cyprus-based Fletcher Group Holdings, until March last year, according to its documents in the Cypriot corporate register.

Lisin took on the prince, who is a banker, for his financial know-how rather than as a lobbyist, the Russian businessman’s personal representatives told EUobserver.

“Mr. Lorenz Habsburg-Lothringen is an experienced finance professional and we understand that it is the main area of his professional expertise, that is why he became a director at our parent company in Cyprus for five months in 2021-2022,” they said in a statement.

The prince “was not involved in any manner in the operations of NLMK or its foreign subsidiaries”, they added.

But if the war has not yet cost Lisin his EU factories, it has already made him more toxic in less formal ways.

“HRH Prince Lorenz resigned from his [Fletcher Group] position on 8 March 2022. This resignation took effect on 11 March 2022,” the prince’s entourage told this website.

“The decision to resign was indeed motivated by the new geopolitical situation in Europe and Russia’s invasion of Ukraine,” it said.

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