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Kremlin’s “Free port Vladivostok” turned port into nightmare

Nov. 17, 2015 at 08:27 by Mikhail Voytenko in Opinion

All Kremlin’s projects and reform attempts end up just like this one

Russia is understandably attracting a lot of attention nowadays, after all its’ recent extravagancies, starting from annexation of the Crimea Peninsula. Experts and politicians are in a sweat trying to figure out what’s behind Mr. Putin’s policy and dammit, what’s all about, anyway. However, understanding Mr. Putin and Russian ruling regime behaviour is much easier than say, understanding quantum theory, because dictatorships are very primitive in their nature, being all alike in their origin, genesis and inevitable disintegration. There is no strategy or far-reaching plan to restore great Russian or Soviet empire in Mr. Putin’s head, he’s too primitive for that. All he and his mob are after is power, preservation of their power and the regime they built. That’s why Kremlin doesn’t have strategy, it’s tactics and tactics only, combined with utter non-professionalism, absolute irresponsibility and bewildering inanity. If one accepts this as a fact and fundamentals of Kremlin decision-making, one will have no difficulties in understanding Kremlin policy and forecasting its’ next moves.
In order to keep the power, Putin and Kremlin made out of Russian economy a maze of feudalistic relations, connections and dependencies, where everyone knows his place and obligations, but in exchange for obedience, he gets a right, a license to rule his domain as he finds most suitable and profitable, both corporate and personally. Every State ministry or Agency or Service is a thing in itself, be it police, or immigration (Border Guards), or taxation, or epidemic disease control.
Russia is sinking into a final crisis, which will destroy Russia, as it destroyed, not long ago, Soviet Union. Kremlin is desperately searching for ways to heal the economy without deep, fundamental reforms, for some magic project, which will prosper and bring revenues, lessening oil dependence, so-called “resources curse”. Again and again, Kremlin is suffering utter defeats, projects fail, with minimum losses at best, not to mention profits.
Here’s one example of such a failure, one out of many. Recently, Mr. Putin proudly declared, that Russian Far East port Vladivostok will be a “free port”, with maximum privileges both for shipping and for foreign investors. An extract from official media:

Vladivostok begins life as a free port
October 12, 2015 Alexander Korablinov, RBTH
The federal law that granted the Russian Far Eastern city of Vladivostok free port status came into effect on October 12. The free port status initially provides administrative, customs and tax benefits to investors in the free trade area, which also includes 14 municipalities in the Primorye Territory.


And here is the bitter truth from locals, stevedores and agents, several weeks later:

A free port status implies maximum simplification of all the formalities and reducing time and papers, required to get a free practice, to an international level, i.e. an hour at most, with “one window” practice. Nothing of the kind happened.
They made Customs round clock, but there is only one night officer, from 0800 pm until 0800am, he’s overstrained and can’t clear all vessels filed for clearance. When clearing for departure, customs officials don’t board vessels any more, but paper work in office takes at least three hours per vessel, while border guards (immigration) board vessels only after customs complete their formalities, so taking all around, vessel has to wait up to 6.5 hours from the time cargo operations are finished until setting sail.
Fishery and commercial ports of Vladivostok, though situated in the same harbor, each has different, not connected, customs branches, and this separation makes relocation of the vessel from one port to another a sheer nuisance and a nightmare. Vessel which has to move from one port to another, has to first, get clearance in the same way it is cleared for departing port for international voyage; second, it has to get clearance to dock in another port, as if it arrives from abroad, but it’s not all. Moving from one port to another (across the harbor, actually) is considered by the authorities as a cabotage, coastal voyage, so the vessel has to get all respective papers and permissions. All these movements and paper works must be ordered in advance, with respective waiting in queue for customs officials.
For example, a vessel completed loading cargo in one port and had to spend 6.5 hours on formalities, to be cleared for a cabotage trip (repeat – it is actually crossing harbor, an ordinary relocation of the vessel in harbor), to dock across harbor at another berth, where 4.5 hours were wasted on another clearance.
According to Customs rules, papers on cargoes loaded in port can be processed only on the day of departure, that’s why there are always monstrous queues of agents and cargo shippers in Customs office. Officers are no able to handle them all, causing quite often dead freight.
According to Customs rules, ships’ agents are banned from Customs office access during night time, from 0800 pm until 0800am. Agents contact Customs officers only via phone, all papers are handed over at the entrance, at the front door, without stepping a foot on a sacred Customs office territory. If any questions or problems arise, agent can settle them, or try to settle, only by phone.
Border Guard banned all vessels waiting for berth from outer anchorage, they are permitted to anchor only on inner anchorage. When there is no free space, vessels have to barrage in high seas outside 12-mile zone, notwithstanding weather conditions.
All the formalities required for arrival/departure of cruise liners take some 8-9 hours, while the stay itself is of 12 hours duration only.


Does it look like a “free port” and investor’s haven to you? All Kremlin’s projects and reform attempts – I repeat, all of them – end up just like this one here, it’s not just a failure, situation is becoming worse than it was before the “reform”. It doesn’t mean of course that Mr. Putin doesn’t want reforms to success. But that’s the beauty of the system he and his friends built. It’s very simple – say, Customs is an organism in itself, it’s a fiefdom, which vowed obedience to the sovereign in exchange for unrestricted and uncontrolled ruling inside the fiefdom. Customs obeys to Kremlin’s orders, accepts new law or reform, but twists it so, that it gets more power than it had before, and there is nothing Kremlin can do about it, if Kremlin wants to remain power.
Anyone willing to do business in nowadays Russia, is advised to be real careful, and to arm himself with newest navigational map with latest soundings, to avoid groundings or collisions. Even so, Russia may be of interest as a place to make some quick bucks, but not as a long-term investment aspiration.

Voytenko Mikhail
November 17, 2015

Kremlin’s “Free port Vladivostok” turned port into nightmare

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