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30/09/2016

Ukraine says Daimler-Kamaz deal contradicts the spirit of EU sanctions

Europe's East

Ukraine says Daimler-Kamaz deal contradicts the spirit of EU sanctions

BPM-97 multipurpose APC [Kamaz catalogue]

EXCLUSIVE: Ukraine has officially complained to the European Commission that a joint venture by Germany’s Daimler and Russia’s Kamaz, a producer of trucks, but also of a large variety of military vehicles, contradicts the spirit of EU sanctions against Russia, EurActiv has learned.

On 24 February, the Commission announced it has approved the creation of a joint venture by Daimler AG, of Germany, and Kamaz OJSC, of Russia. But in fact Kamaz is a firm primarily dealing with military equipment. A catalogue of some of the military production of Kamaz can be seen here.

>> Read: Brussels blesses merger between Daimler and Russian military vehicle producer

The Commission doesn’t find that the merger contradicts the the sanctions adopted by the EU vis-a-vis Russia, in the context of the annexation of Crimea and the Ukraine crisis.

These restrictive measures include an embargo on the import and export of arms and related material from/to Russia, covering all items on the EU common military list.

“There is not a prohibition on the formation of mergers or joint ventures by EU entities where the merged entity operates in Russia and is active in the area of dual use goods and technology for military use or to Russian military end-users,” a Commission official told EurActiv. He all but confirmed that EU policies prohibit selling weapons to Russia, but allow those to be produced by EU firms working as joint venture in Russia.

EurActiv was informed that Ukraine had consequently protested against the merger. According to the official note, Ukraine doesn’t question the legality of the merger from the point of view of EU competition law, but finds that it contradicts the spirit of sanctions.

“In addition, the decision will be actively exploited by the Russian propaganda campaign to discredit the resolve and effectiveness of the EU efforts to oppose Russia’s course toward Ukraine by means of economic pressure,” the Ukrainian note says.

A more vigorous and thorough examination of all aspects of the proposed joint venture should be carried out by the competent EU institutions and its member states, Ukraine suggests. Kyiv also warns the Commission against creating “a false impression of appeasing or encouraging the aggressor in its illegal and immoral actions against Ukraine”.