An Investigation Reveals a Secret Trade Between Europe and the Assad Regime With the Help of Russia

An investigation by a group of organizations and researchers revealed that Europe secretly imported large quantities of Syrian phosphate through fake companies linked to a Russian company close to the Kremlin and operating in Syria, which gives the Assad regime and the Russian oligarchs a lifeline at a time when they are subjected to extensive Western sanctions.

Trade records showed that Spain, Poland, Italy, and Bulgaria have recently started importing Syrian phosphate. Serbia and Ukraine, which also apply European Union sanctions on the Assad regime as part of their agreements with the bloc, are major buyers of Syrian phosphate.

The investigation indicated that the arrival of phosphate from Syria to Europe is achieved by exploiting loopholes in the application of the economic sanctions imposed on the Syrian regime and on businessmen and companies close to it, amid fears of using the same method to circumvent Western sanctions against Russia, which raised many questions about the responsibility involved in this context.

 

Secret Trade

Syrian phosphate is making its way to Europe, despite sanctions imposed on the Syrian regime. This is revealed by an investigation conducted by the Organized Crime and Corruption Reporting Project (OCCRP), Lighthouse Reports, and the Syria Investigative Reporting for Accountability Journal (SIRAJ), in partnership with journalists in seven countries.

The investigation revealed that Europe is secretly importing large quantities of phosphate from a Russian company and the Syrian government for the production of fertilizers, in light of sanctions against Russia and high fertilizer prices globally, according to the Guardian newspaper on June 30, 2022.

The EU imposed its sanctions on the Assad regime in August 2011 in response to its forces' suppression of popular protests and the violations it committed against Syrians.

The sanctions targeted government officials, companies, and prominent businessmen who benefited from the war economy through their relations with the regime's government.

The authors of the investigation tracked shipments of phosphate from desert mines in Syria to fertilizer factories in Europe, using open-source analysis, financial documents, and commercial data from dozens of countries.

Essentially, an analysis of dozens of cruises revealed that vessels carrying phosphate deliberately hid from the International Maritime Organization's AIS tracking system as they headed toward Syria before reappearing on their way to Europe a week or two later.

Companies and government agencies in those European countries said about the imports that they did not violate the sanctions because Syrian phosphates are not specifically prohibited, nor do they deal directly with people and companies subject to Western sanctions.

EU sanctions against the Assad regime do not explicitly prohibit the import of Syrian phosphate, but it prohibits the conclusion of deals with the Minister of Oil and Mineral Resources in the government of the regime, who is the main responsible for the phosphate sector.

In May 2021, a Comoros-flagged vessel called Kubrosli Y disappeared from electronic ship tracking systems off the coast of Turkiye and a week later appeared near Cyprus before continuing to dock in Ukraine.

The tracking data gives no indication of Kubrosli Y's whereabouts during that week, but photos published by a Syrian government news agency two days before the vessel appeared again, inadvertently revealed the image of the Syrian Minister of Oil and Minerals Bassam Tohme standing inside the port of Tartous next to the Kubrosli Y vessel, which was anchored on a pier in the port that was built specifically for phosphate loading.

For example, in January 2022, the Honduran-flagged Sea Navigator vessel disappeared from international tracking systems off the coast of Cyprus. When it reappeared a week later, it was headed north to Europe.

 

Economic Lifeline

Observers believe that the involvement of European companies in the Syrian phosphate trade may lead to the spoiling of Western sanctions on the Assad regime, especially since phosphate exports provide an economic lifeline for its military machine, on the one hand. In addition to transferring European money to the key partner of the Assad regime in the phosphate trade, Russian billionaire Gennady Timchenko, who is considered one of the wealthiest men in Russia and an old friend of Vladimir Putin, on the other hand.

According to the investigation, Timchenko controls all Syrian phosphate resources through a group of his companies.

In 2018, the Syrian General Company for Phosphates and Mines, owned by the Ministry of Oil and Mineral Resources, handed control of the largest phosphate mines in Syria to the Russian Stroytransgaz Company, owned by Timchenko.

The United States imposed sanctions on Stroytransgaz in 2014 after Russia annexed Crimea. So Timchenko distanced himself from his company's operations in Syria, which date back to the early 2000s.

In 2016, the top employees of Stroytransgaz took over a shadowy Russian logistics company and renamed it STG Logistic Stroytransgaz. The Moscow-based company runs the business for anonymous clients, and most importantly, it manages phosphate exports to the Syrian regime in return for 70% of the proceeds from that trade.

The mines belonging to the Russian company produce about 650,000 tons of phosphate annually, although the contract allows for the drilling and extraction of 2.2 million tons annually, according to Syrian officials.

Once extracted, the phosphate is shipped either by road convoy or by train to fertilizer factories near Homs or directly to the port of Tartous.

In 2018, Timchenko's parent company sold a subsidiary called Stroytransgaz STG Engineering to two Moscow-based shell companies.

Soon after, the company won contracts to operate the Tartous export port and fertilizer factories, which is a Syrian state sector, allowing companies using the Stroytransgaz name to control the entire phosphate export chain from Syria.

Stroytransgaz now denies any connection to these companies, but Syrian and Russian company records show that senior Stroytransgaz officials played critical roles in forming these companies, including former Stroytransgaz director (Igor Kazak) and current employee of Timchenko Corporation (Zakhid Shaksuvarof).

Before the revolution in 2011, Syria was one of the world's largest exporters of phosphate, and the industry is collapsing due to the ISIS takeover of the area around the mines in Palmyra in 2015.

Russia sent its forces to Syria that year and helped the Assad regime regain control of that area. The Syrian government returned the favor to Putin by handing over generous contracts to Russian companies working in the phosphate sector, one of the country's most profitable sectors.

Over the past years, the Assad regime granted Russian and Iranian companies significant economic privileges, such as oil and gas exploration, phosphate extraction, port management, and other vital resources in the country.

From the point of view of the Syrian researcher Muhammed Elsukkeri, the Syrian regime still has a high ability to circumvent Western sanctions in various ways.

He added in a statement to Al-Estiklal: "The regime invests in the international regional political and economic situations in order to undermine the sanctions issued by the EU or the American administration, which would secure economic support for its government and its security and military services."

"The American exceptions, which were publicly granted to the Arab gas pipeline several months ago, are the result of hidden exceptions that were previously granted to a number of European countries," Mr. Elsukkeri pointed out.

"This type of trade confirms the fragility of the economic sanctions imposed on the Syrian regime, as there are still constantly expanding margins, according to which the regime moves in order to evade the sanctions, with basic support from Russia," he explained.

As for the European and American reaction to this secret trade between several European countries and the Assad regime, Mr. Elsukkeri concluded that "it will depend on the denunciation of such actions by those European companies, or it may be justified for the sake of the public interest, especially in the midst of the Ukrainian war, which contributed significantly to the impact on trade, supply lines, and resources."

 

Breaching Sanctions

Syria is Ukraine's largest supplier of phosphates, despite Kyiv's strained relationship with Damascus since the Assad regime supported the invasion of Crimea in 2014, as Ukrainian fertilizer companies used to buy directly from the Syrian regime, but since imports resumed in 2018, trade has been passing through a network of mysterious new businesses.

Citing customs documents and trade data, the investigation stated that Ukraine imported $30 million worth of Syrian phosphate over the past four years.

Most of the Syrian phosphate arrives in Ukraine through the port of Nika Tera, owned by the Ukrainian oligarch Dmitry Firtash, who is close to the Kremlin and controls the largest producer of phosphate fertilizers in Ukraine, Sumykhimprom.

Although Sumykhimprom is technically state-owned, it is run by a close business partner of Firtash, according to a Radio Free Europe/Radio Liberty investigation.

A 2018 investigation by Politico found that Greece was buying Syrian phosphates, angering members of the European Parliament, and those shipments subsequently halted.

Serbia is also a major customer of Syrian phosphates, as the investigation stated that Serbia had imported $72 million since 2017.

Recently, EU companies also started repurchasing Syrian phosphates, with Italy resuming trade in 2020, while Bulgaria started that trade in 2021.

In January 2022, Spain and Poland began importing Syrian phosphates. Poland imported $900,000 worth of imports, while Spain imported $37,000 worth of imports, according to trade data reported by the United Nations.

It is noteworthy that two commercial companies run by a Lebanese businessman named Afif Nazih Auf arranged the entry of most of the Syrian phosphates into the old continent through Romania, according to what the investigation revealed.

European demand for Syrian phosphate is likely to grow because the war in Ukraine has disrupted phosphate and fertilizer markets and raised their prices, according to European importers and industry analysts.

In addition, phosphate is essential for crops and animal feed, and European agriculture depends on the global phosphate industry, which is estimated at about $55 billion.

On its part, the European Commission said that it is up to each individual country to decide whether its imports of Syrian phosphates are in breach of sanctions.

Meanwhile, the Ukrainian, Bulgarian and Serbian authorities confirmed that they viewed the matter as legitimate trade, while the Italian authorities refused to comment on the journalists' request.

The sanctions expert Julius Seidenader said: "Syria's phosphate trade revealed how Europe's patchy enforcement of sanctions and difficulty closing loopholes could undermine its recent sanctions on Russia over Ukraine."

"Russians have become masters of layering and hiding assets in shell companies, which makes it very difficult to make sanctions work, whether in Syria or Russia," he added.

It is noteworthy that Syria ranks fourth in the world with reserves estimated at about 3 billion tons of phosphate, but this wealth was not well invested before 2011, as production quantities did not exceed 3 million tons annually.

This made it covered by Iran and Russia, given that this wealth is enormous, in addition to other uses of phosphate because it contains radioactive materials, such as uranium, thorium, and molybdenum, which are materials used in the manufacture of nerve gasses and weapons of mass destruction.