Relations with Russia undermine San Marino's efforts to penetrate the European financial market

2024-08-13 15:32:00, Kosova & Bota CNA

Relations with Russia undermine San Marino's efforts to penetrate the

San Marino, an independent landlocked republic surrounded by Italy, has come under scrutiny due to announcements this year highlighting ties to Russia. Although the country's officials deny any wrongdoing, European Union regulators are warning that San Marino's financial services sector could be a backdoor through which Russia's illicit funds flow, according to VOA correspondent Henry Wilkins. penetrate the European trade bloc.

The company 'Ala Cucine' manufactures custom kitchens in San Marino, a small sovereign state located in the central part of Italy. Its director, Lorenzo Arcangeli, says that the company is looking forward to gaining full access to the lucrative European Union market. But currently, trading with customers in the EU means dealing with increased bureaucracy.

"There are added costs. Both parties, the customer and the company, see it as an obstacle. It is not easy to explain the documentation to a European client,” he says.

San Marino producers are preparing to gain access to the European Union's common market, which is also the world's largest trade bloc, through an agreement that could enter into force at the end of this year. But the financial industry is not included in this agreement.

Western media have often pointed to San Marino's ties to Russia recently. European Union officials have expressed concern that the country's failure to meet certain standards of financial regulation could open a backdoor for illicit Russian funds to infiltrate the European Union.

In April, The Economist magazine described San Marino's friendship with Russia as "alarming" and "unusual". She announced that this country has appointed Frenchman Emmanuel Gout, who has deep ties to the Kremlin, as its ambassador. Mr. Gout has not declared that he also has Russian citizenship.

A San Marino official told VOA that the article's claims are false.

"The article is not only inaccurate, but it tries to sell a peace, and I ask them, who paid them to do this? Because the assessment was not useful for San Marino, all these suspicions spread everywhere,” says San Marino's Consul in Great Britain, Maurizio Bragagni.

The Economist magazine in its article also writes that the honorary consul of San Marino in Moscow until February was Vladimir Lisin, who according to Forbes magazine is the third richest citizen of Russia.

In response to Mr. Bragagni's comments, The Economist's Europe editor told VOA that "what the magazine article says stands."

Contrary to its traditional policy of neutrality, San Marino aligned itself with states that condemned Russia's attack on Ukraine at the United Nations in March 2022.

Russian economist and politician Dmitry Potapenko says that since then relations between San Marino and Moscow have deteriorated.

"Relations have changed, they are now more tense. Will they escalate further and will the Russian Federation use San Marino to evade sanctions? I don't believe it," he says.

But analysts say the European Union's banking authorities have reason to scrutinize San Marino's application for greater access to the bloc's financial sector.

National security, democracy and anti-corruption expert Jonathan Katz from the Brookings Institution says that these doubts should be addressed.

"If the EU raises it as an issue, then it is about serious issues that they have researched. "Maybe it's unusual for San Marino's leaders to feel this pressure because they don't get much global attention on such issues, but that doesn't matter," says expert Katz.

While manufacturing companies such as that of entrepreneur Arcangeli are eagerly awaiting facilities to gain full access to the European Union market, another small European state, Monaco, abandoned similar negotiations with the EU last year after European regulators expressed concerns about his financial practices.