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. Last Updated: 07/27/2016

FSB Grounds a Good Business

Members of the Federal Security Service, or FSB, searched the offices of East Line Airlines on Sept. 19. East Line is a freight forwarder and the owner of Domodedovo Airport. All of the company’s documents on freight forwarding were seized. FSB operatives began checking its planes. Two flights bringing cargo from China turned around and attempted to fly back to China. But they didn’t succeed; due to a lack of fuel, the planes were forced to land in Nizhny Novgorod.

This particular FSB raid on East Line is a significant event. The company first appeared at Domodedovo in 1993 when the airport was controlled by criminal groups. After drawn-out battles, the bandits decided to work the same schedule as the airport’s ground crews: one day on, three days off.

But in those days, the cargo handlers at Domodedovo weren’t loading or unloading anything. They would simply let a client know that his cargo would rot if he didn’t give a cut to the bandits on duty that day. Incoming cargo planes were actually unloaded by homeless people paid at the going rate.

Over seven years, East Line managed to clean up this state of affairs. How? Simple: It built new sites within the Domodedovo complex that the bandits couldn’t control. East Line built two cargo terminals, a fueling complex, a hotel and a facility for feeding flight crews. It rebuilt the airport itself, turning it into the nation’s most modern airport. The company pumped $300 million into the business.

In this country, shipping cargo by air is often associated with the shipping of contraband goods. Customs fees are so high that almost any company that wants to remain competitive can do so only by, say, indicating that a shipment of Italian boots actually contains some other type of cargo. Kirill Kabanov, a former FSB officer who worked on customs issues and now works with the state anticorruption committee, says everyone in the cargo business knows what the unofficial customs fees are. He places the figure at $20 per kilogram of any cargo. Of those $20, $6 ostensibly go to the government; the remaining $14 reportedly is divided between customs agents, freight forwarders and their official protection. Multiply that $14 by 40 tons of cargo for every plane that flies, and by eight to 10 flights every day, and you get an idea of the size of the nation’s customs volume.

It’s hard to conduct a business legally in this country — few can survive by doing so. Many businesses decide to bend the rules. But if a business does that, it can easily fall prey to competitors who want to squeeze it out of the market — or to members of law enforcement who want a cut themselves.

There are few freight forwarders in this country, and only one of them — through the efforts of East Line chief Dmitry Kamenshchik — has bought an airport, cleaned it up of bandits and invested $300 million in it. But the more you invest in your business, the more vulnerable you are to pressure. Now East Line’s activities are paralyzed, and its cargo planes aren’t flying. Give us two or three more such FSB operations, and not only will foreigners stop investing in Russia; Russians will stop, too.

Yulia Latynina is the creator and host of "The Ruble Zone" on NTV television.