Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Debt Spat Puts Paris Embassy In a Lurch




PARIS -- Russia's embassy in Paris, chafing under a French court order that has frozen its bank accounts since mid-May, is tightening its belt and improvising ways to pay bills and salaries.


With all assets blocked at the request of a Swiss-based firm fighting to recoup debts from Moscow, Russia's diplomatic missions in France are surviving on the trickle of income they receive from the sale of visas and other services.


"We are living from hand to mouth. We have to come up with something new every day," said Vladimir Pozdnyakov, the No. 2 diplomat at the embassy.


The embassy's accounts, holding around 2.7 million francs ($380,000), were frozen May 18 under a "holding measure" issued by a judge following legal action by the Swiss trading company Noga.


The firm says Russia owes it some $63 million from oil-for-food deals in 1991 and 1992.


Russia denounced the seizure of funds as a violation of the Vienna convention governing diplomatic status, but the court ruled that Moscow had waived its sovereign immunity in the Noga contracts. An appeal is due to be heard Aug. 31.


In the meantime, Pozdnyakov said the embassy had reached a private agreement with banks to tide it over, but he declined to provide details.


He denied that Moscow was sending money in diplomatic pouches, which are not subject to customs controls, and said Russian officials had been forced to adjust their lifestyle to the austerity measures.


The embassy has postponed the renewal of its car fleet, and maintenance work on the imposing building in Paris' 16th arrondissement f which still features a hammer and sickle on its side f has been delayed.


The ambassador has also reputedly been forced to cut back on lavish receptions at his private residence in the smart seventh arrondissement, a stone's throw from the headquarters of Prime Minister Lionel Jospin.


Whether real or exaggerated, these material concerns probably pale in comparison to the damage to the ambassador's pride of being treated like a common swindler.


"Our prestige suffers," said Pozdnyakov. "It is not only the humiliation that counts. It is the very principle of the immunity of diplomatic missions that is in question."


Noga also tried this month to seize a Russian tall ship docked in the western port of Brest, but after a week of legal activity, a court ruled that the ship's owner, the Murmansk Technical University, was not accountable for Russian debts.


The incidents have hurt already chilly relations between France and Russia, which has urged Paris to unblock the accounts to avoid further damaging ties.


While a French judge ordered the release of $180 million in Russian Central Bank assets seized in May, he upheld the freeze affecting the embassy, Russia's commercial representation and its mission to UNESCO, the United Nations cultural body.


The reasoning behind the decision is that unlike the assets of a central bank or university, these accounts belong directly to the Russian state.


Embarrassed French officials have told Moscow that they cannot interfere with independent judicial decisions.