Blood vodka? Russian firm opens distillery on EU doorstep

"See: Beluga Montenegro, look — produced, bottled in Montenegro. People around the world will be able to read it because their market is USA, France, Italy … everywhere in the world," he added.

Beluga vodka is no longer sold in the EU after it banned imports of Russian alcohols last April.

The EU did so in reaction to Russia's bloody massacre of Ukrainian civilians in the town of Bucha, putting a question mark over Abazović's "pride" in the Russian brand.

The vodka import ban is meant to be so strict that national customs rules now block individual EU visitors to Russia from bringing back even a single bottle for their own consumption.

And the EU Commission told Reuters it was illegal when Russian president Vladimir Putin mailed his friend and former Italian leader Silvio Berlusconi 20 bottles of Russian vodka for his birthday last year.

But if Putin was trolling EU sanctions, Beluga Montenegro risks taking the mockery to another level.

The Nikšić plant is to produce 30m bottles a year, worth some €500m in export sales, according to Montenegro's government.

It employs 200 people, but this will double to 400 by 2025.

And it makes no secret of its Russian links.

The Moscow-based Beluga Group owns the distillery via two Montenegro-based subsidiaries — Noblewood Adriatic and Nekton.

Beluga Group made the investment five months after the Bucha sanctions in a clear effort to work around the embargo.

And Wednesday's launch was personally attended by Russian businessman Aleksandar Mechetin, who was CEO of Beluga Group until December and who still owns 39 percent of its shares.

Mechetin also met Abazović in Podgorica in February to discuss the project.

Loophole?

Montenegro, an EU candidate country, has formally aligned itself with Russia sanctions.

But neither Beluga Group or Mechetin have been blacklisted by the EU or Montenegro because the vodka ban applies to the whole sector rather than individually named companies or people.

And for Abazović that meant everything in Nikšić was above board.

"The fact that Russia is under sanctions does not mean that all companies and their residents are under sanctions," he said on Wednesday.

"There is a list of companies and individuals that are under sanctions. We also have Russian tourists in Montenegro. We cannot stop those who are not under sanctions from entering or doing business in Montenegro", he said.

The Beluga Montenegro launch comes amid an EU crackdown on Russia sanctions circumvention.

But if Putin was not allowed to send vodka to Berlusconi from Russia, the EU Commission was less sure whether Mechetin could make it outside Russia and send it to EU clients.

"Declaring imports of Russian-origin vodka as originating in another third country violates the prohibition to indirectly import these goods," it said in a statement, when asked about the Nikšić project on the EU doorstep.

"It is also prohibited for EU operators to circumvent this prohibition by, for instance, setting up schemes to disguise the actual origin of these products," it added.

But it declined to say if Beluga Group's new factory fell foul of the rules or if its work-around was technically legal.

27 EU decisions

So it will now be up to the 27 individual EU states' customs authorities to make the call instead, the EU Commission noted.

And that means Russia-friendly EU countries could open the door for Beluga to sell its booze into the borderless single market in future.

"It is the EU member states who are responsible for assessing cases of possible circumvention," the commission said.

"The member state, which might import the vodka (from Montenegro, for instance), should assess whether this is a case of sanctions violation," it added.