CRIMEA – PATH FROM THE BLACK SEA PEARL TO A WASTELAND



Russian annexation has cut off the Crimea not only from the mother Ukrainian territory, but from the whole world. For a few years the largest health resort center in the Black Sea coast has turned into a zone isolated by barbed wire, the perimeter of which is into the process of economy decay, wilting of ecology and agriculture as well as constant outflow of human potential. But the mentioned horrific tendencies, so as welfare of the Crimea residents do not frighten the Russian regime at all, considering them as convenient tools for managing the crisis situation. The disappearance of the good old Crimea is the goal of the Kremlin, dreaming to turn a peninsula into a deserted military camp in the underbelly of Ukraine.


Crimea in captive of a long investment calm.


In 2014, an euphoria flashed in Russian society due to the annexation of the Ukrainian peninsula. This had even brought the “Krimnash” (Crimea is ours – ed.) brand new neologism to modern Russian lexicon. It was this verbal formation that became then a sort of matter of pride for the Russians, so as for some of the Crimeans who had been caught on the hook of the Russian propaganda. 


Although in next few years locals have beheld harsh reality of being in the backyards of the Russian neo-empire. In next year there were numerous claims of Russia’s top politicians and visits to the newly captured area with promises of golden mountains for the Crimea. However, the situation has turned otherwise. Projects that had explored investment flows prior to annexation, went to the status of “frozen,” and those individuals and legal entities that remained in the Crimea, have lost access to foreign high-tech products. At present, the projects that were initiated by the Ukrainian authorities – including and those that concerned the arrangement of ports in Yalta and Sevastopol – are stopped.


The imposed sanctions tangibly affect the economy and the welfare of the peninsula population. The Russian authorities, in turn, are not interested and do not intend to provide economic growth in the captured area. Needless to say: after more than four years after annexation, the amount of capital investment in the Crimea can not reach the Ukrainian level in any way. 


n the last year before the annexation, according to the State Statistics Service of Ukraine, $ 1.9 billion was invested. At the same time, fixed assets went to industry (50.1%) and construction (28%). With the arrival of the Russian authorities on the Crimean land, the volume of investment has collapsed. In 2014, the peninsula was able to attract only 697 million dollars, which is 2.8 times less than a year earlier. In 2015, Crimea received $ 784 million, and in 2016 again there was a drop to $ 638 million. It turns out that it is an impossible task to catch up, and even more so to overtake the indicators of 2013.


Although the head of the Crimea’s occupation administration, Sergei Aksenov regularly talks about “the growing interest of foreign investors to the Crimea”, 97% of all investments in the peninsula came from Russia. Two-thirds of them are federal budget money, i.e. from the pocket of ordinary Russians. Russian business doesn’t eager to have a deal with the troubled peninsula – the share of private investment has fallen by half since 2014. Even attempts to stimulate interest in the Crimea through investment measures hasn’t yield a significant result.


At the Russian Investment Forum, which was held in Sochi on February 27-28, 2017, 4 agreements were signed for a sum of 11 billion rubles. This was filed by Russian propaganda as an event that opens “incredible prospects” for the newly captured territory. In reality, the forum did not bring any real advantages to the Crimea, as the mentioned agreements remained agreements on intentions to invest, which actually have no specific basis behind.


As a result, Crimea increasingly acquired an image of a territory that is cut off from international investment. The same story was repeated at this year’s Yalta International Economic Forum (YIEF). This time, it was announced that 70 agreements have been signed for a total of 162 billion rubles. How real this amount is, it is not easy to verify, but at the same time there is no doubt that Crimean economy can hardly expect for international investments again.


In open access we can find only info about three investment projects. The Visla local company attends to invest in the development of new plowed fields, and two investors are going to implement the construction of a trade-fair and trade-exhibition complex in the village of Ukrmnoye, Simferopol district. They even took upon themselves the social obligations to participate in the development of the social infrastructure of the Simferopol district. The described achievements at YIEF look rather poor, to put it mildly,  because even these agreements can be fictitious, since the details of the transactions, as well as the names of the participants, were not disclosed. 



Against this backdrop, the economic situation in the occupied peninsula is so deplorable that many experts even sneer at it openly, poining that all the discussions of the so-called “investors” at such events boil down only to a discussion of the level of questions such as “how to improve the crossroads in Evpatoria or a transport interchange in Feodosia,” which does not correspond to the level of international economic forums at all.


Concerning the Russian business, if it invests funds in the Crimea, than either because of situational benefits for an investor or through soft coercion by bodies of the Russian federal government. Very eloquent is the fact that even large Russian retail chains, such as the Magnit or the X5, do not work in the occupied Crimea or they are reluctant to develop the peninsula market. For example, the founder of the all-Russian Magnit trade network claimed that there are two millions potential customers in the peninsula, who are too poor for the trade network standards. Such a statement once again confirms that the sanctions factor remains a significant obstacle, although the trade networks do not openly acknowledge this.



This is not surprising, because since 2014 they have seen no actual help from Russia. The Kremlin authorities don’t even try to help the Crimean companies and enterprises that were hit by a sanction. For example, the Sevastopol Sea Commercial Port, which actually went bankrupt. The Crimea Sea Ports state unitary enterprise – which is also in the sanctions list – went bankrupt and owed creditors more than 500 million rubles. In parallel, Moscow lays the blame for the current situation on the local “Ministry of Transport,” which still has no stability with chairmen post.


A third of all Crimean enterprises are unprofitable, but in some regions of the peninsula a catastrophic situation has developed. For example, 60% of the organizations of Sudak and Nizhnyegorsk district, 67% of enterprises of Leninsky district and 75% of Razdolnensky district worked with losses. And in Armyansk the level of unprofitableness reached 100%.


The Russian authorities have a number of problems in the oil and gas industry, and there have been inconsistencies with Chinese suppliers who refused to supply high-tech products in the process of building the Kerch bridge.


The described factors demonstrate the utter improbability of the thesis of Russian propaganda about the “good investment climate” in the Crimea. Investment attractiveness of the peninsula under the Russian Federation’s rule for Western investors remains extremely low, more precisely, equal to zero. Some experts say that even if sanctions are lifted, foreign investors will still not be interested in investing to the economy and infrastructure of Crimea because it has been transformed into a military base and a hotbed of arbitrariness of Russian judges. 


And this means that the annexed Crimea will continue to be a “heavy ballast” on the federal budget, and pull more and more juices out of it. The volume of federal subsidies to the Crimea in the budgets of 2018-2020 will reach 500 billion rubles, and this figure will only grow.


The “Degradation” operation.


The occupation of Crimea not only cut off the once blooming peninsula from the influx of foreign investments, but also became a harbinger of the deepest degradation of economic, social, humanitarian and environmental situation in the region.


In recent years, Crimea is experiencing a catastrophic curtailment of business activities and a reduction in the number of jobs. At the time of the occupation, 54 thousand private enterprises-legal entities and 135 thousand private enterprises-individuals functioned throughout the territory of the Crimea. As of March 2016, there were only 22,000 private enterprises-legal entities and 39,800 private entrepreneurs-individuals. It turns out that the number of legal entities decreased by 2.5, and physical persons by 3.4 times.


The authorities conducted a series of “resonant actions.” In 2016, warehousing markets and small business shopping were eliminated in Simferopol, Yalta, Evpatoria, Sevastopol. On the coastal line in Yalta, Alushta and Koktebel, a lot of tourist service facilities have been demolished, apparently as superfluous. 


According to official data of the Federal State Statistics Service, 13,500 enterprises are not engaged in economic activities in the Crimea. The average calculation shows that approximately 411,750 jobs are not working in the Crimea. And this is only the beginning, because according to the estimates of the Ministry of Labor and Social Protection of the Russian Federation, in the occupied Crimea, the risk of dismissal is still about 49 thousand people from almost 1,000 enterprises, most of which are in the process of liquidation. Experts estimate, that over 4 years of the occupation in the Crimea 250 thousand workers lost their jobs!


As a result, the economy is collapsing. The largest economic failures are demonstrated by the sphere of foreign trade – the external commodity turnover of the Crimea in comparison with 2013 decreased by 21 times. At the same time, exports fell by almost 31 times, and imports – by 16.4 times. Domination of imports over exports shows in the best way the “successes” of current Crimean economy: there is practically nothing left to export from the Crimea.


In general, the emerging trends fully meet the Russian government’s course on the destruction of small businesses in the Crimea. The goal of the Kremlin and their proxy authorities is to get rid of the most active part of the local population, and to squeeze out the bankrupt businessmen into mainland Ukraine.


Reduction of employment and discord in the business sphere lead to further impoverishment of the population, a drop in its purchasing power. People’s dissatisfaction and quality of life is growing. For four years of occupation, the inhabitants of Crimea fully realized that the declared free of medical services does not mean their availability and the possibility of obtaining the necessary medical care at all.


The education system is also in critical condition: almost every kindergarten, school, vocational school, university have been turned into a tool for the militarization of Crimean youth. To consolidate the “strategic object”, Moscow will grow in the Crimea a generation of mankurts, accustomed to obedience and loyalty to war criminals, who not only destroy the fabric of Crimean society, but also ecological system of the peninsula and adjacent areas.


Before the occupation of Crimea, fresh water for local population needs and agricultural sector was supplied to the peninsula from the mainland of Ukraine. Now the given resource for the region is lost. The Russian authorities have proven they aren’t able to resolve the catastrophe on their own, because there are no technological and financial opportunities for this. Loss of water supply from the mainland of Ukraine has led to the fact that as of June 2018, more than 70% of the previously characteristic the vegetation has completely withered. In connection with drought, the occupier’s proxy authorities announced an emergency regime.


Clearly, the overlap of the North-Crimean Сanal, caused by the forcible separation of Crimea, brought serious problems to the region. First of all, it hit the water quality in the North Crimea. The level of rigidity and mineralization leaves much to be desired: due to increased water discharge from underground storage, salinization of soil layers occurs. In some areas, such as Krasnoperekopsky and Pervomaisky, the water has already been found unfit for drinking. Its total hardness is 25 millimoles per liter while the norm is 7, and the mineralization is six times higher than normal.


This is due to the fact that the only source of central water supply in the region – the Vorontsov water intake of underground natural waters – is exhausting. As a result, seawater with seaweeds, which clog the pipelines, leaks into the water. And the tariffs for salted water grow from year to year.


In 2014, the Medvedev government announced the plans to build a water pipeline from the Kuban to Kerch. But because of the high cost of the project (more than 100 billion rubles) and a narrow functionality (could provide water only for the needs of the Kerch Peninsula), the idea was quickly abandoned.


From despair, even the options for laying the pipeline under the Kerch bridge were considered, but even this option proved to be unrealizable, since it would be necessary to completely change the design of the Kerch bridge, and given its state of emergency and permanent drawdowns, such a pipe would even crack if successfully installed.


By itself, the Kerch bridge will bring enormous losses to the ecosystem of the Black and Azov Seas, as its construction took place with grave violations of the rules of environmental safety, as well as international law. According to the most optimistic forecasts, experts predicted that the bridge will be usable for 15 nearest years, after which it will become completely unfit for use, and will, in the literal sense, be deadly for use.


The above mentioned degradation of the economy, social sphere and ecology of the Crimea in the long term should have in themselves change demographic structure of the peninsula. But the occupation authorities are speedily accelerating this process.


The Crimea “new demographic order”


Against the backdrop of disregard for the ecology and destinies of people, a very revealing and dangerous trend is the Kremlin’s strategy of changing the ethnic composition of the population to Russians. Putin’s officials are clearly following the Soviet line on “ethnic issue of Ukraine.”


Crimeans are being deprived of perspective business projects or prestigious jobs, but offered to resettle to remote regions of the Russian Federation. Instead, the advantage of key positions and financial flows goes to “guests” from the Russian Federation. Such a strategy negatively affects the moral and psychological state of the local population, which will feel like second-class people.


With the purpose of changing the demographic picture of the peninsula, personnel replacement is used: the Crimean state and municipal employees, despite the loyalty they have shown to the invaders, are systematically and massively being replaced by officials from the Russian Federation, especially from the northern, as well as remote Siberian cities.


During all four years of occupation, directing personnel from Moscow and other regions, Moscow continues to methodically form its own repressive and administrative apparatus in Crimea and Sevastopol: power structures, control bodies, “supervisors” in the organs of municipal authority of the occupied territory. On the basis of comprehensive data obtained on the basis of analysis of public and insider information, the part of functionaries, that where directed from the Russian Federation to the departments of federal agencies of the Crimea, already reaches 70%, and in local departments subordinate to Simferopol – 50%. 


The presence of the Crimean Tatar people in the peninsula – in all its aspects of history, problems and perspective national ideas and tasks – is an “aggravating circumstance” for the occupiers. All the local population of Crimea is considered as potentially disloyal. Russia considers the demographic situation in the Crimea exclusively in the context of the formation of a loyal population in the region of “military development,” that will optimal in terms of its maintenance costs and incapable of civil protests and other uncontrolled forms of political activity.


In general, there are only three categories of locals that are of value for Moscow – the personnel of the military base; external service, which helps to ensure the functioning of the base; “A human shield,” which is used to cover up  possible aggression, as well as for manipulating “humanitarian issues” in the international arena.


All other people, as well as the sectors of economy/activities, necessary for their livelihood are ballast for the Kremlin point of view. The Russian authorities are consistently replacing the population of the Crimea, seeking to increase the share of unconditionally loyal citizens, not in any way connected with Ukraine. Official Rosstat figures indicate that in latest 4 and a half years 247.5 thousand people “migrated” to Crimea. A little more than 140 thousand “migrants” left the Crimea. Due to the migration, Crimea received “clean” more than 107 thousand new people.


Noticible that most of the newcomers settled in the peninsula, while most of those who have left the Crimea are locals, who lived there before the occupation. Even official Russian data indicate that the population of the Crimea for the years of occupation has been refreshed by 17%, and if you take into account those who wasn’t covered by statistics, then the population replacement will be at least 20-25%. In other words – in the term of population the face of Crimea has been changed by quarter for these four years. The nuance is that for Russia this is an absolutely acceptable scenario, despite constant human rights violations. 


At the trial in The Hague, the Russia’s side statement that the Russian authorities are making considerable efforts to ensure human rights in the Crimea was denied, and numerous evidence were provided that prove the exact opposite. We can recall, at least, the ban on the Mejlis of the Crimean Tatar people, as well as the frequent disappearances of civic activists.


At the same time, during the hearings, the Professor of International Law from New York, Harold Gonju Ko said the following: “Russia claims to ban the financing of terrorism in the east of Ukraine, and in the meantime it finance the very same terrorism. In Crimea, the Russian Federation declares the eradication of all forms of racial and ethnic discrimination, instead, it leads a company for the cultural destruction of non-Russian ethnic groups.” Since 2016 they have already been spread not only to the Crimean Tatar people, but also to “Ukrainian saboteurs and terrorists”. Repressions continue against journalists and become more frequent with lawyers and human rights defenders.


As a result, Moscow seeks to change the demographic face of the occupied territory as soon as possible and turn it into an absolutely subordinate territory devoid of historical memory, an economic basis, and capable only to serve the interests of the Russian military in the Black Sea region in a rigid “camp format.”


Afterword


The Russian neo-imperial leadership, having seized the Crimea, has become a most serious challenge for the world security. Thus, having occupied the Crimea, Russia violated 407 bilateral and 80 international treaties with Ukraine. Now, without any restrictions, Russia conducts militarization of the peninsula, turning it into a “powder keg” of the entire Black Sea region.


This occurs in the framework of a large-scale experiment on the rapid incorporation of the annexed territory. What is important, the Kremlin’s political technologists in the Crimea are testing there new techniques that can be implemented on their own people in future. The Crimeans were the first to feel the complete dethronement of the generous promises of the Kremlin, and now they live in fear in the face of the loss of basic means of livelihood.