Economic hardships wrack Crimea following Russian annexation

09 June 2014

In the below article, EFD Fellow Anna Borshchevskaya draws attention to Crimean economic difficulties that followed 2014 Russian annexation.

More than three months after Russian President Vladimir Putin annexed the Crimean peninsula from Ukraine and following a referendum widely condemned in the West and parts of Ukraine as illegitimate, economic hardship has worsened, according to Russian-language press reports.

While the Russian government’s tourism strategy describes Crimea as one of Russia’s most attractive destinations, Crimea’s famous resorts and beaches are empty during what is usually the busiest tourist season. Prices for food, medicine, transport, and other services rose significantly—often more than 25 percent, reports Gulnara Kurtalieva for Ukrinform.

The few and select benefits the Russian government has provided to Crimea—25 percent pension raises, and high salary increases for some in the military—do not appear to have offset the negative consequences of joining Russia, according to reports.

Costs for transit on city microbuses rose by 21 percent. “Simferopol mayor Viktor Ageev assures the people, among whom are those who have not received their salaries for several months, that this is inexpensive,” wrote Kurtalieva. “This is the lowest prices within the Russian Federation.”

Earlier, Ukrinform reported that real-estate prices began rising in Crimea as well, due to Crimea’s transition to Russia’s construction material market and Russian citizens’ wishes to purchase real-estate in Crimea.

“Crimea was always interesting to Russian citizens, and now this interest is quite high. It manifests itself in the desire to buy some real estate in Crimea and it objectively moves prices,” said Vladimir Nikolov, Crimea’s Construction and Architecture minister, as reported by Ukrinform.

Nikolov added that prices for construction material are rising. While deliveries of construction supplies from mainland Ukraine to Crimea stopped, their deliveries from Russia have not normalized.

On May 9, Russia’s Victory Day, Russian President Vladimir Putin came to Crimea. Victory Day celebrates Russia’s victory in World War II and the holiday celebrations are traditionally infused with Russian patriotism.

Crimea greeted Putin with a major parade. Some cheered and thanked Putin for joining their peninsula to Russia.

However, found that many did not share these sentiments. In response to the question of how their life has changed since joining Russia, some described losing their jobs. For example, according to one Crimean resident, some lost jobs in the technical sector because since joining Russia it became necessary to purchase licenses from Russia, which companies could not afford.

Others lost life savings after the Ukrainian National Bank made it illegal for Ukrainian banks to continue operating in Ukraine. “We have a young family, we saved for an apartment for five years. We kept our money in Privatbank,” said one Crimean resident. “And now, when Ukrainian banks have left Crimea, it turned out that Russia will only return to us 700 thousand [rubles]. But we had approximately a million two hundred … how can we return the entire sum?!”

“During the electoral campaign to join Russia,” added another resident, “we were promised that we would get everything back.”

Indeed, as Crimea was preparing to receive Putin on Victory Day, Crimeans reportedly stood in long lines outside banks throughout the entire peninsula.

This article was originally published here.