The Hidden Story of Crimea’s Economic Success

Hits: 7455

Recently Crimea celebrated the 2nd anniversary of its reunification with Russia, marked on the day of the referendum that ended the Ukrainian occupation. Much has been written about the political and geopolitical aspects of the reunification as well as the social sentiments of the people, but little has been said about the economy. I want to lift the lid on that because the results of the economic transition are in fact quite impressive, especially considering the arduous hurdles that had to be overcome in the process.

The transition from the Ukrainian economy to the Russian one meant a transfer from a much less developed economy with a significantly lower price level to a more mature economic environment. Under the Ukrainian rule the black market and corruption were widespread and tax collection a rare occurrence. The problems were compounded by a dramatic suspension of the whole banking system as the Ukrainian banks left the peninsula, to be slowly replaced by Russian banks. Hereby for fear of sanctions the major Russian banks abstained. Trade and logistics patterns were disrupted and new ones had to be created with the Russian mainland, while the direct land access to Crimea from Russia was cut off due to the civil war in Eastern Ukraine.

The first nasty act of humanitarian war occurred when the Ukrainian regime cut off the main water supply to the North Crimean Canal by blocking it with a dam.

At the same time, the Crimeans were punished for their democratic choice by the Western powers which slapped severe sanctions on Crimea virtually prohibiting all trade and investments, the way the U.S. had punished the Cuban revolution.

A new wave of problems started when the Ukrainian regime became increasingly frustrated with the apparent success of the breakaway republic. They virtually prohibited their citizen to travel to Crimea, then they moved on to declare a trade embargo. When nothing worked, they in a last desperate effort cut off the electricity supplies in November 2015 as so-called “activists” blew up the electricity pylons that supplied Crimea in a Ukrainian state sponsored act of sabotage.

But the Ukrainian saboteurs increasingly remind me of the cartoon villains, who continuously go after the lucky-go-happy hero, only to have the joke on themselves. That was the case with their food embargo, which only blew back on the Ukrainian farmers and traders, and so it was with the electricity. With great foresight, President Putin had launched an underwater electricity transmission line from the mainland across the Kerch Strait. Working against the clock the Russians were able to open ahead of schedule the first line of the four cables in early December and the second leg already Mid-December, thus already neutralizing the Ukrainian threat. The remaining two lines are due for April and May respectively.

Except, for the lucky-go-happy is an understatement, more correctly, I would characterize the Russians in this respect as lucky-go-smart, masterly handling the whole political and economic transition. Let’s look at the economic facts.

Wages running ahead of prices

Crimea suffered in 2014 and 2015 from seemingly runaway inflation totaling 70.1% for the two years. This would be very bad news if not for the fact that at the same time nominal salaries rose by 112%, thus the real salaries rose by some 40%. What is remarkable is that the salaries in Crimea grew faster than anywhere else in Russia. From January to December 2015, average monthly salaries grew from 17,000 rubles to 30,000 rubles. Real wages actually declining in Russia on an average. Crimean wages were in beginning of the year at 57% of the national average but reached 70% in December. What this then tells is that Crimea has successfully undergone a period of adaptation to the higher Russian price levels in leaving behind the Ukrainian economic structures. In the same period, inflation in the Ukraine was 68.2%, but contrary to the case of Crimea, the Maidan coup translated into sinking salaries with 16.5% real decline for the two years. The net result is then that the Crimean workers gained 50% over their Ukrainian peers.

The salary gains have been accompanied by more jobs putting unemployment down to 7.2% in January from 9% March 2015. Corresponding figures for Sevastopol were 5.4%, down from 12.3%.

Retail sales recorded a healthy gain in nominal terms but were slightly down in real terms (-5.3%).

The factories are up and running again

Industrial production grew by 12.5% on the year in 2015, and with a whopping 25% in December year-on-year. The extraordinary positive dynamics continued in 2016 with a record gain of 32.2% for January-February.

The construction industry also reported impressive results with a value growth of 73.9% after considering the effects of inflation, with completion of 249 thousand square meters of new housing.

Agriculture

The agriculture and food industry have not fared as well, with a 13.4% contraction in 2015, including a bigger 19.3% decline in livestock production. In crop farming, there were two contradictory trends: cereal crops were up by a sixth while garden plants and wine grapes were down.

The drop in grapes was the result of an unusually cold January. A combination of other reasons affected the agriculture in general, which all derived from the interruption of economic relations with the Ukraine and problems with water supplies, caused by the Ukrainian diversion of the water duct that used to supply Crimea. These problems will all be overcome in due course with alternative supplies being arranged from mainland Russia and new investments, including with significant state subsidies. For example, an investment in a pork production facility will grow already this year the total Crimean industrial capacity for this meat by 35% (corporate produced, excluding homesteads).. Another project will raise the production of milk one and a half times (excluding homesteads).

Tourism is booming

The tourism industry is coming along very nicely, indeed, with a 21% growth of visitors in 2015 bringing the total to 4.6 million. This is often contrasted with the 6 million tourists, of which 4 million Ukrainians, that used to come before the liberation. The comparison is however quite misleading as the purchasing power and habits of that segment of Ukrainian visitors was quite different. They did not require a high standard of service in accommodation and catering and so did not bring in a profitable business and thus did not stimulate investments. Already in the difficult transition year of 2014, the proceeds from the tourist industry doubled to a value of about $1.5 billion from the level of the Ukrainian years of $700 million.

This year promises to be even better with an expected 20% growth of both amount of visitors and prices (net increase about 10% considering inflation). What is interesting is that Russians have taken to visit Crimea all-year round and not only in the hot summer months.

This hardly tallies with the grim picture that Reuters wanted the world to believe in its propaganda piece dedicated to the 2nd anniversary of the liberation, or “annexation”, in their Orwellian parlance. This is the Reuters version:

“Crimea once prospered as a Black Sea tourist hub. Now its businesses are starved of tourists and international investment is barred by Western sanctions.”

Russia has been quick to ensure that all possible ways of bringing visitors and supplies to the peninsula have been explored and used. As a result 5 million passengers where carried by air to and from the regional capital Simferopol, almost doubling from the previous year. There are now direct flights with competitive prices from all major Russian cities, with 70 flights from Moscow alone, even in March.

In addition to that, the ferry across the Kerch Strait shuttled 4.7 million tourists.

The Bridges, and other infrastructure

The big one that everyone is waiting for is the Bridge, the bridge over the Kerch Strait that has been promised for December 2018 with full traffic in 2019. The way things are going, I would expect it to be ready even earlier, that seems to be the Putin-way of making things, as it was with the electricity supplies.

Interestingly, the cost of the Bridge seems to be so competitive that the Western propaganda center has so far not cared to produce a Nemtsov-Navalny style report on the “horrendous cost and corruption” in connection with it, as they did on the Sochi investments.

The Bridge when completed will have an enormous effect on the economy of Crimea and all aspects of life, but there are other very important infrastructure investments as well.

Another bridge, the energy bridge as the Russians call the electricity cables drawn underwater across the Kerch Strait have already been completed to a large extent. I already reported above on the success of this project.

In addition to the transmission line, three electricity power stations will be constructed or reconstructed by 2018, after which Crimea will have surplus power for significant growth of the economy.

Furthermore, Russia is in the process of laying an undersea gas pipeline to Crimea. The investment is estimated at 20 bn rubles (~$300 million) with a completion by 2018.

The Bridge is accompanied with construction of a new highway between Kerch and Simferopol as well as other roads.

Other government investments include reconstruction and modernization of hospitals, public buildings and public places; water supplies; new ambulances, fire tracks, urban transport vehicles, etc.

Stop feeding the West

The Russian liberal faux-opposition has a cant that goes like “Stop feeding Crimea”, an adaptation of Alexey Navalny’s original “Stop feeding the Caucasus”. Based on the results of my little investigation into the reality of the Crimean economy, I would rather turn the question around and tell that what actually happened is that by aiding Crimea Russia “Stopped feeding the West.” – I mean that, the economic results of the investments in the reunification are overwhelmingly positive. The infrastructure projects reported above come with an approximate cost of 700 bn rubles, or approximately $10 bn. On top of that Russia has supported the regional budget of Crimea by a couple of billion dollars in 2014 and about one in 2015, approximately the same level could be expected for this year.

But, the interesting fact is that all these investments have already been paid back in one year in 2015. Proceeding from the economic logic of the opponents of reunification, I compare the savings of Russia on outbound tourism on the investments in Crimea. As three million more Russians tourists travelled to Crimea instead of going abroad, the national economy saved about $10 billion in 2015 and probably 12 to 15 billion in 2016. Thus the savings from 2015 covered the whole infrastructure investment program up to 2020 as well as the budget transfers, the 2016 savings will then cover the next 10 years of budget transfers, if any will be needed. And each coming year after that the whole amount of savings translates into a profit for the national economy.

By the way, this is not fantasy, but economic facts confirmed by the balance of payment statistics of the Central Bank. The statistics show that expenditure on outbound tourism was down in 2015 over the previous year by some $25 billion. Luckily, there are enough savings over to feed Sochi, other Krasnodar resorts, and many other beautiful parts of Russia.

Crimeans will hardly pine for the bad old Ukrainian days when the central government invested annually about $120 million in the economy, as reported by the ousted former prime minister Nikolay Azarov.


Originally published on 2016-03-23

Author: Jon Hellevig

Source: Awara Blogs

Origins of images: Facebook, Twitter, Wikimedia, Wikipedia, Flickr, Google, Imageinjection & Pinterest.

Read our Disclaimer/Legal Statement!

Donate to Support Us

We would like to ask you to consider a small donation to help our team keep working. We accept no advertising and rely only on you, our readers, to keep us digging the truth on history, global politics and international relations.

[wpedon id=”4696″ align=”left”]

READ MORE!
The Origins of Latvian, Lithuanian and Estonian Nations
"The main part of the population of Baltic cities up to the 19th century consisted of ethnic Germans, and also Poles and Jews, but not at all Baltic people. In fact, the “old” (pre-revolutionary) Baltic region was completely built by Germans. Baltic cities were German cities – with German architecture, culture, and system of municipal management. ... in the cities of the Baltic region there were almost no Estonians and Latvians." Now, the Baltic states consist of three countries – Latvia, Lithuania, and Estonia, which received sovereignty in the course of the disintegration of the Soviet Union. Each of these states position themselves, respectively, ...
READ MORE
The Crimean Tatar Card is Being Played Again
The Crimean Tatar writer and artist Diana Kadi recently wrote an open letter to Angela Merkel:“I am the author of a novel about the Crimea. Since an information war is being waged of such intensity that propaganda and lies have become the norm, I believe that it is important for me to set forth my views on the subject of the Crimea. Ukrainian politicians claim that Russia is the aggressor and that Crimean Tatars are oppressed, but that is simply untrue. My people have once again become an instrument of political manipulation. The alleged oppression of the Crimean Tatars is ...
READ MORE
The West is Run by Barbarians
How much longer are we accepting the tyrannical dictate of the American rulers? It gets worse by the day – and it looks like the western world’s “leaders” (sic – so sic!) are caving in ever more to the American killing machine – the European Union – and all its members heads of state, and all the Zion-Anglosaxons and Japan – no one dares standing up and shouting “NO!” – no more of your hegemonic atrocities! – But they all bend over backwards to please a criminal empire, run like the Barbarians.Imagine, the so-called world leader invites you to a ...
READ MORE
Photo Evidence of Russian Terror over Crimean Muslim Tatars Today
Save  SaveOrigins of images: Facebook, Twitter, Wikimedia, Wikipedia, Flickr, Google, Imageinjection, Public Domain & Pinterest.Read our Disclaimer/Legal Statement!Donate to Support UsWe would like to ask you to consider a small donation to help our team keep working. We accept no advertising and rely only on you, our readers, to keep us digging the truth on history, global politics and international relations.[wpedon id="4696" align="left"]
READ MORE
The European Union and Common Pan-European Identity
PrefaceThe article deals with relations between on the one hand the supporters of pan-European identity, which has to take the place of the particular national ones, and on the other hand the proponents of maintaining specific national identities as the top priority within the European Union (the EU). Certainly, the European Union continues to expand its borders, individual national currencies are becoming unified into the common EU currency - Euro (€), and the political and economic climates are gravitating towards pan-continental unification. However, what does this unification process mean in terms of identity? The crucial question is: Will the success ...
READ MORE
Breaking Yugoslavia: How the US Used NATO as its Battering Ram
November 1991 is a month and year that will forever live in infamy when it comes to one of the most grievous crimes committed under the rubric of Western foreign policy, as it was on this month in this year that the break-up and destruction of the Socialist Federal Republic of Yugoslavia (SFRY) was set in train.The Arbitration Commission of the Peace Conference on Yugoslavia was a body set up in 1991 by the Council of Ministers of the European Economic Community (EEC) in response to the conflict that had broken out between separatists in Slovenia and Croatia and the ...
READ MORE
27 Years since the Massacre of Serbian Civilians in Bosnia
In Kukavica village near Rogatica (nowadays Bosnia and Herzegovina), today was marked 27 years since crimes against Serbian civilians committed by Bosnian Muslims, members of the so-called Army of Bosnia and Herzegovina on August 27, 1992.In an attack on a column of Serbian civilians, involving about 1,000 elderly people, women and children on tractors and passenger vehicles, Bosnian Muslim extremists killed 26 and injured 80 Serbs.Rogatica Mayor Milorad Jagodic called this a monstrous crime as among the victims are a child of 11 and 82 years old man.“This was a column of innocent people who were looking for refuge and ...
READ MORE
Bill Clinton
A former U.S. President Bill Clinton's: Past, Present, Future:Origins of images: Facebook, Twitter, Wikimedia, Wikipedia, Flickr, Google, Imageinjection, Public Domain & Pinterest.Read our Disclaimer/Legal Statement!Donate to Support UsWe would like to ask you to consider a small donation to help our team keep working. We accept no advertising and rely only on you, our readers, to keep us digging the truth on history, global politics and international relations.[wpedon id="4696" align="left"]
READ MORE
Trump’s National Security Strategy: The Return of “Great Power” Military Conflict
The new US National Security Strategy released this week and the speech delivered by President Donald Trump Monday to introduce it constitute a grim warning to humanity that US imperialism is firmly embarked on a road that leads to a nuclear third world war.While the document has largely been passed over in silence by the president’s ostensible political opponents in the Democratic Party and given relatively short shrift by the establishment media, more thoughtful ideologists of imperialism have noted the far-reaching changes presented in the document.Writing in the Wall Street Journal, the historian Arthur L. Herman declared Trump’s National Security Strategy ...
READ MORE
Implicit Meanings in Ecumenical Patriarchate’s Tomes
In his recent replies to Archbishop of Albania Anastasios and Archbishop of Antioch John X, Patriarch Bartholomew demonstrated once again that Constantinople envies Rome’s reputation and influence in Catholic Church. The Phanar refuses to take notice of the opinions of other Churches (even on the issues influencing the whole Orthodox world!) presuming itself as the one and only decision-maker and its verdict indisputable.However, justifying its decisions, the Phanar turns to arguments that aren’t really relevant – for example, comparing the recent situation in Ukraine to the Meletian schism in his letter to Anastasios, Bartholomew for some reason didn’t mention that ...
READ MORE
The Failure of US Democracy
I am now convinced that the Oligarchy that rules America intends to steal the presidential election. In the past, the oligarchs have not cared which candidate won as the oligarchs owned both. But they do not own Trump.Most likely you are unaware of what Trump is telling people as the media does not report it. A person who speaks like this:- is not endeared to the oligarchs.Who are the oligarchs?— Wall Street and the mega-banks too big to fail and their agent the Federal Reserve, a federal agency that put 5 banks ahead of millions of troubled American homeowners who ...
READ MORE
NATO — Private Club оf War Criminals
What has happened is that NATO provides cover for these transgressions of the United States government’s policy. In other words, it absolutely legitimizes what effectively is NATO aggression. Moreover, what one needs to bear in mind and what one needs to be mindful about is the fact that in Western Europe you no longer have rulers with the independence of Charles de Gaulle.It seems that Washington, and we can use Washington, America and NATO interchangeably because NATO is dominated by the United States. It is a command structure, which ultimately is based on American military power and American military precedence.  ...
READ MORE
Guy Mettan’s Book on Russophobia: “An Important Contribution to the Demystification of International Relations”
This is definitely an unusual book, as heralded by its title and three subtitles, whose lengthy wording evokes that of several learned tomes of the 18th and early 19thcentury.Its author is a well-known personality in Switzerland. Guy Mettan is a prominent journalist, formerly editor-in-chief of Tribune de Genève; he once presided over the Great Council, the Geneva parliament, of which he is still a representative, elected on the Christian Democrat Party list; he heads the Swiss Press Club and has written several books on Switzerland and international Geneva.As he explains in his foreword, his interest for Russia came by happenstance: ...
READ MORE
Freedom Rider: Churchill, Columbus, and Leopold Fall Down
Millions of white people glorify mass murderers because their sense of identity and place in society is deeply tied to white supremacy.“It is important to name and shame the mass murderers.”The perpetrators of crimes against humanity are often elevated to positions of respect and admiration. It all depends on who did the killing, and who was killed. Now the murderers are being called to account. The new movement in the United States against police and other state violence has inspired this welcome change taking place all over the world. The criminals are being exposed decades and even centuries after their atrocities ...
READ MORE
The Cold War is Over
Like most Englishmen, I grew up with a natural dislike of “abroad” and a belief in the inferiority of all foreign things. I think it took me five visits to France before I began to regret leaving that lovely country rather than to rejoice at my return to our safe and familiar island. It often strikes me as quite funny that I spent so much of my life as a foreign correspondent, a profession for which I am so unfitted. When I went to live in Moscow in 1990, I felt that I had somehow betrayed my native soil. (I was ...
READ MORE
Blaming Russia for Skripal Attack is Similar to ‘Jews Poisoning our Wells’ in Middle Ages
Congratulations to Craig Murray for getting there first. The colorful former British ambassador to Uzbekistan, turned anti-establishment dissident after he was sacked from the Foreign Office in 2004, has published on his blog some key texts by authoritative scientists which cast serious doubt on the British government's claims about what happened to the former double agent, Sergei Skripal, and why.Murray – and his sources – have unearthed texts from 2016, 2013 and 1995 by, respectively, a scientist at Porton Down, the secret British military chemical weapons installations which is 20 minutes from Salisbury where Skripal was found last week; a scientist at ...
READ MORE
Russia vs. America
GR Editor’s Note Moscow is accused of doping as part of a US dirty tricks campaign to prevent Russia from participating in the 2016 Summer Olympics in Rio de Janeiro. What is the record of the US with regard to doping? The main sports organizations including the NFL, MLB, and NBA have allowed unusually relaxed policies for performance-enhancing drug testing and punishment. The USADA is the US government agency responsible for the implementation in the United States of the World Anti-Doping Code, Yet, the record suggests that the USDA does not actively intervene in “big money sports” and often turns a blind eye ...
READ MORE
Rescue in Serbia of the Jews during WWII
Serbia rescued more Jews than any other part of the former Yugoslavia during the Holocaust. Yad Vashem , The Holocaust Martyrs’ and Heroes’ Remembrance Authority, has awarded the title of Righteous Among the Nations, those who risked their lives to save Jews during the Holocaust, to 127 individuals from Serbia, which is the highest number for the former Yugoslavia.On December 2, 2008, Arthur Koll, the Israeli Ambassador to Serbia,  presented to the children and grandchildren of Borivoje Bondzic, Grozdana Bondzic, Ljubica Mandusic-Gazikalovic, and Jelica Rankovic the Righteous Among the Nations award. They are the descendants of Serbs who during the Holocaust risked their own lives ...
READ MORE
Who will Miss Obama?
Origins of images: Facebook, Twitter, Wikimedia, Wikipedia, Flickr, Google, Imageinjection, Public Domain & Pinterest.Read our Disclaimer/Legal Statement!Donate to Support UsWe would like to ask you to consider a small donation to help our team keep working. We accept no advertising and rely only on you, our readers, to keep us digging the truth on history, global politics, and international relations.[wpedon id="4696" align="left"]
READ MORE
Croatian President Lauds Ustasha Nazis as the «Fourth Reich Lite» Rears its Ugly Head in Europe
Croatia's President Kolinda Grabar-Kitarovic with Croatian diaspora in Canada holding the flag of WWII Nazi-Ustashi Independent State of CroatiaCroatia’s president, the former deputy NATO secretary general for public diplomacy Kolinda Grabar-Kitarovic, decided to pay homage to Nazis of the Ustasha Nazi puppet regime of Croatia shot by Yugoslav partisans at the end of World War II. Grabar-Kitarovic’s tone deafness in choosing Victory in Europe week to honor dead Nazis shocked the Balkans and the rest of Europe.The Ustasha, along with their Slovenian and Serb loyalists to the Nazi puppet regime, were killed by the partisans under the command of anti-fascist ...
READ MORE
The Origins of Latvian, Lithuanian and Estonian Nations
The Crimean Tatar Card is Being Played Again
The West is Run by Barbarians
Photo Evidence of Russian Terror over Crimean Muslim Tatars Today
The European Union and Common Pan-European Identity
Breaking Yugoslavia: How the US Used NATO as its Battering Ram
27 Years since the Massacre of Serbian Civilians in Bosnia
Bill Clinton
Trump’s National Security Strategy: The Return of “Great Power” Military Conflict
Implicit Meanings in Ecumenical Patriarchate’s Tomes
The Failure of US Democracy
NATO — Private Club оf War Criminals
Guy Mettan’s Book on Russophobia: “An Important Contribution to the Demystification of International Relations”
Freedom Rider: Churchill, Columbus, and Leopold Fall Down
The Cold War is Over
Blaming Russia for Skripal Attack is Similar to ‘Jews Poisoning our Wells’ in Middle Ages
Russia vs. America
Rescue in Serbia of the Jews during WWII
Who will Miss Obama?
Croatian President Lauds Ustasha Nazis as the «Fourth Reich Lite» Rears its Ugly Head in Europe

Written by Policraticus

SHORT LEGAL DISCLAIMER: The website’s owner & editor-in-chief has no official position on any issue published at this website. The views of the authors presented at this website do not necessarily coincide with the opinion of the owner & editor-in-chief of the website. The contents of all material (articles, books, photos, videos…) are of sole responsibility of the authors. The owner & editor-in-chief of this website is not morally, scientifically or legally responsible for any inaccurate or incorrect statement in the contents of all material found on this website. The owner & editor-in-chief of this website is not responsible for the content of external internet sites. No advertising, government or corporate funding for the functioning of this website. The owner & editor-in-chief and authors are not morally, scientifically or legally responsible for any inaccurate or incorrect statement in the text and material found on the website www.global-politics.eu

Website: http://www.global-politics.eu