In 2015, Crimea realized it did not become a special region for Russia. Now it is time to reflect on the changes in peninsula’s economy, tourism, human rights situation and its relations with mainland Ukraine.
Trade and energy blockades of Crimea were the most significant events for the peninsula in 2015. They caused a further estrangement of Crimea from mainland Ukraine. The main conclusion the peninsula has to draw, however, is that it never became special for Russia.
Crimea consists of two parts — the Crimean autonomy itself and Sevastopol, a city with special status — both from administrative and political standpoints. Simferopol and Sevastopol have their own separates sets of issues. While Russian Head of Crimea Sergey Aksyonov has been trying to find a common language with Kremlin officials since the last spring, the hero city of Sevastopol has been going through its own local political crisis, though not without federal meddling.
Political observers predicted — and Aksyonov hoped — that Moscow would treat the situation in Crimea “with special care and understanding”. At first, during the “transitional period”, that was true.
Aksyonov started this year with seizing of Ukrainian companies in Crimea. However triumphant these actions — that were dubbed “nationalization” — were, Russian authorities started limiting Aksyonov’s independence by putting him on the same level with other regional heads. Aksyonov refused to accept that.
In summer, Aksyonov said that the case against Andrey Skrynnik, Russian Minister of Industrial Policy, was a frame-up. At that time criticism against Kremlin was met with restraint. A little later, however, Moscow decided to introduce its own officials to Crimean government using the newly created positions of deputy ministers.
Political analysts explained that that was an attempt to establish exterior management of the peninsula, since the Crimean authorities failed to handle the tasks given to them. Responding to Moscow’s actions, Aksyonov even said once that he feels “he has no rights regarding the federals”. In the end, the idea of controlling the “republic” from the center was not implemented fully.
Public conflict between Kremlin and Crimean authorities mostly boiled down to the implementation of the Federal Targeted Programme. In September, Russian Deputy Prime Minister Dmitry Kozak came to the peninsula to discuss this issue. Russian government repeatedly reproached Crimean authorities for not being ready to implement the programme. The latter made excuses that they are only learning to live in Russian reality.
However, a huge scandal erupted in December. Aksyonov said that the region received no funds to implement FTP at all. Russian government responded by initiating an investigation regarding the disbursement of FTP funds, that prompted Russian experts to suggest Kremlin might even discharge Aksyonov.
Another issue standing out in peninsula’s political life is the relations between Sevastopol Governor Sergey Menyaylo and Head of Sevastopol Legislative Assembly Aleksei Chaly. Right after the annexation of Crimea, Russian President Vladimir Putin offered Chaly the seat of Sevastopol governor, but Chaly nominated Menyaylo instead, citing his crisis managements skills.
A little later, however, Chaly started to regret his decision and focused on criticizing the governor. Most observers believe that the roots of the conflict between politicians are personal. Chaly repeatedly reproached Menyaylo for ineffectiveness and skillfully used his managerial mistakes (for example, the scandal around Tauric Chersonesos). In April, he even suggested the governor had to resign and hold early elections, stating that Menyaylo failed to fulfill his duties.
Kremlin decided to resolve the managerial crisis by quieting both sides. As the result, the conflict disappeared from media landscape, though in reality Chaly and Menyaylo never reconciled. The conflict culminated, when yesterday Chaly voluntarily resigned from his position.
From an economic standpoint, Crimea has mostly become another region of Russian Federation, though it does have a number of distinctive features. The important thing is that Crimean economy follows wherever Russian one goes. Depreciation of ruble by 21.7%, inflation, lack of investments, GDP decrease — all these trends influenced the prosperity of both Russians and Crimeans.
As it was last year, Crimea is separated from the rest of the world due to the sanctions and its ambiguous legal status. Crimean industry is steadily adapting to the new realities — Russian laws, changes in trade flows and lack of investments, — and trying its best to supply the peninsula with local goods (for instance, the production of dairy products increased severalfold). Lack of certain goods was compensated with import from Russia, Ukraine and countries that refused to join the sanctions.
The civil blockade of Crimea — that started in September and blocked all import of goods from Ukraine — made everything significantly more complicated. While it was easy to replace consumer goods with analogues produced in Russia or imported through it, commodities supply took a big hit.
With blockade in force, Crimea lost a significant portion of its shipments of raw materials and industrial commodities. As the result, some of the biggest Crimean companies, such as Crimean Titanium, halted their operations. The situation worsened, when in late November a series of explosions near Ukrainian border left the whole peninsula, including its industry, without power. Russian authorities were hoping that manufacturers would be able to compensate for the downtime by working round the clock after the power supply were restored, but the outcome is not yet clear. According to official data, industrial production started to decrease in autumn, but has increased overall in the first eleven months compared with the same period in 2014.
Crimea’s biggest international trade partners this year were Ukraine, Panama (due to marine traffic and ships registered there) and Turkey. Lately, however, trade with both Ukraine and Turkey plummeted under the influence of political factors. Notably, 60% of Crimean export are ships and chemicals.
Overall, it seems that in the first six months Crimean industry was steadily recovering from the shock caused by the annexation, but in autumn a number of external factors, including the trade and energy blockade, new sanctions and conflict with Turkey, weakened it again.
As far as common Crimeans are concerned, according to official data, in the first eleven months consumer prices grew by 26%, while in January-October salaries increased by 33%. Nonetheless, the value of consumer goods market decreased by 10.8% this year, indicating that Crimeans’ welfare deteriorated.
When occupational authorities of Crimea passed the budget for 2016, they cited an “optimistic forecast” that peninsula’s gross regional product has increase by 8% in 2015, but the majority of experts believe this forecast to be unrealistic. They also say that the wellbeing of Crimeans mostly hinges on huge subsidies from the federal budget. Both this year and in 2016 Moscow is covering about 70% of Crimea’s expenses.
Crimea has become an island of lawlessness in the last year.
Unjust courts, kidnappings, searches, detentions, questionings, bans on peaceful assembly, religious persecution, seizure of property, pressure on independent media — these are only a fraction of actions Russian authorities of Crimea are responsible for.
Linguistic, religious and political discrimination are still a visible trend in Crimea. These violations are mostly aimed at the rights and freedoms of people, who oppose the annexation of the peninsula and support Ukraine.
In 2015 the discrimination also gained national dimension — Russian law enforcers are paying extra attention to Crimean Tatars.
2015 has also become a year of judicial prosecution of dissidents. The most resonant case was the trial of Crimean activists Oleg Sentsov and Oleksandr Kostenko in North Caucasus Military Court of Rostov — on August 25 they were sentenced to 20 and 10 years in prison respectively, after being unfoundedly accused of preparing a series of acts of terrorism in Crimea. Euromaidan activist Oleksandr Kostenko was given a 4-year sentence for throwing a rock at a Berkut officer during the Revolution of Dignity in Kyiv. Trial of “February 26” case has also started recently — a group of Crimean Tatars were arrested for participating in a rally near the Crimean parliament on February 26, 2014. The most prominent among the defendants is Ahtem Chiigoz, Deputy Head of the Mejlis of the Crimean Tatar People, who has already spent almost a year in detention.
Crimean “authorities” are also using criminal prosecution, searches, interrogations and “extremism prevention meetings” with FSB officials to intimidate dissidents. Events in Ukraine, including the trade blockade and power lines explosions in Kherson Oblast, were used by Russian prosecutors as another pretext for persecution.
The number of tourists visiting Crimea increased by 25% to 4.5m this year, according to official data.
This number, however, is to be treated skeptically, considering Crimea was cut off from Ukrainian tourists, while Russian ones faced considerable transport issues on their way to the peninsula.
Even if this number is true, it is a lot smaller than 6m tourists in 2012. According to the Ukraine’s forecasts, the number of tourists was expected to increase further, if not for the annexation (in 2012 National Geographic put Crimea on its list of places to visit).
Workload of Crimean hotels was only 36% this year.
According to the estimates of Crimean “Ministry of Resorts and Tourism”, visitors to Crimea have spent about RUB 60bn this year (about 13 000 per one tourist, almost the same as in Sochi).
Federal authorities of Russia attempted to increase Crimea’s attractiveness. Putin even visited Yalta in August to discuss the plans for promoting internal tourism and its importance for regional social and economic development. After Russian plane crashed in Egypt and Turkey shot a Russian military jet, Moscow doubled its calls for Russians to spend vacations in Crimean resorts instead of Egyptian and Turkish ones.
Blackouts also were an important factor: hotels stopped working on December 1, while tourists started cancelling their trips or returning earlier, unwilling to dine by candlelight.
“New Year in Crimea” project also failed, despite being zealously promoted by Crimean officials: sales started well, but then quickly plummeted.
Most importantly, the profile of a Crimean tourist changed a lot this year. Previously a significant portion of tourists travelled on their own, rented rooms at private hotels or lodgings and dined at local cafes, effectively supporting local entrepreneurs. Now, however, the majority of tourists coming to Crimea buy package tours, living and eating at the same hotel or resort.
Relations with mainland Ukraine
2015 has come to its end, but Ukrainian government still has not presented a strategy for de-occupation of Crimea. Unsurprisingly, relations with the annexed peninsula resemble the reaction of a patient to psychiatrist’s hits on the knee.
Early this year Valerii Chalii, Deputy Head of the Presidential Administration of Ukraine, said that Ukraine was ready to continue maintaining its position in international courts. It became apparent that any decisive actions regarding Crimea are not to be expected in 2015.
Ukraine did begin the litigation to recover losses from the annexation this year. Ministry of Agrarian Policy started re-registering state companies located in Crimea — the ones that ended up on the sanctions lists and were never fully seized by Russia — and changing their management. In January, Ukraine also managed to recover UAH 3.7bn that belonged to the National Bank of Ukraine and were kept in Crimea at the moment of annexation. Recently State Duma also decided to contribute by allowing Ukrainian banks to recover debts from Crimean citizens via Russian intermediaries.
Blockade of Crimea by Ukrainian activists was, probably, the most important event characterizing the relations between Kyiv and occupied peninsula in 2015.
Although on January 25 Ukraine decided to support sanctions introduced in December 2014 by G7 countries, the EU and Switzerland, Ukrainian law on free economic zone in Crimea stayed in force almost the whole last year and practically turned the peninsula into a grey zone that was used to transport Ukrainian goods into the aggressor country.
Unwilling to wait for Ukrainian government to take actions, Mejlis of the Crimean Tatar People initiated a trade blockade of Crimea on September 20 and was quickly joined by other activists. This way Mejlis responded to the repressions against Crimean Tatars and pro-Ukrainian activists on the occupied peninsula. Cabinet of Ministers of Ukraine banned trade with Crimea only on December 16 and left a loophole anyway: the ban does not apply to humanitarian aid and power supply.
The issue of supplying Crimea with electricity remains unsolved. Unidentified individuals blew up the pylons supporting the power lines leading to Crimea on November 22 and Crimea is still unable to cover its needs fully. The deal between Ukrainian and Crimean power grid companies about power supply ends on December 31, and, despite Aksyonov’s claims that Crimea can fully provide itself with power, Russia said that it is ready to extend the contract with Ukraine. Meanwhile, Moscow also increased energy subsidies for Crimea in 2016 by RUB 1bn compared to 2015.
Volodymyr Demchyshyn, Ukrainian Minister of Energy, also seems willing to extend the deal with Crimea, but Ukrainian President Petro Poroshenko said that this issue was to be discussed by the Council for National Security and Defense. According to Poroshenko, Ukraine might supply Crimea only if a relevant decision is made and Ukraine’s national energy, trade and safety interests are taken into consideration.