The UN General Assembly passed a resolution on Ukraine yesterday. The document recognizes the referendum in Crimea as having no legal basis. The General Assembly urged all countries to refrain from recognition of Crimea's status. 100 countries voted for the resolution, only 11 voted against it (Armenia, Belarus, Bolivia, Cuba, North Korea, Nicaragua, Russia, Sudan, Syria, Venezuela, Zimbabwe). 58 countries of Latin America and Africa abstained.
Russia considers the annexation of Crimea an irreversible situation. Ruslan Grinberg, Director of the RAS Institute for Economics, has described the potential economic effect that annexation of the peninsula may cause and sanctions against Russia and post-Soviet integration in an interview with Vestnik Kavkaza.
- What economic effect could the annexation of Crimea have on Russia?
- Initially, the annexation of Crimea by Russia will require big expenditures. In the long run, everything will certainly be fine. There are problems with electricity, problems with water. Infrastructure ties between Ukraine and Crimea are hard to replace. These are all solvable problems, but they will certainly need money. And certainly we need to judge by the fact that living standards in Ukraine was three times below that of Russia. And they are happy to get the standards Russians have. But it will require additional funds from the budget, maybe billions of dollars. And they need state investments, because private investors will probably be inactive. Maybe the PPP form would be suitable.
In the long run, should a free economic zone be formed in Crimea, should investments be safe from thefts, should modern tourism facilities be built, everything would be great. It is possible to increase the living standards, pensions and salaries of state workers.
- How can economic sanctions adopted against Russia affect its relations with the South Caucasus states?
- Sanctions work in two directions. We live in an interdependent world. This is where our president is right and we always need to choose here, search for balance between punishing and punishing oneself. I think that these republics are de facto recognizing our act [the annexation of Crimea], but I am not so sure about it de jure.
Georgia will consolidate with NATO even more, Azerbaijan will probably take a neutral position, Armenia will back us up de jure because we are its security guarantor.
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Speaking of post-Soviet integration, Grinberg noted that the “syndrome of the older brother is hard for us to overcome. I have always sided with experts, political analysts and economists in Russia saying that integration should be paid for. We often say, even in the context of the situation in Ukraine, that Americans and Europeans form certain funds, give grants. But this is common practice. Russia is way behind in this aspect, because it happens that the finances the country spends bring no efficient integration, some country asks for this form of aid but nothing happens. If we want to consolidate the post-Soviet space around Russia, Russia needs to be generous. A different story is that situations may differ. Now, for instance, it may be different over the Ukraine story. We should raise Crimea.”
