Crimea: is it worth the trouble?

By Vestnik Kavkaza

More than 70 military units of the Armed Forces of Ukraine, which are located in Crimea, including 25 ships of the secondary fleet and 6 combat ships of the Ukrainian Naval Forces, hoisted the Russian flag on Tuesday, the chairman of the Crimean administration told RIA Novosti. This and other news from Crimea made Ukrainian politicians worry. For example, the former president Victor Yushchenko made a dire forecast: “Putin won’t stop with Crimea. Crimea is a little break. Kherson, Kharkov, Lugansk, Donetsk are the most vulnerable points.”

However, at the moment Moscow’s task is to “process” Crimea. According to experts, the problems of electricity power and gas are solvable, but the problem of water is quite difficult. Analysts are split on whether Crimea will be a burden for Russia or a help.

Mikhail Yemelyanov, first deputy chairman of the State Duma Committee for Economic Policy, is sure that “Crimea won’t be a burden for Russia, at least strategically. Obviously, at the beginning certain resources should be spent to adapt the Crimean economy to Russia; many problems will appear in the sphere of infrastructure, energy, electricity power networks, the law, for example, the Ukrainian authorities are blocking access to the registry of ownership. It is a big deal to have a document re-issued. The same thing applies to our aviation, our aircraft. Crimean aircraft will still fly with the Ukrainian code. However, strategically Crimea is a very attractive subject for investments, due to its resorts, agriculture. And I think investment will flow into Crimea, not only state, but also private investment. And in general it will adapt to our economy and will be a successful constituent.”

Vladimir Zharikhin, deputy director of the Institute of the CIS Countries, also thinks that Moscow will have to pay a certain price for Crimea, but “we shouldn’t forget that we pay about $100 million to Ukraine for leasing of the Black Sea Fleet in Crimea. Now the money will be given not to Ukraine, but to development of Crimea. Secondly, Ukraine buys our gas for a discounted price, the sum of the discount is about $250 million annually. The money can be transferred from one country to another and cover the Crimean budget deficit.”

Speaking about possible sanctions launched by the West against Russia, economist Andrei Kobyakov, stated: “Economic war is one of the most important components of the contemporary world… There are amusing things - collecting signatures for a petition in the United States to exclude Russia from the WTO. I really want to applaud them. I want these sanctions to be applied as soon as possible. These events are associated largely with the problem of the non-commodity future of Russia.”

Kobyakov says that there is a certain degree of vulnerability, but that it is surmountable: “We can be disconnected from major lines of credit, but we cannot refuse to pay back the loans already taken or stop paying interest on them. What does this mean, given that Russia's external debt is more than $700 billion and that we are not only talking about Russia - there is also the Chinese factor, and it is not known how it will behave in these circumstances. It has already opened a certain umbrella above us at least. Some steps on the import of critical goods can be implemented, we in turn have the ability to deliver a crushing blow, to use economic nuclear weapons in terms of trading currency, we can begin to trade our resources without accept the dollar. This will be the beginning of an entirely new financial system in the world.”

The expert realizes that all these measures would lead to escalation of the situation, which is not desirable. He suggests strategic reviewing of “the absolutely false premise that an open economy is good. This crisis might become that historical circumstance that might awaken what is called "political will." Therefore I look at these events as a reason to be optimistic about our future development.”