Prime Minister Dmitry Medvedev flaunted Russia’s grip on Crimea on
Monday by flying to the region and announcing plans
to turn it into a special economic zone, defying
Western demands to hand the region back to Ukraine.
The visit, hours after Russia held talks on Ukraine with
the United States, is likely to anger Kiev and the West,
which accuse president Vladimir Putin of illegally
seizing the Black Sea peninsula after a March 16
referendum they say was a sham.
Shortly after landing in Crimea’s main city of
Simferopol with many members of his cabinet,
Medvedev chaired a Russian government meeting
attended by Crimean leaders and outlined moves to
revive the region’s struggling economy.
“Our aim is to make the peninsula as attractive as
possible to investors, so that it can generate sufficient
income for its own development. There are
opportunities for this – we have taken everything into
consideration,” he told the televised meeting, sitting
at a large desk with Russian flags behind him.
“And so we have decided to create a special economic
zone here. This will allow for the use of special tax and
customs regimes in Crimea, and also minimize
administrative procedures.”
In comments that made clear Russia had no plans to
give back Crimea, he set out moves to increase wages
for some 140,000 state workers in Crimea, boost
pensions, turn the region into a tourism hub, protect
energy links with the peninsula and improve its roads,
railways and airports.
Russia’s swift takeover of Crimea, following the ouster
of Moscow ally Viktor Yanukovich as Ukraine’s
president in late February, has caused the biggest
crisis in East-West relations since the Cold War.
Medvedev’s visit underlined the impotence of the
West and Ukraine to force Russia out following the
formal annexation of Crimea, signed by Putin, on
March 21.
Medvedev arrived in Simferopol hours after U.S.
Secretary of State John Kerry met Russian Foreign
Minister Sergei Lavrov in Paris late on Sunday and
reiterated that Washington considered Russia’s
actions in Crimea “illegal and illegitimate”.
The United States and European Union have imposed
sanctions on Russian officials, lawmakers and allies of
Putin. They are threatening broader measures if
Russia, which has forces massed near Ukraine’s
eastern border, seeks to take more territory.
HEAVY FINANCIAL BURDEN
The absorption of Crimea and its 2 million residents
creates an additional financial burden on Russia,
which is struggling with slow growth, rising inflation,
a weak currency and unusually high capital flight this
year.
But Medvedev’s remarks indicated the Kremlin hopes
Crimea, which he said had “colossal prospects” for
tourism income, will become quickly self-sufficient.
Finance minister Anton Siluanov said last week that
Russia would spend up to 243 billion roubles ($6.82
billion) in Crimea this year, to be financed from the
budget reserve.
The ultimate cost of its action in Crimea is likely to be
far higher: analysts in a Reuters poll last week slashed
their forecasts for Russian economic growth.
The region has an estimated 55 billion rouble budget
deficit, and the peninsula has been dependent on
Ukraine for 85 percent of its electricity, 90 percent of
its drinking water and much of its food.
The reliability of those supplies is now in question.
The local authorities have said they will nationalize
Ukrainian state-owned business, including energy
producer Chernomorneftegaz which is exploring for oil
and gas offshore.
Apart from hosting a Russian naval base, Crimea’s
biggest industry is tourism as one of the former Soviet
Union’s few warm seaside resorts. But until now, 60
percent of visitors arrived from other parts of Ukraine,
mostly by train.
Making it an attractive destination for Russians will be
more difficult, since they mainly arrive by air and have
a wider choice of holiday destinations. Crimea would
have to compete with Bulgaria, Turkey, Greece and
Egypt, as well as Russia’s own brand new $50 billion
Black Sea Olympic resort in Sochi.
Kerry said after talks with Lavrov in Paris on Sunday
that progress on resolving the crisis over Ukraine
depended on a Russian troop pullback from Ukraine’s
borders.
Moscow has said the buildup is part of Russian
military exercises. It wants assurances that Russian-
speaking regions in eastern and southern regions of
Ukraine have extensive autonomy and wants Russian
established as the second state language
Posted from WordPress for BlackBerry.
herexg's Blog 