Tuesday, May 13, 2014

Window on Eurasia: Ten Ways the Crimean Anschluss is Imposing Costs on Russia

Paul Goble

            Staunton, May 13 – Even as Moscow continues to celebrate the annexation of Crimea and some Russians push for the absorption of even more Ukrainian territory, ever more commentators are pointing to the very real costs that Putin’s Crimean adventure are imposing on Russians as a people.
            Ukrainian commentator Oleg Leusenko provides a useful checklist of ten ways in which the Crimean Anschluss is already a burden.  His listing is not complete: one can add other costs as well. But it does bring together many of the imagined achievements and their real price tags (svobodu-narodam.livejournal.com/746203.html).
            First, according to the Russian finance ministry, “the Russian state budget will spend 800 billion to a trillion rubles (20-30 billion US dollars) on ‘the restoration’ of Crimea alone.”
            Second, the Russian budget will have to pay from 108 to 130 billion rubles (3-4 billion US dollars) a year for pensions and the salaries of government employees there.
            Third, “Crimea will become ‘an internal offshore,’” a place where many firms will relocate in order not to pay taxes, thus leaving less money to pay the new costs.
            Fourth, the equalization of prices between Crimea and the Russian Federation will mean that visiting the peninsula will now be beyond the means of ordinary Russians.
            Fifth, Russian siloviki who had already been restricted in their travel now after Crimea can’t go abroad at all.
            Sixth, capital investment in the Russian economy has fallen 13 percent since the beginning of the Crimean campaign.
            Seventh, capital flight from Russia was greater during the first three months of this year than for all of last.
            Eighth, foreign investment is down by more than two-thirds.
            Ninth, as a result of these trends, the Russian economy is shifting from stagnation to recession.
            And tenth, Russia finds itself in a weaker position in gas talks with China. And it may soon lose its European oil and gas market.
            Widely reported poll results (see ng.ru/politics/2014-05-12/3_tv.html) suggest that at present, Russians are quite prepared to stand up to sanctions and even the rise of a new “iron curtain” around them.  But those attitudes reflect more a temporary high of patriotic enthusiasm than anything else.

            The costs Leusenko talks about are among those Russians are going to have to pay not just today and tomorrow but a long time to come, and they are likely to stop being a matter of national pride as Vladimir Putin would like and to become an ever more unwelcome burden on a people that is already having to bear too much.


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