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Adaptation to Russian reality ahead for Crimea

March 19, 2014, 15:04 UTC+3 Alexandrova Lyudmila

MOSCOW, March 19. /ITAR-TASS/. After 22 years in Ukraine Crimea is going back to Russia’s fold as two regions - the Republic of Crimea and the city of federal significance Sevastopol. The agreement was signed in the Kremlin on Tuesday with the participation of Russian President Vladimir Putin and heads of the newly accepted regions. From now on, the focus will be on their adaptation to Russian life. The interim period for Crimea to digest the Russian legislation and establish governing bodies is to be completed by the year-end.

Crimeans will have three languages of equal status — Russian, Ukrainian and Crimean Tatar. Until recently, Ukrainian had been the official language, while Russian enjoyed the status of a regional language. Crimea’s border on Russia becomes Russian border, while Ukrainian citizens living in Crimea and Sevastopol became Russians on Tuesday. Yet they will still have the right to choose - those unwilling to acquire Russian citizenship can declare this within a month and retain their citizenship.

The first elections to the new regions’ governing bodies are scheduled for the second Sunday of September 2015 — Russia’s unified election day. Until then their authority will be on the shoulders of the parliament and ministerial council in Crimea and the city legislative assembly in Sevastopol.

Adaptation of Crimea’s economic, financial, credit and legal systems to Russian regulations will take the interim period to be completed till the year-end. The peninsula will be shifting towards ruble payments.

According to the Minister of Economic Development Alexei Ulyukaev, Crimea’s transition from the hryvnia to the ruble implies modification of payments, settlements, correspondent accounts, banking system, bringing licensing in compliance. This can take two-three months, while the issue of special tax regimes in Crimea may take a little longer.

Experts believe that bringing a former Ukrainian beneficiary region up to the average Russian standard will prove one of the costliest tasks, as salaries of public sector workers, pensions and social aid in Russia considerably exceed the current payments in Crimea. In particular, Russia will need 23.3 billion rubles a year to bring the Crimean average pension to the Russian level.

First Russian pensions will be paid to more than half a million Crimean retirees as soon as in April. Crimeans may join the Russian system of compulsory health insurance in April and start getting social aid. Local doctors will get a salary 35% above the previous region’s average like those in inland Russia.

However, it is investments in the peninsula’s infrastructure, not the regular costs that can become the largest spending item in Crimea. Over the last three years, per capita investments in Crimea were 2-3 times less than in the average Russian beneficiary region.

On Tuesday, Russian Minister of Economic Development Alexey Ulyukaev talked to journalists about what support for the Crimean economy would cost Russia. Short-term costs, he said, “are more or less comprehensible” and based on the evaluations of Crimean budget and transfers necessary to sustain its balance. He estimated Crimea’s monthly budget deficit at $80-90 million.

“As for long-term costs, we are naturally evaluating the problems of transport and energy infrastructure. Transport infrastructure can require up to 100 billion rubles, energy and communication infrastructure will also need dozens of billions of rubles,” Ulyukayev said.

Defense and law enforcement services are also set for Crimea’s accession to Russia. The Crimean army and police are joining the Russian units. First young Crimeans eligible to join the military would start serving in the Russian army this spring, Crimean Prime Minister Sergey Aksyonov said on Tuesday. A source in the Russian Ministry of Defense has told the RBC daily there would be no inspections of Crimean forces’ competency prior to their joining the Russian army.

Ukrainian military now stationed in Crimea can leave the peninsula, the Russian president’s press officer Dmitry Peskov told BBC — they should either join the Crimean forces, which will now become part of the Russian army, or leave Crimea.


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