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Crimea is not burden on Russia’s economy but it needs employment program for people

April 07, 2014, 19:03 UTC+3 Zamyatina Tamara
© ITAR-TASS/Alexei Pavlishak

MOSCOW, April 07. /ITAR-TASS/. Crimea’s reunification with Russia has not affected Russia’s economic indicators or the Russian economy’s growth rates, Doctor of Economic Sciences Mikhail Delyagin, the director of the Russian Institute of Globalization, told ITAR-TASS on Monday.

“The Gross Domestic Product (GDP) grew by 0.8% in the first quarter of 2014, which is exactly the same as in the first three months of 2013. It means that Crimea’s incorporation into Russia has not changed the basic trends in the state of the Russian economy,” Delyagin said with reference to the figures provided by the Russian Ministry of Economic Development.

According to Delyagin’s calculations, Crimea’s adaptation to Russian realities will yearly cost Russia 110-180 billion rubles ($3-5 billion).

“The uncommitted funds in the Russian federal budget were valued at 7.6 trillion rubles ($217 billion) on March 1, 2014. Given that Russia no longer pays Ukraine for renting a base in Sevastopol for the Russian Black Sea fleet and does not have the need to create another naval base near Novorossiisk, Russia has even benefited from Crimea’s incorporation,” the Russian expert went on to say.

“At the same time, the outflow of private capital from Russia increased to $65-70 billion in the first quarter of 2014 compared to $62.7 billion in 2013. These figures reflect the panic of venture capital. 'Spare money' which found no application in Russia’s economy was taken out of the country," Delyagin said, adding that he believes this money will return as soon as profitable commercial projects appear in Russia.

In his view, Crimea needs an employment program for its people. “Out of Crimea’s population of two million people, only about 300,000 are officially employed,” Delyagin sai,d offering his plan of resolving Crimea’s employment problem.

“First, it is necessary to create conditions for Crimean Tatars to develop cooperation with Russian small and medium businesses. A huge number of people could be sent to search for artesian water. Enterprising military could start converting Crimea’s military air fields into civilian airports for airlifting tourists or organizing pontoon ferry crossings via the Strait of Kerch,” Delyagin said, enumerating potential job opportunities for the Crimean population.

“First and foremost, Crimea needs to develop tourism infrastructure and health resort services, make that sector of economy transparent and oblige entrepreneurs to pay taxes to the budget,” the economist said.

“Naturally, Crimea lives off its service sector, which accounts for more than 60% of the gross domestic product (GDP) or over 100 billion rubles ($2.8 billion). However, industrial enterprises are the main source of budget revenues,” Svetlana Verba, the Crimean minister of economic development, said in an interview with the Ogonyok magazine.

“Trade and the service sector are hiding the biggest potential for filling the Crimean budget - non-legalized mini hotels and unbridled ‘resort’ trade. We have already started restoring order in this sphere,” Verba said.

According to Svetlana Verba, the peninsula’s economy cannot survive exclusively on tourism and the health resort industry because they provide only seasonal employment.

“Crimea needs to develop those sectors of economy that will create jobs all-year round. They include science-intensive industries and processing of agricultural products,” Crimea’s minister of economic development said.


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