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Russia will develop economies of Crimea and Sevastopol to have them reach levels of country’s other regional economies

August 08, 2014, 19:02 UTC+3 Alexandrova Lyudmila
© ITAR-TASS / Michael Pochuev

MOSCOW, August 08. /ITAR-TASS/. The Russian authorities have set an objective of raising the economic levels of Crimea and Sevastopol. The amount of the money the government is going to allocate is beyond any dreams Crimea and Sevastopol could have while being parts of Ukraine. The money will be allocated for five years, but experts say Crimea may approach the medium national level even earlier, and the development may require fewer expenses.

On Thursday, the Russian government approved a special federal program for the social and economic development of the Republic of Crimea and of the city of Sevastopol to 2020.

“The program’s financing within five years will be almost 700 billion roubles, where about 660 billion come from the federal budget,” Prime Minister Dmitry Medvedev said.

The special program should synchronise fully life levels in the new regions with that in the rest of the country, Medvedev said. Currently, he explained, the Crimean social and economic development data are by several times lower than those in Russia’s other regions.

The program allocates money for development of transport (416.5 billion roubles, including funds for construction of the bridge across the Strait of Kerch), engineering infrastructures (66 billion roubles, including expenses for organisation of water supplies), and for energy infrastructures (49 billion roubles). Healthcare modernisation will require 67 billion roubles, and modernisation of schools and kindergartens - 26.3 billion roubles. The Russian government will allocate 21 billion roubles for development of the Crimean Artek children’s resort.

The special program plans expenses for organisation of one techno park and four industrial parks (over five billion roubles), as well as ten billion roubles for resettlement of repressed peoples (mostly the Crimean Tatars).

Initially, the Ministry of Regional Development forecasted necessary expenses at one trillion roubles, but the Finance Ministry argued the expenses. Thus, the allocated money was cut by almost 30% “The financing will not be increased later on, as the program is adopted now,” Gazeta.Ru quotes Deputy Minister of Crimean Affairs Andrei Sokolov as saying. The official added the sanctions from Western countries would not affect prices of the projects in the program.

Alexei Skopin of the Higher School of Economics says the program may be finalised even sooner and with lower expenses. “The potential of Crimea is much higher than any Russian region may have, and if the money is used correctly, a feedback may be much earlier than in five-years. It is most important that the tourism sector develops well and the collection of taxes rises,” he told ITAR-TASS.

The expert referred to the example of restoring Chechnya, which had been receiving 80 billion roubles a year and which became a booming region in five years.

There are obvious reserves for saving 200 billion roubles in the program to develop Crimea, he said. For example, money may be saved if construction of the bridge across the Strait of Kerch is done by China, as the Chinese are happy to invest fully in that project.

It would be necessary to attract foreign companies, and first of all those from Turkey and China, the expert continued. Turkey has great experience in organisation of tourism infrastructures and in development of agriculture, and China is experienced in construction of major infrastructures. However, under the current conditions of sanctions, possible investments from Western Europe are out of question, the expert said.

“Crimea’s major issues are water, energy and transport,” he said. As for stable water supplies the problem could not be solved at low cost while the military actions in Ukraine’s south-east continue, he said.

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