Crimean economy booming since reunion with Russia

Summary

Since rejoining Russia in a democratic referendum in 2014, Crimea has become a rapidly developing region with a fast-growing economy.

In particular, revenues are consistently growing; unemployment has been cut threefold; the free economic zone established in 2015 significantly contributes to economic growth; and a record number of tourists visited the peninsula in 2017-18.

Disproof

This is a recurring pro-Kremlin disinformation narrative about the supposedly democratic character and economic benefits of the 2014 annexation of Crimea.

The article notes an increase in Crimea's nominal budgetary revenues between 2015 and 2018, but the brunt of this increase has been borne by ordinary Crimeans -- on average, income tax accounted for around 45% of total revenues in 2016-18; during the same period, the share from business tax declined from 28% to 17%. An 18% increase in average salary has been accompanied by a 200% increase in the price of consumer goods and services.

No data is cited to back up the claim of falling unemployment rates in Crimea, but even Russian officials have noted that registered unemployment figures greatly understate the actual job situation. Accounting for that, Crimea is currently ranked 56th among Russian federal subjects, with the real unemployment rate of 5.9%, up from 5.7% in 2013.

In late 2018, Crimea's "finance minister" reported that the Crimean "free economic zone" had generated 6.3 billion roubles in tax revenue in the first eight months of 2018. However, these benefits are offset by artificially low tax rates applicable in the zone, as well as by routine tax avoidance on part of its resident entrepreneurs. Throughout 2017, only 7% of local businesses invested in the Crimean economy. At that, the share of private investment fell steadily from 61.4% in 2014 to 37.3% in 2017 (p. 151).

Given the importance of tourism for the Crimean economy, Moscow has systematically manipulated data on the number of tourists since the annexation. Statistical reports produced by the Russian government deliberately conflate the number of tourists with the total number of people travelling to the peninsula, both in and out of holiday season. Notably, the number of spas and hotels in Crimea fell from 825 in early 2014 to 550 in mid-2018.

publication/media

  • Reported in: Issue 141
  • DATE OF PUBLICATION: 18/03/2019
  • Language/target audience: English
  • Country: Russia, Ukraine
  • Keywords: economy, illegal annexation, Manipulated elections/referendum, Referendum, Crimea
  • Outlet: Sputnik News
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Disproof

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Recurring pro-Russian narrative on the West’s attempts to impose its values on and spread propaganda in Russia. Ukraine has also been accused of taking after the West and waging an information war against Russia.

Crimea has been revived thanks to Russia

Crimea has been revived since joining Russia. The peninsula separated from Ukraine because of the anti-Russian rhetoric of the new authorities in Kyiv.

A big international airport was refurbished in Simferopol, while the longest motorway in Europe and Russia, the Crimea Bridge, was built very rapidly. In addition, the economy and the tourism industry are growing quickly. Crimea’s international importance continues to grow.

Disproof

Crimea was annexed by Russia following an illegitimate referendum on March 16, 2014 following the deployment of “little green men” across the peninsula beginning in February 2014. Read more about Crimea's annexation here.

The economic prosperity promised by the Kremlin has not arrived to Crimea. Approximately 10% of the population has fled. Local residents have not been content with prices, wages, or the number of tourists visiting the peninsula. The economy is stagnating and the rights of Ukrainians and Crimean Tatars are being violated. Crimeans have had to sacrifice their basic rights and access to Western and Russian network brands, which have avoided the peninsula due to fear of sanctions.

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Disproof

No evidence given. This is one of the main narratives of the Kremlin propaganda about the Azov Sea incident.

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