Crimea - 85th Federal Republic of the Russian Federation

Whatever your opinions on the recent political upheavals over the return of the Crimea to the Russian Federation (there you are I’ve already nailed my opinions to the mast ) those of us that deal and trade with Russia must seize the opportunities that a further 2 million people and a New Republic badly in need of restructuring offers.

The Crimea was claimed by Catherine the Great in 1783 as part of the Russian Empire having defeated the Ottomans. After the Socialist Revolution in 1917 Crimea became one of the 89 republics within the Russian Soviet Federative Socialist Republic which itself was one of the Soviet Republics making up the country known as The Soviet Union (USSR). Eventually after boundary changes and splitting up the spheres of influence after the Second World War ( Sorted out by the way at the Churchill/Stalin/Roosevelt conference in Yalta Crimea) there were 15 Soviet Republics of the USSR – Ukraine (minus Crimea) being one of them.

Crimea remained part of Russia until 1954 when Nikita Khrushchev – the then Leader of the Soviet Union and a Ukrainian National gave Crimea “a gift on a Golden Dish” to the Ukraine.

(A bit like Gordon Brown a SCOTTISH Prime Minister of the UK giving the Isle of Man to Scotland!!!) It did not seem so bad then as it was all one country – The Soviet Union.

In my mind the biggest culprits of this debacle was Gorbachev/Yeltsin because when they disbanded the Soviet Union in 1991 and all 15 Soviet Republics became self-governing independent countries they forgot to say to the Ukraine “that includes you but Crimea comes back to Russia.” Had that been established in 1991 it would have been universally accepted and saved a lot of political row and sabre rattling now.

All that aside The Crimea is now the 85th Republic of the Russian Federation, (Sevastopol, the Port on the Crimea home of the Russian Black Sea Fleet is separately the 84th Republic of the RF).

It is a fait accompli and we should now look forward and relish the business opportunities.
The Crimea under the administration of Ukraine suffered from that country’s economic woes and its infrastructure has been neglected. Crimean’s moan that the only work done was on the road from Simferopol Airport to the Ukrainian Government Dachas!

Russia will want to show Crimea, the World and the Ukraine how The Crimea is better off as part of the Russian Federation.
For a start petrol prices have halved and pensions doubled already.

Russia will invest huge amounts of Money into its 84th and 85th Republics.

A figure of Rbs.15bn has been quoted as the first initial tranche of investment.

A bridge will have to be built across the Kerch Strait connecting with the Republic of Krasnodar in mainland Russia, the only land connection between The Crimea and Russia. An underwater tunnel for a rail connection is also being considered.

Rbs.35 bln. will also be invested in the tourism industry but this will be more than matched by private enterprise – New Hotels, updated Airport with direct flight connections, resort attractions, restaurants/bars, transport and road infrastructure and supplies of consumables and consumer goods for resale will follow.

Crimea was the Riviera of the Black Sea at the turn of the 20th century paying host to Russia and Europe’s Nobility, Cultural celebrities and the global traveller. It can become that resort paradise again – it has all the natural attractions and a good climate. It needs the infrastructure development and the training of people to work in all aspects of the tourist industry.

It is already a Port stop on many cruise line schedules and with better and enlarged facilities this will increase.

It’s History with The Crimean War and the infamous Charge of the Light Brigade also adds to its attraction.

The big economic prize lies in the Black Sea’s natural Gas reserves – these are in Crimean Waters and talks with Exxon/Mobile and Shell will have to switch from the Ukraine to Russia – a project estimated at one thousand billion US Dollars.

Crimea gets its energy at the moment through the Ukraine – not satisfactory so underwater cables and pipes must also be built through the Kerch Straits.

Crimean Manufacturing companies are also getting excited at the easier access to the huge Russian Market. The economically stronger and comparably richer customer base is luring these companies to hire workers and upgrade production facilities – good business for western supplies of equipment, tooling and raw materials.

The Real Estate Industry is going to boom with Russia’s elite buying up land and building their holiday dachas. Resort companies building hotels and transforming the Sanatoriums into Spas and upmarket Health clinics.

Sports facilities and Stadiums will also be built and renovated to International standards to host World events.
In can be envisaged that The Crimea and its main resort of Yalta will be given priority in the same way that Sochi in the Caucasus has been internationalised as a sports venue and meeting centre.

The population of Crimea in order to cope with this new era will want to be re-educated and trained to western business standards. Already the possible founding of Russia’s tenth Federal University in the Crimea has been flagged up, but UK educational institutions will need to target this new MBA market and the English Language schools will have many new student anxious to join and speak to the business world.

How to claim this business:

As always with Russia you have to go there – often, be seen to want to invest in their country as partners and to build up strong relationships. The Russia House is planning to organise a recce business trip in September/October this year visiting Simferopol, Sevastopol and Yalta meeting with local businesses, Chambers of Commerce and the Governor’s Office. Your indication of wishing to join this would be appreciated – no commitment at this stage, just a show of interest. Please contact Barry Martin for further information.

Barry Martin

Chairman, The Russia House


Additional information