If as a result of the nation-wide referendum of the multi-national Crimean people it shall become independent, than investments shall flow generously into the free Crimea. And not only from Russia. Russian tourists will flow. First of all, it is a tradition, second – it shall be popular. A “Cabin in Crimea” shall become the dream of all prosperous Russians, land lots and realty estate costs shall jump up. Generally speaking, Crimean people will have a good opportunity to make some extra money.
Such dogmatic opinion is often heard from those, welcoming Russian annexation of the Crimea. Is this scenario of the situation development so good for the autonomous republic and its residents?
The Autonomous Republic of Crimea is the region of grants. It shall be pretty expensive for Moscow to provide it for in terms of international isolation of the autonomy. According to the Head of the Russian Ministry of Finance Anton Siluanov, Crimea budget deficit already now comprises 10 billion UAH, i.e. about 35 billion RUR. In its turn the First Vice Prime Minister of the Autonomy Rustem Temirgaliyev reported, that the Crimea needs about 1 billion USD to assist the budget system and about 5 billion USD of investments.
It seems that these values are not final. In future they shall only grow.
The amounts, to be granted for Crimea, exceed the aid of the Kremlin to Abkhazia and South Ossetia greatly. According to the Kommersant newspaper report, for example, the first plan of the aid for South Ossetia was adopted already in August 2008, when the Government of the Russian Federation granted 500 million. RUR for humanitarian aid and announced, that it would forward 10 billion RUR for infrastructure restoration. In 2013 the Presidential Envoy of the Russian Federation to North Caucasian federal district Aleksandr Khloponin noted that the scope of aid for the republic in 2008 exceeded 34 billion RUR.
Russian reporters note that the aid to Abkhazia since 2010 is financed via complex plan of assistance for social-economic development of the republic. For two years 16 billion RUR was granted. Last October Aleksandr Khloponin stated that financial aid of Russia for Abkhazia in 2013 would be increased by almost a third and comprise 1.803 billion RUR. And Khloponin reported that in 2014-2015 the Russian Federation shall invest into the social development of Abkhazia 3.274 billion RUR.
As the Mass Media note, there are two articles of aid for the republics in the Russian budget – social-economic development and budget investments. According to Kommersant, with respect to the Law on budget implementation for 2012, these numbers comprised for South Ossetia 6.5 billion RUR and for Abkhazia 6.8 billion RUR. In 2013 according to preliminary data 4 and 2 billion RUR were granted respectively.
This January the Head of the Government Dmitry Medvedev ordered to grant for the Ministry of Construction of the Russian Federation the funds for provision of aid for Abkhazia and South Ossetia in 2014-2016. According to the order the Ministry of Construction should have been provided with budget appropriations, provided for the investments under the subdivision “International Affairs and International Cooperation”. The document suggests that each of the bob-recognized republics shall be granted 1 billion RUR between 2014 and 2016 annually.
But has such Russian patronage been of good for these non-recognized republics?
Let’s take for example Abkhazia the budget of which for 70% consists of Russian grants. Today this non-recognized republic, oriented towards the Russian Federation, is the state of clans with high-level corruption and extremely underdeveloped economy.
The economy of Abkhazia grounds on three stones – tourism, retail trade and agriculture. Today agriculture of the non-recognized republic has a complicated period. First of all because of technical underdevelopment its products are f low competitive ability. Secondly, as about half of people left the country after the armed conflict of 90-s, its lands remain to be undeveloped.
Yet since the times of the Soviet Union the main income source of tourism and related retail trade. Many health resorts and holiday hotels were constructed in Abkhazia and they were full even during winter. And the holiday-makers in summer rented rooms from the locals assuring their constant income. Also today Abkhazia is a tourism-oriented country. But there are fewer tourists in the non-recognized republic. And those coming are not rich, mainly from Russia, missing the resorts of the USSR period.
In general as noted in the Analysis of tourist flows in Abkhazia in 2013, published at the web-site of the Chamber of Commerce and Industry of Abkhazia, “the number of visitors of the resort sites in the Republic of Abkhazia in 2013 according to the Resort and Tourism Committee, comprised 120 051 people, which is 6 199 people (5.5%) more than in 2012". According to unofficial information the number of tourist a year is about 400 thousand people: many of them stay in private apartments. By this Abkhaz experts state that official tourist market of Abkhazia has no growth. It is mainly explained by the lack of proper tourist infrastructure.
In this study it is also noted that the operating complex of health resorts, guest houses, hotels and holiday houses comprises about one fourth from the level of 1992. Today the capacity of the tourist market does not exceed 150 000 people per season.
Naturally something has been constructed in recent years: those insignificant investments in Abkhazia are used mainly for tourism. Also for the construction of new guest houses and reconstruction of old ones. But it is a drop in the ocean. There are a greater number of hotels in Abkhazia in a devastated condition. As for staying at locals, the tourists comment on the web-sites on the attitude as follows: "The locals strive to take everything you have, thinking that you are a walking wallet ".
Also the hopes of Sukhumi connected with the Olympic Games in Sochi did not come true. The participation of Abkhazia was only about supply of inert materials – gravel and break-stone – for the construction of the Olympic Games facilities. And these supplies were significantly lower than Abkhazia wished. The flow of tourists visiting the Olympic Games was also small as the infrastructure and quality of service did not meet the requirements of the tourists coming from developed states. The opening of Sukhumi Airport for the Olympic Games did not happen, as the International Civil Aviation Organization (ICAO) does not recognize Abkhazia as a constituent.
In general turning of the neighboring area of the “Big Sochi” into a modern tourist region threatens Abkhazia with serious losses.
As one of the experts noted during the conversation with the author of these lines “it is unlikely that someone shall strive to visit the Soviet Abkhazia going through the Luxurious Sochi ".
One of the main problems for Abkhazia is insufficient investments. Those available are coming from Russia.
The legislative prohibition of selling of lands and realty estate to foreigners also impedes the flow of investments to Abkhazia. Although this prohibition does not prevent Russians to own more or less significant facilities in Abkhazia. As well as the land lots at the Black Sea cost.
Russian protectorate over Abkhazia promotes the appetite of Russian businessmen and politicians, willing to purchase a land lot in a resort part of western Black Sea area. This is illustrated by Abkhaz village Aibga located not far from Sochi: a few years ago Russia within the frameworks of the negotiations on delimitation of the border suggested Sukhumi to give to the Russian Federation 160 sq.km. of the lands around this village.
Because of the fight for property and real estate local business-clans and Russians are conflicting, which resulted into a murder in autumn 2012 of a Russian businessmen, the owner of the company El Petroleum-Abkhazia Sergey Klemantovich and his date Oksana Skarednova.
Also the last year murder of a Russian diplomat Dmitry Vishernev in Abkhazia is also connected under one of the versions with big construction contracts (for the amount of 35 million USD) for the construction of a complex of buildings of the Russian Embassy in Sukhumi. According to another version the reason of the diplomat’s murder could be the conflicts related to real estate: Vishernev, except for the main diplomatic activity, using his contacts with the authorities of the republic, regulated the real estate issues, purchased by the Russians in Abkhazia. The conflicts were caused by the fact that the houses and apartment purchased by the Russian by the sea, sometimes has several owners.
This creates for Abkhazia the image of the country dangerous to be invested into: the risks are too high. Criminal level by the way is in the list of factors making Abkhazia not really attractive for the investors and tourists, as they do not feel safely at beaches and streets. And the hopes of Abkhaz people for the President Aleksandr Ankvab would be able to eliminate corruption failed: the Abkhaz President seems to have lost this battle.
For example, significant amounts of funds, granted by Russia to Abkhazia are actively stolen by local and Russian officials. The following story is demonstrative. In 2010 the Accounts Chamber of the Russian Federation inspected the way Sukhumi spent the funds granted by Moscow. From 1.2 billion RUR received that moment, 348 million RUR simply vanished. Local Abkhaz authorities stated that “the funds were not stoles”, they were simply used inefficiently. But in Abkhazia people do not believe this. The non-recognized republic is constantly quaking with corruption scandals.
This is the price paid Abkhazia and its people for Russian protectorate and international isolation.
Translated by EuroDialogueXXI from Zn.ua