The economy of annexed Crimea is stagnating (VIDEO)

During the ten years of annexation, Russia built new roads for Crimean residents, but limited their freedom. While the occupation authorities are investing money in security forces and defense, there are not enough teachers and doctors on the peninsula. Salaries of residents are still 20–30% less than the national average, and the number of tourists remains the same as in 2013. “Layout” found out what improved and worsened in annexed Crimea after the arrival of Russia.

Crimea began to earn more, but still remains a subsidized region – spending on it is growing

On March 6, 2024, the head of the Ministry of Economy of the Russian Federation, Maxim Reshetnikov, reported that “investment is here [в Крыму] increased threefold compared to 2014, and the growth of the peninsula’s economy was three times faster than the Russian average.”

As the analysis of “Vestka” showed, after the annexation, Crimea actually began to earn more – while the growth rates of its economy are still lower than the all-Russian ones: over eight years, the growth rate of the peninsula’s economy decreased by 10.5 percentage points, while the all-Russian growth rate was + 0.9 percentage points over the same period.

Crimea, like two thirds of Russian regions, is subsidized, that is, it cannot fully provide for itself at its own expense. This is how it was until 2014. As “Vestka” found out, Crimea can independently cover only about a quarter of its budget, and Sevastopol – a third:

Crimea independently earned 66 billion rubles in 2022 – with subsidies of 189 billion, reported the head of the republic Sergei Aksyonov; Sevastopol revenues this year amounted to 72.8 billion rubles, of which almost 48.1 billion were infusions from the center, according to the city budget. For comparison: under the Ukrainian government in 2013, Crimea independently covered 40% of its budget, and Sevastopol – 65%.

What sanctions did Europe impose on Crimea and Sevastopol due to the annexation?

The Crimean Bridge, the Tavrida highway and other roads were built on the peninsula; over 1 trillion rubles (10 billion euros) were spent on them. Immediately after the annexation of Crimea, the Russian authorities relied on the construction and repair of roads in the region. This was one of the main problems of concern to residents: in 2015, according to a FOM survey, 44% of Crimeans noted problems with roads. In 2021, 92% of the population noted an improvement in the quality of roads, TASS reported.

In total, more than 4,000 kilometers of roads were built and repaired on the peninsula from 2014 to 2023, and 660 kilometers in Sevastopol, the heads of the annexed entities reported. At the same time, the share of local roads that do not meet regulatory requirements has increased from 29% to 61.7% over eight years. This means that, despite large-scale repairs and construction, more than half of the roads in Crimea have poor asphalt, no lighting, too narrow sidewalks or other problems.

Nevertheless, the Russian authorities nevertheless implemented several large-scale projects on the peninsula, which became useful under the conditions of annexation:

The most iconic of them is the Crimean Bridge: the president personally came to the opening in 2018, the road even appointed its own mascot in the form of the cat Bridge. Large-scale construction was entrusted to the Stroygazmontazh company of Arkady Rotenberg, a childhood friend of Vladimir Putin.
The Ukrainian authorities have been trying to build the Crimean Bridge since the 1970s, and before the annexation they discussed joint work on it with Russia.

As a result, the Russian Federation implemented a large-scale project on its own: the cost of the bridge was 227.9 billion rubles (about 2.3 billion euros).
Before the annexation, it was possible to get to the peninsula by land through Ukraine, so after the Crimean Bridge became the only road that connects it with the mainland and allows land deliveries of products. Up to 40 thousand cars and 47 pairs of trains can travel through it per day.

Another completed major road project is the Tavrida highway, connecting the Crimean Bridge with Sevastopol. It turned out to be more expensive than expected: in 2016, the head of Crimea Sergei Aksyonov estimated it at 85 billion rubles, but a year later the Ministry of Economic Development announced the cost at 166 billion.

“Tavrida” was also built to bypass populated areas and relieves congestion on local roads, reducing the amount of exhaust gases inside cities. In addition, the route speeds up the journey from Kerch to Sevastopol and Simferopol.

In just 10 years of annexation, the Russian authorities have allocated 1.38 trillion rubles for the development of Crimea and Sevastopol under a federal target program aimed at the construction and development of social and road infrastructure, according to the Ministry of Economy. In March 2022, Putin said that the program to finance the peninsula should last until 2027, and in the future until 2030.

The salaries of Crimeans have increased, but are still less than the average earnings of Russians and Ukrainians

Since 2014, they have been trying to bring the salaries of Crimeans and Sevastopol residents to the national level – this thesis has been repeatedly expressed by Putin since the annexation. According to “Vestka” calculations, wages here have actually increased since then, but do not reach the national average. Moreover, the average salary in Crimea has been declining for the last five years relative to the national average.

In 2013, a Crimean citizen earned on average 2,850 hryvnia (approximately 11,343 rubles in prices of that year), Ukrstat reported. The amount was 87% of the average amount in Ukraine, Vorstka calculated.

Since then, Rosstat has annually recorded an increase in wages, but the ratio with the Russian average has never exceeded 68%.

In Sevastopol, the situation is similar: in 2013, the salary here was 95% of the Ukrainian average. Over 10 years, according to official data, it increased from 3,114 UAH (12,394 rubles) to 47,650 rubles.

But the maximum ratio of wages in the city to the overall figure for Russia over ten years is 73%.