If and when Russia absorbs Crimea, acquiring the peninsula isn’t going to come cheap. The real cost of Crimea might not be sanctions from the US and EU but the funding it’s going to take to support the region. Here’s how Leonid Bershidskii breaks down the numbers for subsidizing Crimea in Forbes Russia.
In the first half of 2013, according to figures from Kyiv Investgazet, Crimea (without Sevastopol) was fifth of 26 Ukrainian regions by the amount of net-assistance from the central budget. (In first place, despite the widespread myth of the “freeloading west” is Kyiv and second and third are Donetsk and Lugansk provinces). For these six months, Crimea received from Ukraine’s state budget 3.78 billion more than it paid in. If you consider 4 rubles to a hryvnia—at the rate until the end of last June—that is 15 billion rubles ($410 million). That’s 30 billion rubles a year.
According to Ministry of Finance figures on the distribution of aid to Russia’s regions in 2014 there are three regions with higher levels of subsidizing from the federal budget: Yakutia, Dagestan, and Kamchatka. For every Crimean, Ukraine currently allocates the region a subsidy of 15,200 rubles, and in 2014 Russia allocates to Chechnya 14,750 rubles a person.
There’s also infrastructure costs:
According to the Ukrainian edition of Insider, currently 65% of gas supplies in the Crimea are delivered by the 100% state Chernomorneftegaz which produces this gas in the Black and Azov Seas. You can, of course, change this proportion and deliver gas directly from Russia, but you have to build the pipeline.
Approximately 80% of the water comes to the Crimea through the North-Crimean channel from Ukraine. True, no one can cap the channel, but Ukraine is quite able to take more money for water.
Four-fifths of the electricity to the Crimea is supplied by Zaporizhia Kakhovskaya HPP, located outside the Crimean territory. Rates here could be raised as well.
Russia will have to either negotiate for the livelihood of Crimea with Ukraine or to build new infrastructure. The first would be difficult: outside of sending troops to Kiev if it drives a hard bargain, something will have to give. And second, it’s expensive.
Basically, Crimea is potentially a heavy economic burden.
As Forbes concludes, “imperialism is generally expensive. Imperialism during years of economic stagnation is ruinous.”
You Might also like
By Sean — 4 years ago
The consensus around Russia’s ban of food imports from the US and EU is that Russia is only hurting itself. As a NY Times editorial, aptly named “Russia Sanctions Itself,” stated, “No doubt many producers in these countries will feel the loss of $30 billion in food exports to Russia, but the overall effect on their large and diversified economies will be marginal. Russia, by contrast, imports about 40 percent of its food needs in terms of value, and the Russian agriculture minister has acknowledged that the sanctions would cause a spike in inflation.” If this is the case, then what’s Putin’s strategy behind the food ban?
Writing in Slon, Maksim Samorukov takes a stab at Putin’s possible strategy. In 2013, the EU exported 10.5 billion euros of food to Russia, about 10 percent of its total agricultural exports, making it the second largest market after the US. It’s a growing market, Samorukov states, because Russia imports three times more from Europe than it did ten years ago. Moreover, these exports are important to balance trade in Russian oil and gas. Nevertheless, 10.5 billion euros doesn’t seem like a lot when spread over 28 EU countries. Nevertheless, some countries will be more affected than others as this chart shows.
And this is perhaps what Putin is banking on. Europe’s agricultural lobby will put pressure on their governments and countries like Spain, which has the most to lose with Russia’s food ban, will break the solidarity of the EU. It’s wishful thinking, for sure, but here’s what Samorukov argues:
- The food ban will hit European farmers, and their discontent might force governments to weaken their resolve. Samorukov writes, “Farmers in Europe are very organized people, with extensive experience in lobbying and a tradition of organizing mass demonstrations at the slightest threat to their welfare. You can always find a group of fishermen or peasants at the official European Union buildings in Brussels expressing their indignation at the next food policy. And if it comes to any major changes in agricultural policy, then there is bound to be a crowd of many thousands. . .” Moreover, these farmers will have the sympathy of the population, adding to the political pressue. Putin is essentially counting on European democracy to work in his favor.
- The EU’s pocket book is squeezed on both sides. There’s the “pampered” farmers in western Europe that refuse to accept any reduction of agricultural subsidies on one side, and the poorer famers from eastern Europe on the other. Until now, according to Samorukov, famers in the east were getting fewer subsidies than their counterparts in the west. But now the EU will have to pay those famers equally to alleviate the pain of the Russian food ban. “A unified EU budget, where agrarian subsidies make up almost half of expenses, cannot support such a burden.” Putin, therefore, is hoping that the EU financial woes will play to his advantage as well.
Russian ban on European food seems to have been invented in the hope to take advantage of these difficulties in the EU’s agricultural sector and try to split the unity of the Union. For example, the countries of southern Europe, that have little enthusiasm for sanctions against Russia, joined the them solely to not betray European solidarity. And now the imposition of sanctions would mean they would not only have possible problems with the flow of tourists, but also tangible losses to their already problematic and large agricultural sector.
Samorukov, however, doubts this will work:
The Kremlin certain in its cynicism, as usual, underestimates the principles of Western leaders and their willingness to make sacrifices for the sake of the idea of European solidarity, especially when it comes to such lawlessness as the revision of the borders. But still the impact on agriculture was the best choice from the viewpoint of the proportion of losses and effect.
There’s also the shooting down of MH17 by Russian backed separatists. This changed everything, and explains Europe’s suddenly discovered resolve.
Though Samorukov doesn’t make the argument, I think there’s a possible third idea behind Putin’s thinking: the long term goal of reducing Russian dependence on the West. This project of import substitution coincides with the nationalist fervor that has characterized Putin’s third term. In the short term, Russia will likely increase its exports from places like Brazil. In the long term Putin is banking on the food ban to invigorate Russia domestic agricultural production. Russian consumers will certainly feel the pinch of this policy, but as Samorukov states, the Kremlin can reassert that Russia is a besieged fortress and its people must sacrifice for the sake of sovereignty. But this mobilization can’t last forever. The question is whether Putin’s strategy will pay some geopolitical dividends before the nationalist mobilization peters out.Post Views: 514
By Sean — 9 years ago
President Bush sent a gushing statement to Georgia on the fifth anniversary of the “Rose Revolution.” Bush said in White House press release,
One of the most inspiring chapters in the history of freedom was written by the Georgian people during the Rose Revolution. Thirsting for liberty and armed only with roses in hand, citizens throughout Georgia peacefully staked claim to their God-given right of liberty. These demonstrations proved once again, that when given a choice, people choose to live in freedom.
On this anniversary, Americans honor the brave Georgian citizens who defended freedom, and we renew our commitment to supporting Georgia’s democracy, independence, sovereignty, and territorial integrity. We also look forward to the day when the light of liberty shines on all people throughout the world.
Blech. Under normal circumstances, one could, in fact, one should ignore Bush’s blathering. His days are numbered, he’s the lamest of all lame ducks, and frankly even he’s looking like January 20 can’t come fast enough. But these aren’t normal circumstances. Especially since along with an anniversary greeting came $250 million, the first installment of the $1 billion the US promised to send Georgia as compensation for Saakashvilli’s little war.
The money is to prop up Georgia’s budget as follows:
The USD 250 million grant will fund Georgia’s budget expenditures to cover state pensions, state compensation and state academic stipends – USD 163.3 million; health care costs for people living below the poverty line – USD 26.1 million; allowances to individuals displaced by the conflict in Abkhazia USD 6.1 million; financial support to schools through a voucher system on a per-student basis USD 24.2 million; USD 30.3 million will be allocated for compensation and salaries for government employees of all ministries excluding the Ministry of Defense and Ministry of Interior, according to the U.S. embassy.
I love how the Bush Administration snuck school vouchers into the aid. They’ve been trying to shove this code phrase for privatizing public schools down Americans’ throats to no avail. One sure way to force a privatization experiment ship it to a foreign country all nice and wrapped up with aid money.
Now granted, in the big scheme of things, $250 million is chump change to the US coffers. It pisses away $1 billion in Iraq in three days. But considering the recent uproar over holding US automakers responsible for putting themselves on the brink of bankruptcy, shouldn’t there at least be some commotion over sending money to bail out a country that got itself in a mess? Guess not. Apparently claiming your “God-given right of liberty” comes with a few perks and a lot more dollars.Post Views: 134
By Sean — 7 years ago
Victory Day. The most sacred holiday in Russia. The day when razzle and remembrance blend. The day when Russia becomes a smooth space. All the antagonisms and hierarchies in Russian society should collapse, if only for a brief moment, into the semblance of unity. World War II, or The Great Patriotic War as it’s referred to in Russia, is the most important event for post-Soviet Russian national identity. Its memory is supposed to bind even if the actual experience of the war divided, dislocated, and dismembered Soviet society.
Yet, while Victory Day allows for unity, the event that symbolically commemorates and represents that unity, the parade, is a mediated experience for most Russians. Granted, the Russian landscape is dotted with local Victory Days which localize the war’s memory, yet, in a way, all of these flow, like Russian state power itself, from Red Square. And that parade, as I experienced last year, turns that smooth space into a striated one not just with its security barriers, metro station closings, and street closures, but also the narratological barriers the politics of the present erects around its memory. One can point to many silences that disrupt the war’s smooth narrative: the deportations of the Chechens, Ingush, Germans, Finns, Crimean Tatars, Karachais, Kalmyks, Balkars, Kabardins, Poles, Kurds, Turks, and others, Gulag labor, the dismemberment of Poland and the Katyn Massacre, the Soviet occupation of the Baltics, the draconian “Not a step back” Order No. 227, blocking units, and punishment brigades, the Red Army’s revenge pillaging, raping, and killing as it moved west, the forced imposition of imperial rule over Eastern Europe, and finally, the role of Stalin himself. Also where the Holocaust fits into Russians’ historical memory of the war remains unresolved. As does the question of the seemingly interchangeable categories of perpetrators and victims. All of these, and more, pound on the walls of the Russia’s national memory of the war at the same time they erect new barriers and fortifications in the creation of an overarching history, memory and commemoration of the war not just in Russia, but in Europe as a whole.
Nor does it look like this problem of the war’s history and memory and experience and narrative will be resolved anytime soon. In fact, consensus on these issues is becoming increasingly remote, and others would argue, the debate is moving into potentially historically and politically dangerous territory as some seek to create narratives of the 20th century in general and the war in particular where the victims of Nazism and Communism are rendered equivalent. This move toward equivalence is viewed by some as violating perhaps the taboo of taboos, the historical uniqueness of the Shoah.
The place of the Holocaust in the general memory of WWII has been undergoing gradual marginalization particularly in post-communist Europe, where some see “Holocaust envy,” as best articulated in the Prague Declaration in 2008, and resolutions by the Council of Europe and the European Parliament, has taken hold. In 2005, the late Tony Judt noted this trend of equivalence as Eastern Europe reckons with a half century of communism:
The difficulty of incorporating the destruction of the Jews into contemporary memory in post-Communist Europe is tellingly illustrated by the experience of Hungary. In 2001 the government of Viktor Orbán established a Holocaust Memorial Day, to be commemorated annually on April 16 (the anniversary of the establishment in 1944 of a ghetto in wartime Budapest). Three years later Orbán’s successor as prime minister, Peter Medgyessy, opened a Holocaust Memorial Center in a Budapest house once used to intern Jews. But much of the time this Holocaust Center stands nearly empty, its exhibits and fact sheets seen by a thin trickle of visitors—many of them foreign. Meanwhile, on the other side of town, Hungarians have flocked to the Terrorháza.
The Terrorháza (“House of Terror”), as its name suggests, is a museum of horrors. It tells the story of state violence, torture, repression, and dictatorship in Hungary from 1944 to 1989. The dates are significant. As presented to the thousands of schoolchildren and others who pass through its gloomy, Tussaud-like reproduction of the police cells, torture equipment, and interrogation chambers that were once housed there (the House of Terror is in the headquarters of the former security police), the Terrorháza’s version of Hungarian history draws no distinction between the thugs of Ferenc Szálasi’s Arrow Cross party, who held power there from October 1944 to April 1945, and the Communist regime that was installed after the war. However the Arrow Cross men—and the extermination of 600,000 Hungarian Jews to which they actively contributed—are represented by just three rooms. The rest of the very large building is devoted to a copiously illustrated and decidedly partisan catalog of the crimes of communism.
The not particularly subliminal message here is that communism and fascism are equivalent. Except that they are not: the presentation and content of the Budapest Terrorháza make it quite clear that in the eyes of the museum’s curators communism not only lasted longer but did far more harm than its neo-Nazi predecessor. For many Hungarians of an older generation this is all the more plausible for conforming to their own experience. And the message has been confirmed by post-Communist Hungarian legislation banning public display of all representations of the country’s undemocratic past: not just the swastika or the Arrow Cross symbol but also the hitherto ubiquitous red star and its accompanying hammer and sickle. Rather than evaluate the distinctions between the regimes represented by these symbols, Hungary—in the words of Prime Minister Orbán at the opening of the Budapest House of Terror on February 24, 2002—has simply “slammed the door on the sick twentieth century.”
But that door is not so easy to close. Hungary, like the rest of Central and Eastern Europe, is still caught in the backdraft.6 The same Baltic states which have urged upon Moscow the duty to acknowledge its mistreatment of them have been decidedly slow to interrogate their own responsibilities: since winning their independence neither Estonia nor Latvia nor Lithuania has prosecuted a single case against the surviving war criminals in their midst. In Romania—despite former President Iliescu’s acknowledgment of his country’s participation in the Holocaust—the “Memorial of the Victims of Communism and Anti-Communist Resistance” inaugurated at Sighet in 1997 (financed in part by the Council of Europe) commemorates assorted interwar and wartime Iron Guard activists and other Romanian fascists and anti-Semites now recycled as martyrs to Communist persecution.
In support of their insistence upon “equivalence” between the suffering under fascist and communist regimes, commentators in Eastern Europe can point to the cult of the “victim” in contemporary Western political culture. We are moving from winners’ history to victims’ history, they observe. Very well, then let us be consistent. Even if Nazism and communism were utterly different in intent—even if, in Raymond Aron’s formulation, “there is a difference between a philosophy whose logic is monstrous, and one which can be given a monstrous interpretation”—that was scant consolation to their victims. Human suffering should not be calibrated according to the goals of those responsible for it. In this way of reasoning, for those being punished or killed there a Communist camp is no better or worse than a Nazi camp.
Indeed, you can see some of this presently being played out on Victory Day in Ukraine, as this report from Russia Today shows:
Russia, with much justification, views this transformation of the memory of liberation into the memory of conquer as deeply insulting. Yet the whether one thinks about the legitimacy of these moves, they nevertheless raise some quite uncomfortable questions about the basis for history, memory and identity. How to reconcile all these memories of victimhood into a general narrative, where the field of victims in the war can be objectively be dispersed between the war’s winners and losers? Can it be done? Should it? Or is the European memory of the war, as Tony Judt suggests, ever to remain “deeply asymmetrical”?
Or to put it another way, can national identity for the 21st century, particularly in post-communist space, kick the historical hangover of the 20th? Only time will tell, but with each Victory Day it appears increasingly doubtful.
Image: Totally Cool PixPost Views: 261