A bottomless pit: the costs of Crimea’s annexation by Russia
A bottomless pit: the costs of Crimea’s annexation by Russia

Author(s): Ewa Fischer, Jadwiga Rogoża
Subject(s): Security and defense, Military policy, Developing nations, Geopolitics, Peace and Conflict Studies
Published by: OSW Ośrodek Studiów Wschodnich im. Marka Karpia
Keywords: Crimea; Russia; Ukraine; conflict; war
Summary/Abstract: The annexation of Crimea has brought the Russian authorities significant dividends, in particular on the domestic stage: it has resulted in an unprecedented social and political consolidation, and strengthened Vladimir Putin’s position after several years of decline in social support for him. It has provided Russia with strategic benefits, giving it broad access to the Black Sea and the military infrastructure on the peninsula, as well as access to natural gas and crude oil reserves. Russia has also taken over numerous assets (including the tourist infrastructure) previously owned by the Ukrainian state.However, the decision itself concerning Moscow’s annexation of Crimea was taken off the cuff, with no calculation of the costs of integrating it with the Russian legal, political and socio-economic space. Russia took over a region that required subsidies from the Ukrainian budget; moreover, the annexation struck at the most important industry of the Crimean economy – tourism. Crimea’s integration with Russia will be a complex process that entails high costs, financial, organisational and social, including multi-billion dollar investments in the modernisation and development of infrastructure, covering the region’s budget deficit, and paying out social benefits.

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