The Bad Economics Of Crimean Independence

Whatever political and ethnic forces are at play, all sides must remember that Crimea's finances and infrastructure are Ukrainian to the core.

The port of Sevastopol is the hub of the Crimean economy
The port of Sevastopol is the hub of the Crimean economy
Dmitri Butrin, Aleksei Shapovalov, Anna Colodovnikova and Anastasia Fomicheva

MOSCOW – The new regional government of Crimea would in theory be in a unique position to double-dip on aid from both Kiev and Moscow. It is just one twist in the crucial economic question that must be considered in any discussion of Crimean independence from Ukraine.

After a recent meeting in Moscow between Russian Prime Minister Dmitry Medvedev and senior finance officials of the new Crimea regional government, the Kremlin says it is preparing a financial aid package for Crimea. The Vice Premier of the new Crimean government said that the region would need around $1 billion in aid and $5 billion in “investment.” Considering the population of Crimea is around 2 million, that is less per capita than the aid that Russia gave to South Ossetia after hostilities broke out there with Georgia in 2008.

The Russian Finance Ministry hasn’t revealed the exact contents of its offer, but it seems to be considering some combinations of loans and pure aid.

The region of Crimea is entirely integrated into Ukraine. In spite of the fact that all of Crimea’s tax revenue stays in the region (other regions in Ukraine contribute 50 percent of tax revenue to the federal budget), around 70 percent of Crimea’s monthly government expenditures are funded by transfers from Kiev.

It received around $350 million from Kiev in 2013 and, excluding customs taxes, collected around $200 million locally. It appears quite clear that when the leaders of Crimea were discussing finances with Moscow, they were trying to see if Russia could replace that money.

Still, even in the face of such negotiations, it is politically difficult for Kiev to refuse to send Crimea its usual cash transfer, because that money helps legitimize Kiev's assertion that Crimea is part of Ukraine.

“We are fulfilling all of our financial obligations to Crimea, and time will tell what the future holds,” a Ukrainian finance ministry official declared this week.

The Ukrainian government also is expected to pays retirement benefits to residents of Crimea. Ukraine's Social and Political Ministry reported that pensions in Crimea were fully paid in February, even though Kiev only received 24% of the region’s contributions to the state pension fund in February. Further complicating matters, Russia could refuse to pay the current government in Kiev, which it considers illegitimate, the yearly rent of $97 million for its naval base in Sevastopol (of which $6 million is ultimately sent back to the city of Sevastopol). It could make those payments directly to Crimea's pro-Russian regional Prime Minister Sergei Aksenov.

It is fully possible that the autonomous government in Crimea could accept financial transfers from both Russia and Ukraine – both sides are prepared to pay, especially because there is already a precedent and infrastructure set up for accepting “investment” from Russia through special funds. But it’s unlikely that Russia will agree to spending $5 billion on investment in Crimea. Any money meant to “unify” Crimea with Russia will not materialize for at least three or four years.

The energy conundrum

Further complicating matters is energy policy. Separating Crimea from the rest of Ukraine in terms of energy production would be a long-term infrastructure and financial project. Although Ukraine depends on Russia for much of its energy, the energy in Crimea is mostly produced at power plants located elsewhere in Ukraine. Crimea only produces about one-tenth of the energy it consumes, with the rest sent in from other parts of Ukraine. Russia and Crimea are separated by the Strait of Kerch at the entrance of the Black Sea, and there are no underwater cables through the Strait.

A 2009 map of existing and proposed Russian natural gas pipelines to Europe. (Samuel Bailey via Wikipedia)

Southern Russia has the energy capacity to supply power to Crimea, says Vladimir Sklyar, an energy analyst. But he thinks that Crimea would need to have gas-based power plants, which would cost around $1.8 billion to build and could take up to 3 years to open.

It wouldn’t be too difficult for Crimea, which also lacks an oil refinery, to get oil through its ports, experts say. It’s worth noting that cargo trains have continued to run to Crimea from the rest of Ukraine even during the crisis. There is a clear understanding that unless Crimea’s sea ports could be blocked, there is little sense in trying to put the region under siege. But if the question of electricity – which Crimea depends on for its supply of fresh water – isn’t solved, no other investments from Russia really make sense except short-term investments to ensure the region’s independence and possibly off-shore gas exploration.

Crimea’s dependance on Russian aid would inevitably increase. Spa tourism plays a big part in the Crimean economy, and the 2014 season already seems to be a bust because of the conflict, leaving all those who depend on tourism without an income. If you consider that, financing Crimea could easily cost Russia $100 million per month.

And that would come in the form of grants, not loans. Because no one would ever count on Crimea, no matter what flag it flies, being able to service debt and have a budget surplus in the future.

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What It Means When The Jews Of Germany No Longer Feel Safe

A neo-Nazi has been buried in the former grave of a Jewish musicologist Max Friedlaender – not an oversight, but a deliberate provocation. This is just one more example of antisemitism on the rise in Germany, and society's inability to respond.

At a protest against antisemitism in Berlin

Eva Marie Kogel


BERLIN — If you want to check the state of your society, there's a simple test: as the U.S. High Commissioner for Germany, John Jay McCloy, said in 1949, the touchstone for a democracy is the well-being of Jews. This litmus test is still relevant today. And it seems Germany would not pass.

Incidents are piling up. Most recently, groups of neo-Nazis from across the country traveled to a church near Berlin for the funeral of a well-known far-right figure. He was buried in the former grave of Jewish musicologist Max Friedlaender, a gravesite chosen deliberately by the right-wing extremists.

The incident at the cemetery

They intentionally chose a Jewish grave as an act of provocation, trying to gain maximum publicity for this act of desecration. And the cemetery authorities at the graveyard in Stahnsdorf fell for it. The church issued an immediate apology, calling it a "terrible mistake" and saying they "must immediately see whether and what we can undo."

There are so many incidents that get little to no media attention.

It's unfathomable that this burial was allowed to take place at all, but now the cemetery authorities need to make a decision quickly about how to put things right. Otherwise, the grave may well become a pilgrimage site for Holocaust deniers and antisemites.

The incident has garnered attention in the international press and it will live long in the memory. Like the case of singer-songwriter Gil Ofarim, who recently claimed he was subjected to antisemitic abuse at a hotel in Leipzig. Details of the crime are still being investigated. But there are so many other incidents that get little to no media attention.

Photo of the grave of Jewish musicologist Max Friedlaender

The grave of Jewish musicologist Max Friedlaender

Jens Kalaene/dpa/ZUMA

Crimes against Jews are rising

Across all parts of society, antisemitism is on the rise. Until a few years ago, Jewish life was seen as an accepted part of German society. Since the attack on the synagogue in Halle in 2019, the picture has changed: it was a bitter reminder that right-wing terror against Jewish people has a long, unbroken history in Germany.

Stories have abounded about the coronavirus crisis being a Jewish conspiracy; meanwhile, Muslim antisemitism is becoming louder and more forceful. The anti-Israel boycott movement BDS rears its head in every debate on antisemitism, just as left-wing or post-colonial thinking are part of every discussion.

Jewish life needs to be allowed to step out of the shadows.

Since 2015, the number of antisemitic crimes recorded has risen by about a third, to 2,350. But victims only report around 20% of cases. Some choose not to because they've had bad experiences with the police, others because they're afraid of the perpetrators, and still others because they just want to put it behind them. Victims clearly hold out little hope of useful reaction from the state – so crimes go unreported.

And the reality of Jewish life in Germany is a dark one. Sociologists say that Jewish children are living out their "identity under siege." What impact does it have on them when they can only go to nursery under police protection? Or when they hear Holocaust jokes at school?

Germany needs to take its antisemitism seriously

This shows that the country of commemorative services and "stumbling blocks" placed in sidewalks as a memorial to victims of the Nazis has lost its moral compass. To make it point true north again, antisemitism needs to be documented from the perspective of those affected, making it visible to the non-Jewish population. And Jewish life needs to be allowed to step out of the shadows.

That is the first thing. The second is that we need to talk about specifically German forms of antisemitism. For example, the fact that in no other EU country are Jewish people so often confronted about the Israeli government's policies (according to a survey, 41% of German Jews have experienced this, while the EU average is 28%). Projecting the old antisemitism onto the state of Israel offers people a more comfortable target for their arguments.

Our society needs to have more conversations about antisemitism. The test of German democracy, as McCloy called it, starts with taking these concerns seriously and talking about them. We need to have these conversations because it affects all of us. It's about saving our democracy. Before it's too late.

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