The development of any state or its individual region directly depends on the level of investment that businesses are willing to invest in infrastructure, production, goods sand services. The problem of investments’ attractiveness is particularly acute for tourist regions, as the seasonal nature of such activities forces them to look for other areas for investors. Until 2014, the Crimea implemented numerous investment projects that contributed to the inflow of funds into the budget of the peninsula.

After the Russian occupation started, the peninsula became a kind of “exclusion zone” for Ukrainian, Western, and even Russian investors. There are many reasons. First, any reputable company with a good reputation does not want to be subject to global sanctions for operating in the occupied territories. Secondly, the “Russian world” is extremely unpredictable, which means that no one will give the investor any guarantee of return of his funds. Today, the Kremlin is trying to prove to the world that an allegedly “liberated” Crimea is simply becoming a “Klondike for investors”. Expert of the Association of Reintegration of Crimea Viktor Filatov understood the real situation.

Today, the Russia-controlled “authorities” of the peninsula is trying to work out the Kremlin’s methodics of its “active development”. So called “Director General of the Crimean Development Corporation” Dmytro Vorona provided the occupiers-controlled media with information that “the investment attractiveness of the peninsula” has allegedly “increased 10 times” over the past three years, which “contributed to creating the necessary economic conditions for development and investment” [1]. In the occupied Crimea, a whole “investment portal of the Republic” was created, on which the self-proclaimed “chairman” Serhey Aksyonov called on all “investors to cooperate”, guaranteeing all possible “support and protection” [2]. “Subordinates” are not far behind their “boss”.

Thus, in early 2022, the so called “Minister of Finance” of the occupied Crimea stated that “the peninsula can count on Arab investment”. The occupiers even sent their own “delegation” to a business meeting “Russia – Arab world”, which took place in the United Arab Emirates, to establish appropriate “agreements”. It was reported that allegedly “Arab investors are interested in Crimean agriculture” [3]. It would be more logical not to risk sanctions and to work in this direction with mainland Ukraine, which has opened the market for agricultural land, and in a few years will provide access to foreign investors. At the same time, the periodic trips of “Crimean officials”, including Aksyonov’s wife, to the Emirates did not lead to any real financial results, as even competing clans of collaborators reported.

The real situation with the Crimean economy is radically different from the illusion created by the aggressor State. Immediately after the beginning of the occupation, the economy of the peninsula came to a standstill. For real investors, the peninsula became inaccessible, which was facilitated by numerous financial and economic sanctions. The export-oriented industry of the peninsula significantly reduced volumes, and the volume of “Russian government orders” did not provide the necessary economic effect. In fact, only “public servants” and other persons, who receive funds from the Russia-controlled “budget” can survive on the peninsula, and first of all those who can steal something.

For example, according to “official data” of Russia-controlled “Krymstat”, the “exports of services” from the Crimea (excluding Sevastopol) in 2015 amounted to 31.97 million dollars, and in 2019 – only 14.55 million; respectively, “imports of services” for the region amounted to 1.75 million in 2015 and only 278.2 thousand dollars in 2020. “Imports of goods” in Crimea fell from $ 100.1 million in 2015 to $ 41.2 million in 2020, including food from $ 40 million to $ 15.8 million, timber and paper – from $ 5 million to $ 1.1 million. It reduced for textiles from 2.47 million to 480 thousand dollars, for machines – from 20.1 to 11.5 million dollars, for chemical products – from 9.46 million to 2.48 million dollars. The increase was related exclusively to the volume of “imports” of fuel, from 750 thousand to 3.85 million dollars.

Also aggressor-controlled “Krymstat” reports that “exports of goods” from the Crimea in 2015-2020 decreased from 79.5 million dollars to 33.9 million, with the minimum in 2018 – 23.8 million dollars. Although the Russian invaders support the export of food from the Crimea (“exports” in 2015 amounted to 19.3 million and in 2020 – 18.1 million dollars, with a minimum in 2018 – $ 5.1 million), the export of chemical products of the Crimea, as according to “Krymstat”, decreased from 21.8 million in 2015 to 6.38 million in 2020 (minimum in 2018 – 3.73 million); “exports” of metal products from the Crimea decreased from 7.69 million in 2015 to 982 thousand in 2020, and of machinery and equipment – from 29.46 million to 7.73 million dollars.

Also, even according to “official” data of “Krymstat”, the “foreign trade turnover” of Sevastopol in 2015 amounted to only 54.7 million dollars, and in 2020 – “as much as” 9.9 million dollars. Of course, these figures of the Russian invaders consider Ukraine as an alleged “foreign” economy for the Crimea, and therefore, if we reject the “CIS countries” declared by “Krymstat”, it turns out that Sevastopol, even according to “official statistics”, “exported to far-foreign countries” in 2020 goods for “as much as” 1.1 million dollars.

After this figure, the discussion on the “investment attractiveness of the region” can no longer be conducted. But let’s add that the total “imports” of Sevastopol from 2015 to 2020, according to the occupiers, decreased from 38.1 to 5.1 million dollars, including food from 16.2 million to 1.07 million, and for wood – from 2.2 million up to 273 thousand dollars, for textiles and footwear – from 3 million to 66 thousand dollars, for machines – from 4.8 million to 2.1 million dollars. At the same time, mentioned “Krymstat”, which is controlled by the invaders, obviously has no motive to distort these indicators in the direction of deterioration, quite the contrary.

At the same time, the annual “budget” of the occupied Crimea is up to 2 billion dollars, of which 85 % are “federal budget funds” of Russia [4]. But as you can see above, the issues of “foreign trade” are microscopic even for such a rather limited “budget”. It is unlikely that such an environment will have a positive “investment climate”, as well as a real motivation of the aggressor-controlled “government” to attract “investors”. According to numerous data, even Russian companies do not want to invest in the “gray” and fully subsidized zone, and later to have the prospect of falling under sanctions and losing everything [5]. For example, in 2018, a “tender” for the construction of a power plant for the occupied Crimea with a capacity of 450 megawatts never took place. The reason for the organizers was not expected – no investor took part in the “competition”. The Russia-controlled “authorities” were forced to recognize the “competition” as not having taken place, and “officially” the reasons for the abolition were never announced [6].

In order to somehow “interest” the “investors”, the Kremlin even “simplified the procedure for extraction of groundwater in the occupied Crimea”. To do this, changes were made to the entire federal law at the initiative of Putin himself. That is, “investors” were allowed to “use the subsoil for the purposes of exploration and extraction of minerals” [7] under a simplified system. However, despite various offers and guarantees, “investors” stubbornly leave the occupied Ukrainian peninsula one after another. Thus, in 2018, the last western hotel chain left the Crimea – the American company “Best Western Hotels & Resorts” [8]. This is a very significant step, because the world does not want to cooperate with the aggressor who is resolving armed conflicts. In part, the aggressor is trying to “cover the need for investors” at the expense of “government agencies and companies”, which are forced to “invest” in the occupied peninsula. For example, Russian banks “Russia” and “RNKB” were forced to become the “investors” in the construction of a new terminal at Simferopol airport, spending a total of more than 30 billion rubles. The owners of these banks are persons close to Putin (Yu. Kovalchuk and O. Zhestrov) [9], and it is exactly “Russia” and “RNKB” that have illegally established their financial network in the occupied Crimea since 2014, for which they received European and US sanctions.

Out of desperation, the Kremlin began to devise schemes to “attract investors” to the occupied peninsula to circumvent sanctions. In particular, last year the occupiers announced plans to create so called “special administrative districts” on the peninsula. The Russia-controlled “government” promises its investors “confidentiality” of doing business in the Crimea, which allegedly “reduces the risk of sanctions”.

It is very reminiscent of an ostrich with its head in the sand, which believes that this is how it hid from others. In the context of total informatization and electronic document management, it is difficult to imagine that Ukraine or its Western partners will not be able to establish which companies operate in the sanctioned region. Many experts also agree that even if they manage to “pull in” Russian “investors” into Crimea, it will be exclusively Russian oligarchs close to the Kremlin, who already have nothing to lose, because they are already under sanctions. Moreover, such “investments” are unlikely to be useful for the Crimean residents, because this “investment” will lead to higher prices for products and services, as well as to the local businesses’ destruction [11].

The real picture of the “investment attractiveness” of the occupied Crimea is already visible today. Thus, before 2014, about $ 2 billion had been invested in the peninsula, and after the beginning of the occupation, the “volume of investment” in the Crimea decreased by almost three times [12]. There were only tendencies to “increase investment” in Crimean real estate (30% of total investment) and agriculture. However, these are data from 2016, and as of 2021, these figures have decreased many times [13]. It turns out that “investors” are ready to buy just a “house or apartment by the sea”.

Probably this is the amount of “investments” that is not a pity to lose during deoccupation. And there is something to lose, because the sanctions really work. In particular, in 2021, the American company “Interactive Brokers” blocked the accounts of the Russian “investor” when he entered his personal account from the occupied peninsula. Currently, the grief-investor is unable to use his own funds and is forced to explain why he was in the territory under sanctions [14]. And such surprises will increasingly be expected to earn in the occupied territory of another state. The Russia-controlled “government” of Crimea is also not far behind the Kremlin and is trying to stimulate “foreign investors” in a rather original way. In particular, there are calls from Mr. Aksyonov not to cover their activities, which will allow them to implement the “scheme of cash flow and receive dividends and income”. It is not clear how such a scheme differs from the usual money laundering. It was stated that it was primarily about “German investors”, but so far the occupied Crimea has not received any “investment” from Germany [15].

At the same time, the presence of offshore companies is increasing on the occupied peninsula. For example, the “owner of the Terletsky boarding house” in Foros since 2015 is “Vargas Properties Inc.”, a company registered in the British Virgin Islands. The founder of the company was the “mayor” of Foros, Viktor Volkov, who was “appointed” by the occupying “authorities” after 2014 [16]. It seems that this is how the Russian oligarchs want to create a convenient place in the Crimea for money laundering. That is, if it is not possible to invest in the development of the occupied region, it can be created “offshore” to serve the interests of the Kremlin. And this is not the only example, because “Starvista” is 100% owned by the Cypriot company “Starvista Ltd”, which in turn belongs, as registers shows, to Rinat Akhmetov, and the “Crimean Wine House” is registered in the Seychelles as “Brand Group Corporation Ltd.” [16]. That is, it is not just one offshore, but a whole network of companies.

The names of Ukrainian oligarchs among investors of the occupied Ukrainian peninsula are becoming typical. Thus, in 2021, “Pandora Papers” confirmed the involvement of the People’s Deputy of Ukraine Mr. Oleksandr Gerega in business in the occupied Crimea. According to whistleblowers, until recently he owned offshore companies connected to a network of hypermarkets in the occupied Crimea [17]. However, investigations are ongoing, and Ukrainian law enforcement agencies, together with Western partners, are systematically identifying and shutting down such “investors”. It is also worth mentioning the more significant threats to the infrastructure and ecosystem of Crimea, which is created by Russia, attracting “investors” to the peninsula.

Wanting to lure the “investor”, the self-proclaimed “government” of Crimea in 2014 “nationalized” and two years later “sold” to the Federation of Trade Unions of the Republic of Tatarstan Landscape Park in Foros, founded in 1834, with an area of ​​over 70 hectares. The object itself is unique and included in the monuments of landscape art. “Investor” paid 1.5 billion rubles for the park, although the “starting price” was about 3 billion. The final beneficiary was the oil company “Tatneft”, which immediately announced that a “children’s sanatorium” would be built on the site of the park.

In 2021, total felling of unique plants began, which caused a “riot on the knees” of local residents. However, of course, the Crimean residents did not stop the construction, although all the “opposition” collaborators actively promoted the “Foros case” [18]. The Russian occupiers also invited Syria to Crimea as an “investor”, whose companies allegedly “secretly import ore into Crimean ports”. It is stated that such “investments” allowed the “Crimean Titan”, huge chemical enterprise, to operate [19]. The civilized world is well aware that the Syrian political regime is criminal and that Russia supports it in every way.

Russia is trying to bring “investors” to the occupied Crimea with a rather dubious reputation, including those who represent either unrecognized territories, or structures controlled by Russia itself. Thus, in 2021 the construction of a fish processing plant in Kerch was completed, which was financed by a “group of entrepreneurs from Abkhazia” who process fish at home. Moreover, the Russian occupiers gave them a complete “carte blanche”. The fact is that this construction took place within the “free economic zone”, declared by the aggressor State, which means that “investors from Abkhazia” received for “lease”, without any “bidding”, two plots of land with a total area of ​​over 6 hectares.

In addition, “Abkhazian businessmen” were “exempted from paying property tax for a period of 10 years” and provided “income tax benefits” [20]. This is reminiscent of the banal squandering of the peninsula’s resources, from which only the local population suffers. By the way, Ramzan Kadyrov has also already stated that “Chechen investors will definitely come to Crimea”. In particular, it was about the Chechen businessman Ruslan Baysarov, who plans to “invest 12 billion rubles in the resort infrastructure of the peninsula”, to “modernize several resorts and bring them closer to world standards” [21].

“Solid investors” from the occupied East of Ukraine are likely to appear soon, as there are not enough of them on the peninsula. It is noteworthy that Russia is trying to lure its “Chinese partners” to Crimea, holding “meetings” and announcing “quite ambitious plans”. In particular, according to Russian propaganda, “Chinese business plans to build a tobacco factory, a golf club, and a terminal for the sale of Chinese building materials with a total area of ​​100,000 square meters on the occupied peninsula”. If this has anything to do with reality, Chinese businesses want to use the occupied Crimea as a transshipment point to further promote their goods to Russia, as European countries will definitely not buy goods made in the sanctioned territories. However, local “officials” certainly do not take into account the risks to the ecosystem from harmful production, or other factors. For them, the main thing is a fake picture of an “investment-attractive” Crimea.

At this time, instead of the occupied Crimea, other regions of Ukraine, in particular the Kherson region, are already receiving investments. Even the most remote areas of the region turned out to be really attractive for investors. Currently, two large-scale projects are being successfully implemented here: a powerful cargo terminal is being built in the Dnipro river’s Kakhovka Bay near the village of Osokorivka, as well as a Dnipro river terminal in the village of Novovorontsovka [23]. In this case, the investor was also the local community itself, and local residents will receive new jobs and taxes to the local budget.

The Crimean residents found themselves in a completely different situation. For example, let’s mention the situation with the construction of a “local company” waste processing plant in Simferopol. “Planned to open a company” in 2018, and the “cost of the project” amounted to more than 95 million rubles. However, the plant did not work, allegedly due to problems with land registration [24]. Our Association has already written about this “investment” scam and reported to the UN about the collapse of recycling, which occurred as a result of theft and negligence and caused environmental disaster [25]; [26]. A typical situation took place in Feodosia, where a “local entrepreneur” planned to build a cottage village on his own land. However, local “officials” refused him, citing the fact that the land was allegedly classified as “agricultural land”, although according to “documentation” it belongs to the “category of land for individual development” [24]. Such situations are regularities of the realities of the occupation, when the “government” is ready to “save the whole world” and has no desire to help the Crimean residents.

The analysis shows the total economic isolation of the occupied Crimea, which has become a kind of “Titanic” for the “investors”. And we are not talking only about Ukrainian or Western investors, because Russian business does not want to be subject to sanctions. It is obvious that while occupying the Ukrainian peninsula, the Kremlin did not even think about the well-being of the Crimean residents, on the development of the region and increasing its investment attractiveness. As a result, we are witnessing a deep financial and economic crisis in all spheres of the Crimean economy. Some of the assets have been stolen, and the remnants continue to be destroyed.

Thus, the search for “foreign investors” for the occupying “powers” is primarily an element of propaganda, rather than improving the current fully subsidized economy of Crimea and Sevastopol. All this is accompanied by a powerful information campaign about billions of “investments” in the Crimea, due to which allegedly “developing tourism and infrastructure of resort towns”. Such “investments” by Russian business are either coercive or become elements of money laundering, for which they seek to turn Crimea into a kind of “offshore”. However, in reality, any “investor”, independent from the aggressor State, will invest in a territory that is recognized as occupied by the whole world and which will inevitably be de-occupied.

Sources:

1. https://tass.ru/ekonomika/12785539

2. https://invest-in-crimea.ru/homepage#map

3. https://rossaprimavera.ru/news/02e1e0f2

4. https://www.pravda.com.ua/articles/2020/04/8/7246911/

5. https://www.slovoidilo.ua/2021/03/19/kolonka/denys-popovych/polityka/rozbyta-vitryna-try-holovni-problemy-okupovanoho-krymu

6. https://hromadske.ua/posts/zhoden-investor-ne-pohodzhuietsia-finansuvat y-elektrostantsiiu-v-rosii-dlia-aneksovanoho-krymu

7. https://investigator.org.ua/ua/news-2/204491/

8. https://www.eurointegration.com.ua/news/2018/08/3/7085200/

9. https://www.vedomosti.ru/economics/articles/2018/03/16/753933-investiruet-krim

10. https://aspi.com.ua/news/ekonomika/rosiya-vvodit-v-okupovanomu-krimu-osoblivi-rayoni-dlya-zakhistu-vid-sankciy#gsc.tab=0

11. https://ru.krymr.com/a/krym-investitsii-khusnullin-blant-trillon-yanitskiy /31429946.html

12. https://inventure.com.ua/analytics/articles/nevidannye-inostrannye-investicii-kryma

13. https://ru.krymr.com/a/28369159.html

14. https://www.kommersant.ru/doc/4712175

15. https://www.epravda.com.ua/news/2016/04/16/589796/

16. https://www.rbc.ru/newspaper/2019/03/26/5c94f4359a7947feadfea4f7

17. https://mind.ua/news/20231849-pandora-papers-pidtverdili-prichetnist-geregi-do-biznesu-v-okupovanomu-krimu

18. https://www.kommersant.ru/doc/4712175

19. https://www.youtube.com/watch?v=ubszunOs8Vk

20. https://crimea.ria.ru/20210125/Investory-iz-Abkhazii-dostraivayut-v-Kry mu-zavod-po-pererabotke-ryby-1119189499.html

21. https://www.unian.net/politics/897468-chechenskaya-mafiya-pomojet-kr yimu.html

22. https://www.radidomapro.ru/ryedktzij/proyzvodsvo-materialov/stroymat eriali/kitajskie-investory-rasskazali-o-planach-v-krymu-13166.php

23. http://www.golos.com.ua/article/291018

24. https://rg.ru/2020/08/18/reg-ufo/v-krymu-investory-stolknulis-s-problem ami-pri-smene-kategorii-zemli.html

25. https://arc.construction/10388

26. https://arc.construction/12879