The beginning of the Russian invasion of mainland Ukraine radically changed the situation on the financial market of the aggressor State. It is already clear that despite all the previous reassuring statements and training, Russia’s financial system has been unprepared to function in the face of large-scale military conflict. For our Association, a radical change in the aggressor’s macrofinancial system became apparent after the sudden abolition in early 2022 of the “federal target program” for the “development of Crimea”, hundreds of billions of which had previously been successfully stolen on the peninsula by Russia-controlled “officials” for eight years.

Due to previous “Crimean” sanctions, the Crimean economy and society have not directly felt the effects of Russian aggression as the actual destruction of the Russian financial market and the complete devaluation of powerful companies, painful today for Russia’s upper and middle class.

The practical consequences for the Crimean economy today are the increase in the “credit rate” and the practical impossibility of taking “credit money for enterprises and institutions”. The Russia’s occupiers are now promising to allocate a “key group” of structures to which credit money will be allocated “in the first place”, i.e. – manually, so the rest of the business can only hope for a miracle.

The second consequence for the financial system of Crimea is the collapse of the foreign exchange market of the Russian ruble. The official exchange rate of this currency during the nine days of the war rose from 80 to 120 rubles per dollar, i.e. the devaluation was 50%. The unofficial dollar exchange rate in Crimea has so far stabilized at 160 rubles and will obviously grow, there is a lack of cash currency, especially in small towns.

It is noteworthy that the occupiers are blocking Western stock exchange sites, which reflect the real fluctuations of the Russian ruble. Some experts say that the artificial restraint of the ruble is a means of helping the Kremlin’s own oligarchs to get rid of ruble assets.

 It will be recalled that from 2015 to 2022, the Crimean and Sevastopol “budgets”, due to the destruction of the peninsula’s economy by the aggressor, were subsidized from the federal budget of Russia by 80 %. At the same time, the level of embezzlement of these funds by “officials” was up to 50 %, in particular in public procurement, as our Association has repeatedly written. Of course, during the war, no one in Moscow will be able to allocate such funds to the Crimea.

At the same time, in March 2022, the occupiers changed the order of “public procurement” and removed a number of “formalities”, which completely eliminates all forms of competition and tracking of funds. This “opens the door” for manual regulation of “public finances” and will further increase the corruption burden on “budgets”. Thus, the aggressor obviously wants to “acquire” the loyalty of Crimean “officials”, in which he currently has great doubts.