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Thursday, October 27, 2016

Crimea under sanctions: investors were cowardly and penniless

Crimean authorities want money. They are urging the visiting entrepreneurs to invest in the local economy. But interviewed by “MK” foreign investors in one voice said that in terms of sanctions investment boom is almost unreal. So far performed rather intelligence objectives, in the homeland because foreigners have a nasty “preventive” conversations. Frankly in the way and such provocative decisions made at the ordinary sessions of the G7, where the protocols are approved on the extension of sanctions against our country and Peninsula, inclusive. In General, foreign investors are ready with open arms to meet the restrictions. Only if you talk to weigh all the “pros” and “cons”, it becomes clear that the Crimean sanctions will not be cancelled, as for the “Donbass” — that they regard the verdict will be, apparently, for several years.

Photo: FLICKR / Dmitry Dzhus

Investment boom “in Crimea”

So will be shed on whether the Crimea “Golden rain”? Local authorities promise that by all means. A month ago the head of the Republic Sergey Aksenov on the results of the Yalta forum announced that it signed dozens of agreements on 70 billion roubles that will allow to create more than 25 thousand new jobs. To invest hundreds of millions of euros in sanctions region are allegedly ready even foreigners: in agriculture, energy, tourism. What are the only schemes are not voiced until the breeding of buffaloes and their milk mozzarella…

For the layman, unfamiliar with the local realities, it all sounds very tempting. It creates the illusion of the forthcoming investment boom.

However, the reality is quite different. Visited the forum to the correspondent “MK” was able to talk with many foreign brave investors. They are all in the best case, he came to Yalta for exploration. And, of course, without money.

“I work for a large Greek construction company, but asked not to publish her name, says businesswoman Rena Takaki. — We are not afraid of sanctions, but, as I understand it, the mechanism of work with foreign investors here is not yet formed. We want to find out the working conditions with local banks, as well as the possibility of purchasing property for foreign companies. Many Greek entrepreneurs interested in order to come to Crimea and to start work. But the problem is that the EU sanctions that prohibit our business to stay on the territory of the Peninsula. Three of our colleagues had some conversation in connection with their plans in the forum and not participating.”

The head of the administrative apparatus of the Bulgarian parliamentary party “Ataka” Hristo Marinov also did not hide problems.

“We already had cases, when businessmen from the European Union arrived in the Crimea, they all loved it here and wanted to invest, but they started to “twist arms” in the main host country, said the Bulgarian. In particular, there is the experience with the Indian company, which considered the possibility of investing in the Peninsula, and we were the intermediaries. They began to pull the plug in Europe, in Canada — and they were forced to abandon their plans. I think in Crimea it is necessary to create a mechanism that will reliably protect the privacy of the investor. The task for the leadership of the Crimea and Russia”.

According to him, Bulgaria’s economy is more affected by Russian counter-sanctions. First of all it concerns farmers, who have not found alternative markets, the country’s agriculture is now literally on her knees.

Supported the Bulgarian his Italian colleague Stefano Valdegamberi, the Deputy of the regional Parliament of Venice. “We came here because we ask you to reconsider the policy of the European Union against Moscow,” he explained. — Economic war has lasted almost two years, it has already cost Italy 3,5 billion Euro is the volume of Italian exports to Russia, which went up in smoke. Exports fell by 34% — from 10.7 billion euros in 2013 to 7.1 billion euros in 2015. So, supply of engineering products fell by 699 million euros, the export of clothes — for 539 million euros, the export of food products — by EUR 400 million, exports of cars, which is 399 million euros, the export of footwear to 369 million euros, exports of metal — to 259 million euros. Mainly affected the North-Eastern regions of Italy, including Venice, where I live, exports to Russia from these regions decreased by 72%”.

“The European Union can not develop without normal relations with Russia, — the Deputy of Parliament of Austria Axel Kesseler. — Last year the export of Austrian goods to Russia decreased by approximately 35% — this applies to food products, and consumer goods. It’s sad, because for the previous 10 years, we have established good economic relations. Your country has occupied 10-e a place among all countries in the world in terms of exports of Austrian goods. This situation needs to change, to rebuild trust. I would like a feasible to participate in this process is one of the reasons for my arrival in Yalta”.

“Juche” in Crimea

It is symbolic that the only international document signed at the forum, became a framework cooperation agreement with the government of Abkhazia.

The head of the Crimea Sergey Aksenov at all it says that “tools to overcome the sanctions regime weight, but to discuss them in a public field should not be”. Now most of the foreign entrepreneurs register their businesses on the mainland of Russia and after that go to the Crimea under the Russian brands.

So anyway, as Crimea is now forced to rely on government investment, and private power. Love the North Korean ideology of Juche.

On the Peninsula organized a Corporation for the development of the free economic zone (FEZ). Like all right, we can say, according to the template, but the experience of Russia for such projects, to put it mildly, not optimistic. Expectations are always higher than the result.

According to statistics, on 1 January 2016 in Russia in FEZ, there are only 435 residents. Now, attempts to create various special economic zones in these towns. There is infrastructure, preferential conditions, and the investor continues.

Deputy Chairman of the Council of Ministers of the Republic of Vitaly Nahlupin on the forum suddenly said in the free economic zone of Crimea stated more than 400 participants, with a total investment of 75 billion rubles. Moreover, local feature is the fact that 90% of small and medium businesses.

Of course, don’t want to think that the Crimean officials involved in fraud, but these figures are hard to believe. Moreover, the entry threshold in the Crimean FEZ rather big: for small businesses — 3 million rubles, for medium — 30 million rubles, not counting the other investment encumbrances. Plus in the Crimea is not developed financial infrastructure, is not elementary work of the international payment system. The only Bank card on the Peninsula is “the World”. In the Crimea, only 1340 ATMs, and not all of them connected to the National payment system.

Because of the threat of sanctions any large Russian Bank does not work on the Peninsula and we’re not going to. This was confirmed by the Deputy head of one of the state banks Mikhail Oseevsky. “The government as the largest shareholder of our Bank never set a goal to begin work in the Crimea”, — bluntly said the banker. No wonder that the Peninsula is now the largest Bank — the one that got to international sanctions lists.

Samoupravlanja the Simferopol branch of the financial institution Stanislav Grishin believes that the current Crimean investors are not very good. “Investment projects are being implemented, but, unfortunately, the percentage of applications that could potentially be seen as an investment, very low,” says Grishin. According to him, the low percentage approved for crediting of investment projects connected with the poor quality of their training and the reluctance of entrepreneurs to invest their own funds — they prefer to work with the banks on the principle of “give money”.

According to the Minister of Finance of Crimea Irina Kiviko, the volume of lending to Crimean banks following the results of last years paltry — a total of 26.6 billion rubles. The problem is in the fact that after the reunification with Russia, local businesses do not have credit histories.

But Sergei Aksenov was not discouraged, promising to create in the region an unprecedented open environment for business. “We are working on the bugs of 2015 and razvorachivaet all administrative processes, the official added. — Opened electronic filing of documents via the Internet to obtain the status of the investor. The timing of negotiation of documents in ministries and departments reduced to one day.”

Business in Crimea

Who invests in the Crimea? These investment projects is very small. And those that have, are either the development of existing businesses, or the attempts of businessmen close to local authorities, money at the expense of administrative resources.

The largest presented in Yalta investment project is the construction of a new airport complex “Simferopol” worth 32 billion rubles. Rights for its construction received the “international airport Simferopol”, the CEO of which is close to power.

One of the construction companies pledged to invest 2 billion rubles in development projects on the southern coast of Crimea. Moreover, expensive housing, and not economy class.

The head of the domestic producers of footwear Andrey Pavlov took the risk to open in the Crimea a new factory. “At the moment there are preferential treatment for small businesses — said the entrepreneur. — So you have big business to break up in order to compete successfully. We did not go on this is not a legitimate scheme, and it’s hard for us even in the Crimea, although we have received resident status. The main problem here is to find trained specialist. If retail and services are all just, in the manufacture of the opposite picture.

Entrepreneur engaged in the viticulture in the Crimea, said that much of the Crimea still has the quality of “showing off.” For example, the production of wine, according to official figures, on the Peninsula grows. In fact, the business just organize a small winery, then under the brand name of “Crimea” from imported raw materials “fuck the millions of bottles”. That is, the local wine was no more. “Although we must pay tribute, new vineyards began to plant,” — says the winemaker.

In General, it turns out that the bridge across the Kerch Strait, the bridge and pipeline were the biggest projects in the Crimea over the past two years. Only private investors to this have nothing to do. All built with funds from the Federal budget.

To be or not to be, that is the question

So when private, including foreign, businessmen believe in the Crimea?

It is obvious that Russia will never give up Crimea. Moscow insists, that are not annexed, and returned to the Peninsula for the legitimate, historical right. The validity of this fact is confirmed by at least two facts.

Firstly, the results of the Russo-Turkish war of 1768-1774 Russia conquered this territory from Turkey. Final agreement on the rejection of the Crimea from the Ottoman Empire in favour of Russia was signed in 1783. Following this document, if our country refuses Peninsula, it should be returned to Istanbul.

Secondly, when the first Secretary of the CPSU Nikita Khrushchev in 1954 to mark the 300th anniversary of the reunification of Russia and Ukraine decided to gift the transfer of Crimea from the jurisdiction of the RSFSR to the jurisdiction of the USSR, it was done, according to many experts, violations of Soviet legislation. Moreover, according to most historians and lawyers, Sevastopol was never transferred to the management of Kiev and before the collapse of the Soviet Union remained a city of Union subordination.

But most importantly, many people forget about the referendum, which took place in the autumn of 1991 (after the coup). On it a large part of continental Ukraine voted for the independence of the Republic, but the lion’s share of those who came to the polling stations of Sevastopol and Simferopol, opposed.

Now in March 2014 in a referendum on the return of the Peninsula to Russia in favor of it voted not less than 97% of voters who came.

But the sanctions are still there. Foreign investors are eager to take them off. At the end of may in Simferopol was visited by a foreign delegation consisting of the representatives of public and political life in Germany. The main purpose of the visit was to create a positive image of the Crimea and Russia, as well as the breakthrough of the information blockade.

In those days Bulgaria was held a presentation of investment, cultural and tourist potential of the Crimea. This is the first such presentation in the EU since the reunification of the Crimea with Russia.

However, despite some steps towards each other, specific legislative action is taken. On the contrary. Recently the “Big seven” have agreed on the continuation of sanctions against our country. In response, Moscow has decided to extend food embargo against the EU and the United States before the end of 2017. So, at this time, according to our officials, they will not be cancelled.

Sanctions . Chronicle of events

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