With Sanctions, Russia Becomes Crimea's Sole Investor
Published: August 1, 2014 (Issue # 1822)
Under the weight of the latest round of European Union sanctions, the contested territory of Crimea will become an even greater burden to the beleaguered Russian budget than had been expected.
The EU on Wednesday imposed new sanctions directed specifically at Crimea, banning European investors from participating in infrastructure, telecommunications, transport, energy, as well as hydrocarbon and minerals extraction projects in the region.
Following the decision, Russian officials on Thursday presented soaring new estimates on how much money will be required over the next six years to support the territory, which Russia annexed from Ukraine in March to international condemnation.
Oleg Savelyev, head of the recently created Crimean Development Ministry, said Thursday that 658 billion rubles ($18.4 billion) will be needed through 2020 to develop Crimea's infrastructure, Interfax reported.
Almost a third of that vast sum, or 247 billion rubles ($6.9 billion), must be channeled to building a bridge across the Kerch Strait, creating the first direct road and rail connection with Russia's mainland there, Savelyev said, speaking at a meeting with Deputy Prime Minister Dmitry Kozak.
Contradicting earlier reports, Kozak said that the bridge, which will be the most expensive one ever built in Russia, is now to be funded on state money alone. Construction is scheduled to begin later this year, he added.
Previously, government officials had said that private investors might participate in the project through a public-private partnership scheme. Return on investment could have come from tolls levied for passage across the bridge, but officials were divided on whether a charge should apply as there is currently no free alternative for crossing the strait.
Attracting private investors to other infrastructure projects, be they foreign or domestic, will now be more difficult following the sanctions, which have limited the funding options and international business prospects of Crimean ventures. The state will now be left with the option of either opening up its own coffers even wider or luring Russian investors with generous benefits.
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