CRIMEA’S ECONOMIC PROSPECTS

Companies from Italy, the United Kingdom, France, Germany, Greece, Netherlands,Turkey, Cyprus, Austria and Romania want to be first in line once the sanctions are lifted. Many companies are looking to see what possibilities there are  in Crimea. The Crimea still has a great need for foreign expertise, especially in the areas of energy, water management and road construction. 

A territorial planning system of the peninsula is being actively worked out, and it is expected to boost many promising projects. A regional public-private partnership law is being prepared for adoption to facilitate and add transparency and clarity to relations between investors, local businessmen and authorities of the peninsula.

A number of European companies which started their business in Crimea in the Ukrainian period are still working on the peninsula. The investors have quite broad interests: from the financial sector and industries to infrastructures. The tourism industry and affiliated farming projects are a magnet for businessmen from Europe. The construction of a large number of tourist complexes is planned to begin in the peninsula within years.

Despite the sanctions, European businessmen have a keen interest in cooperation with Crimea. The French international retail group, Auchan, as well as the German retailer Metro are already operating on the peninsula and planning to expand their presence in the region.

European businessmen are mostly interested in recreation and entertainment infrastructures, resorts, wine-making, production of tobacco, retail trade, shipbuilding and some other industrial, agricultural and service segments which are no less promising.

According to the Crimean Economic Development Ministry, the founders of over 400 projects have expressed their wish to collaborate with the region. Eighteen projects have entered a stage of active development. Many investment agreements are under consideration and signing.

The center for investments and regional development is now adjusting 31 projects to the local realities. Investors come from Israel, Japan, France, Turkey, Bulgaria, the Czech Republic and some other countries.

Italians have concluded four letters of intention to implement business projects in Crimea including Construction of residential property together with the Crimean Construction Company (CCC); Opening a poultry production unit to produce turkey meat and processed turkey meat foods; Construction of a five-star hotel in Simferopol; and starting a joint winery.

Gaps and Loopholes to avoid sanctions

The EU sanctions forbid the sale of goods related to certain sectors such as energy, tourism or infrastructure. EU companies are also prohibited from acquiring shares of any Crimean companies or creating joint ventures. However, firms can set up a subsidiary in Russia, meaning they must only comply with Russian law. This allows EU companies to avoid the sanctions, as EU sanctions only apply to EU companies. It is also possible to ship goods to Crimea via Moscow, through other Russian shipping companies. The EU introduced sanctions against the port of Kerch and the port of Feodosia – but now these legal entities no longer exist, as they were united into one single entity called ‘ports of Crimea’ – which is not on the EU sanctions list. Until now, there remain 2 vessels under an EU MS (Bulgaria) flag which continue to go to Crimean ports. There are several dozens of vessels more which are hidden under other flags but in fact are owned or freighted by EU persons.

Twin-City Agreements

1. Padua and Simferopol City Council, signed a five-year memorandum on cooperation between the cities. This memorandum is a pledge of a five-year friendship for restoring the economic, cultural, and tourist cooperation between the two cities.
2. Sevastopol is also interested to set up a twin-city arrangement with  Genoa
3. Christian Estrosi, head of the French region of Provence-Alpes-Côte d’Azur and mayor of Nice, has called the Crimean city of Yalta as belonging to the Russian Federation and signed a letter of intention for the development of friendly relations and restoration of twin-city relations between Yalta and Nice.”
4. The mayor of the German city of Heidelberg Eckart Würzner is discussing partnerships” and close cooperation with the city of Simferopol, a sister city of Heidelberg.