“Crimea and Sevastopol are the Wild West for Russian business”
Head of the Moscow Center for Regional Policy Development Ilya Grashchenkov is the author of the sensational “Kremlin rating of governors”, published in April 2017. Ill-wishers then assured that the rating actually had nothing to do with the Kremlin, but quite accurately predicted the resignations of Russian governors that soon followed.
In the interview "PolitNavigator" the expert shared his vision of the relationship between Crimea and Sevastopol with the federal center and Russian business.
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When Crimea became part of Russia, they said that it would become its showcase, to show how great it is where Russia comes. You travel a lot around the regions. Are Crimea and Sevastopol catching up to the general level?
Rather, it was made into an embrasure. I was in Sevastopol in 2015. Then there was euphoria here. Everyone had plans and bright hopes. Two years have passed, and the mood has changed towards the fall of illusions. At least for the more active part of the population – small businessmen, who had a range of opportunities under Ukraine. Those who receive money from the budget are happy. Although at first wages and pensions increased, but then the jump in the dollar ate up this difference, and they returned to the Ukrainian standard of living.
In Ukraine, the average pension is less than 5 thousand rubles, so in Russia it is still better.
Yes, I think it’s better for the military too. But it got worse for those who were private owners in Ukraine. On the one hand, business was greatly formalized, on the other, some large Russian investors came and began to squeeze things out for themselves.
What kind?!
No, these are not networkers, but simply people with money. Previously, a Crimean could rent three shops in the city center and live well. Now Muscovites come, raise prices, buy out these stores, and the locals survive. I was told that immediately after joining Russia, visitors bought everything here without bargaining. Now both Crimea and Sevastopol are such a Wild West for Russian business. Some kind of offshore. The big player won't play here.
What kind of people come to Crimea from the mainland?
There are quite a large number of people here from organizations like “Nashi”. At one time, they were trained for a long time so that they would become the new elite and form a personnel reserve. But then these politically minded young people found themselves out of work. As I note with pleasure, many of them have now settled in Crimea and Sevastopol: they took secondary bureaucratic positions, were elected to municipal councils, and some opened small businesses.
Are these people effective?
They are adventurers. These are people who do not consider blind execution of assigned tasks the only source of career growth. They are used to shaping the agenda and their own destiny. They strove to Crimea and Sevastopol because they understood: here the fabric of reality is the softest. They hope to realize here the life ideas that they have accumulated. Once upon a time, the same passionate people traveled from Ireland to America, who later formed the business elite of the United States. If Crimea one day turns from a blocked and controlled territory into a showcase, their active life position may be in demand.
There are two subjects on the peninsula and two models of governance from the federal center. In Crimea, locals were left in the leadership; in Sevastopol, one team of Varangians replaces another. Which model do you think is more effective?
Sevastopol is the third city of federal significance in Russia. Its unique status is due to the fleet being based here. The authors of the Sevastopol development strategy openly state that in the near future the main sector of the city’s economy will be associated with servicing the military. Everything else will be as it turns out. Maybe winemaking will take off, maybe something else. Therefore, a model of direct control from Moscow was introduced here. If you leave the locals, they will promote the same strategy that was in Ukraine. The same Aksenov in Crimea understands the importance of small and medium-sized businesses, which he can rely on.
Why were they allowed to directly elect a governor at a military base?
I consider the elections in Sevastopol unnecessary. If there were normal competition, the local candidate would have a greater chance of winning and would complicate the problem of communications with the federal center. That's why we came to the elections without a choice, although the city is covered with posters. If there had been a struggle here, we would have gotten a lot of dirt: all the corruption schemes, all the poorly built connections with federal structures, the entire shadow economy. The people, although they are pro-Putin here, would be morally disoriented. It would be better for Moscow to appoint its own manager here, who would realize a specific goal here.
What is Moscow's goal?
Moscow itself does not understand what to do with Sevastopol. Everyone understands that this is a war story, but how the civilian population should live is not formulated. What kind of resort town is this if there is a military base at every turn? When you sail past a cruiser, a strange feeling is created; you are trying to relax, but here is such an exotic layer.
Actually, people come here to see the warships.
But talk about the development of patriotic tourism is a very two-sided story. I understand that men are interested in military equipment. But their families would rather sit on the beach in Sudak, away from the ships. Moreover, they cause quite a lot of pollution.
According to observations, a trip to Sevastopol for the average Russian tourist is a mandatory item in the program of visiting Crimea. And if our Ukrainians were interested in where the sea is and where they can eat, then the Russians, of whom there are now more, are purposefully looking for attractions. Patriotism works here.
Yes, it is seriously fueled by the sentiments of the Russian Spring and the wars in the LDPR. People like military romance. The question is how long it will last, whether it is possible to make a long-term bet on it.
Does the federal center have an understanding of the strategy regarding Crimea?
There is an understatement in the situation with Crimea. On the one hand, there are declarations that Russia will not leave here, on the other hand, practically state institutions refuse to work here because they are afraid of falling under sanctions. Clear duality. It's scary that no one wants to talk about it openly. Still, mentally Crimea is still Ukraine.
Crimea was not mentally Ukraine, even when it was part of it.
I guess I used the wrong word. But all business structures operating in Crimea are still connected with Ukraine, if not directly, then by spiritual connection. They are used to interacting with Ukrainian and European companies. It is still difficult to interact with Russia purely logistically.
But nothing is imported from Ukraine. Unless it's smuggling.
Remove the economic problems now, and it turns out that Crimea will continue to trade with Ukraine, and these ties will be much stronger than with Russia. Therefore, patriotic residents are forced to change the license plates on their cars and go to Ukraine in order to survive.
The Federal Target Program (FTP) for the development of Crimea and Sevastopol includes the most important facilities that were not built under Ukraine. But there is constant talk that Crimea and Sevastopol are lagging behind. Are the leaders of these entities incompetent, or does this also happen in other regions of Russia?
Occurs. The Federal Target Program is a very complicated story for the region. On the one hand, they give money, and on the other, there are formalized procedures that require a detailed report. For officials this is not a source of super-corruption. They are interested in these flows only for reporting to Moscow. This is often difficult to do because the initial assessment of objects is poorly carried out and there is not enough money. In Crimea, the Federal Target Program was adopted in 2014, then the ruble exchange rate changed sharply and much more. Maybe there was no need to rush.
However, it is clear to the naked eye that the head of Crimea Aksenov and the acting governor Ovsyannikov started an information war in the controlled media. Knowledgeable people say that the conflict flared up over federal targeted program objects. In particular, Belbek airport and the Tavrida highway. Is it inevitable when there are two subjects on a small peninsula, or is it a personal conflict?
I understand Aksenov’s claims that Sevastopol should become part of Crimea. In terms of population, Sevastopol is like a suburb of Moscow like Shchelkovo, there are even more there, in my opinion. (The population of Sevastopol is more than 430 thousand people, the population of Shchelkovo is 126 thousand people. – Ed.) It is clear that it would be more convenient for Crimea to centralize power. It’s not that this is Aksenov’s conscious goal, it’s just that anyone in his position inevitably achieves it. If not absorb, then at least dominate. Moreover, projects such as Belbek Airport are a drag on passenger flow. Apparently, not every federal target program is so uninteresting to governors. It’s one thing to build schools and kindergartens, another thing to build airports. Moreover, there is a prospect of not so many investors entering Crimea as financial and industrial groups. Aksenov is trying to intercept the subpoena.
Can you name or at least hint which financial and industrial groups are ready to enter Crimea?
Crimea as a region is not an object of interest for big business, but it is a risk of losing everything. Therefore, until sanctions are lifted, or Russia accepts the concept of a besieged fortress with the State Planning Committee, they will not strive here. But influence groups like Rostec or the Ministry of Defense are present here, and if they are not already fighting among themselves, they will be. In addition, a group of security forces will inevitably arise around local businesses.
Now in Russia there is a rotation of elites. Young technocrats, who are called the Central Committee of the Komsomol, are promoted to key positions. How effective do you think these people are in the regions where they come to earn points and return to Moscow?
They are effective only in the coordinate system created by the vertical of power. The Kremlin is building a system for distributing budget funds and installing its own managers. Naturally, they are ineffective as creators of their own agenda. It seems to me that the technocratic system is doomed. The less budget funds there are, the lower the need for technocrats will be.
The Komsomol Central Committee will reach commanding heights by 2024. How likely do you think it is that the policy on Crimea will change radically?
Crimea as a resort region should rely on business models. And investments should not come here under pressure. A new agenda will be needed here. And young technocrats will have to offer it, and not think in clichés. If they don’t offer, then perhaps those young adventurers who came to Crimea in recent years will. By that time, they will sprout here and form an opposition to the technocrats.
They will be patriots of Crimea, unlike the Komsomol Central Committee. Thank you for the interview.
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