If, or when, Russia formally annexes Crimea, it will gain an economy with two million people worth less than 4% of Ukraine’s GDP, which is itself dwarfed by Russia’s much larger economy. Upgrading the region’s infrastructure and bringing spending levels to the Russian average could cost tens of billions of dollars. This is easily absorbed by Moscow’s budget, and it will be keen for Crimea to thrive under its management, perhaps as an example for other restive regions in eastern Ukraine.
Tourism is one of the peninsula’s most important industries, attracting six million vacationers to its beaches and Soviet-era spa resorts every year. Revitalizing Crimea’s shell-shocked economy will rely on attracting new tourists to replace the ones scared away by the region’s military stand-off.
As reported today in Kommersant (link in Russian), Russian and Crimean officials have signed deals to promote stronger tourism links. These apparently include measures to direct Russian government employees to take holidays on Crimean beaches instead of their preferred alternatives in Turkey or Egypt, according to a Russian official. (Never mind that the government just spent $50 billion to spruce up the rival Black Sea resort of Sochi in preparation for the Winter Olympics.)
There is also the intriguing possibility that Crimea could operate under Ukrainian visa rules for up to two years, the official told the newspaper. Ukraine has a much more permissive visa policy than Russia, which suggests that Americans and Europeans might be allowed to visit this reclaimed bit of Russia without any prior paperwork.
But will they? Before the recent turmoil, only 5% of Crimea’s tourists came from outside Ukraine and Russia. Tour operators have reported a collapse in bookings since Crimea’s suspiciously well-equipped “self-defense forces” rose up and occupied government buildings, sealed off Ukrainian military bases, and set up armed checkpoints. As summer approaches, visa-free travel to Russia may appeal to a certain sort of intrepid traveller but, in general, as one local hotelier told the Financial Times (paywall), “no one will want to holiday under the barrel of a gun.”