The head of the Russian government’s new Crimea Affairs Ministry said the territory will look to Singapore as the model for reviving an ailing economy that has sunk lower since Russia seized it from the Ukraine in March.
“I blew the dust off the book ‘Singapore: From Third World to First’ by Lee Kuan Yew to have another read when I became minister,” said Oleg Savelyev. “We will pursue Singapore’s model in Crimea, we’ll ensure a comfortable business environment there.”
Lee, who ruled Singapore from 1959 to 1990, turned the former impoverished British colony into one of the wealthiest countries in the world. The World Bank ranks Singapore No. 1 on its annual ease of doing business survey. Russia is 92nd, just behind Albania and Barbados.
“Regulatory principles in Crimea will be much better, simpler than in the rest of Russia,” said Savelyev. “The region will not have the stifling bureaucratic system that Russia is notorious for. Our task is not to replicate the Russian model, but to create a much better one.”
Casinos figure prominently in the plan and will likely be located in and around Yalta, the Black Sea resort that was a favorite vacation spot for the masses in the Communist era and is famed as the place where Josef Stalin, Winston Churchill and Franklin Roosevelt met early in 1945 to discuss the reorganization of Europe just a few months prior to the defeat of Nazi Germany.
“We will try to put our boldest dreams into practice,” Savelyev said.
Tourism is still one of the mainstays of the economy of the Crimea, which National Geographic magazine named one of the world’s top travel destinations last year, calling it “a diamond suspended from the south coast of Ukraine.”
The peninsula attracted 6 million visitors last year, about 70 percent of whom were Ukrainian and 25 percent Russian. But those numbers have plummeted since annexation as the government in Kiev urges people to boycott the region and skirmishes continue between Ukrainian forces and pro-Russian separatist rebels in eastern Ukraine.
Russia seized the territory after bloody mass demonstrations in the Ukraine in February forced Kremlin-backed President Viktor Yanukovych to flee to Russia.
Since then, the Ukrainian government has banned all lenders operating under Ukrainian law from the region, and nearly every bank on the peninsula has closed. All transactions currently are cash only because credit and debit cards no longer work. Another economic pillar, shipping, is also foundering. The economy now is heavily dependent on subsidies from the Kremlin to survive.
Russia, however, plans to spend upwards of US$48 billion by the end of the decade to get the region back on its feet. That’s about 10 times the annual output of its 2 million people. Plans include a new terminal at Crimea’s only international airport, in Simferopol, ring roads around Simferopol and Sevastopol, home to Russia’s Black Sea Fleet, and a five-kilometer bridge connecting the peninsula to the Russian mainland.
Lawmakers in Moscow are working on a draft bill that will offer tax and other incentives to stimulate exports, according to Savelyev, and businesses there will operate under English commercial law rather than Russian legislation to attract foreign investment, he said.
“Crimea’s economic potential is incredible,” said acting Prime Minister Sergei Aksyonov. “We’ll only need Russian aid during the transitional period. We’ll return the funds with interest.”
