For Crimea, Split From Ukraine Would Be Complicated And Costly

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The West may not accept that Crimea is becoming part of Russia. Here's the reality: Ukraine's own government is planning to pull its military out of the region. That's just one of many signs that Russia's annexation is nearing complete. But Crimeans who are excited to join Russia must face a reality as well: The transition could be difficult, even painful. The economy in this region has been largely dependent on Ukraine's government and that's about to end.

NPR's Eleanor Beardsley has more on the new reality in Crimea, including the fact that, for the moment, it's not exactly a place you'd want to visit.

(SOUNDBITE OF A TRAVEL VIDEO)

UNIDENTIFIED MAN: (Foreign language spoken)

ELEANOR BEARDSLEY, BYLINE: This travel video promises sun and fun on the beaches of Crimea. But not this year. The crisis over Crimea has already scared off the summer tourists. Inside a travel agency in downtown Kiev, owner Vitali Kouvalyshen says Ukrainians account for at least 60 percent of the peninsula's holiday makers.

VITALI KOUVALYSHEN: They stopped their planning of their vacations because of situation of this. I think this year is finished already. The tourist season is finished. We are sure.

BEARDSLEY: Kouvalyshen says the Ukrainians will head to Bulgaria, Cyprus or Turkey this year, where the service is better anyway. He says the dearth in tourism will be especially hard for the many Crimeans who rent their private homes and rooms unofficially. Despite the pebble beaches and cliff-hanging castles that made Crimea famous as a Soviet resort hub, the Black Sea peninsula has long been a corruption-riddled backwater in economic terms.

DIMYTRO KULEBA: Crimea is not self-sufficient. Crimea has always been a region that was able to function only on donations from central government.

BEARDSLEY: That's Dimytro Kuleba, an expert in international law. Kuleba says about 40 percent of Crimea's annual budget is propped up by subsidies from Kiev. About a quarter of Crimea's population is retired and Russia promised them larger pensions. Kuleba says the Kremlin will have to shell out heavily if it doesn't want to disappoint them.

One Russian minister already commented that Crimea's economy was no better than Palestine. What economic activity Crimea does have is across the thin strip of land that connects it to mainland Ukraine, says financial analyst Alexander Paraschiy.

ALEXANDER PARASCHIY: Crimea has very tight economic, business and trade relations with other parts of Ukraine.

BEARDSLEY: Paraschiy says 90 percent of Crimea's water comes from Ukraine's Dnieper River. And its electricity, gas and food are all supplied by Ukraine.

PARASCHIY: So if these roads from Ukraine to Crimea will be closed or blocked, I assume there will be a deficit even for food on the territory of Crimea.

BEARDSLEY: Paraschiy points out that Russia has very limited capacity to supply Ukraine, because it isn't even connected to it by land and everything would have to come by ferry.

Russia has also said Crimeans will exchange their Ukrainian passports for Russian ones and switch their currency to the ruble. The talk is already having ripple effects. Two days ago, Crimean local authorities said they nationalized the peninsula's largest bank chain, Kiev-based Pryviet Bank, which forced the bank to close branches and freeze cash withdrawals.

Paraschiy says there will also be questions about Crimea's railways, gas pipes, storage and port facilities. He says Crimea does have a few economic assets, such as its natural resources.

PARASCHIY: We know that Black Sea around Crimean Peninsula is rich in hydrocarbon deposits, oil and gas. And the core question will be whom all these deposits will belong.

BEARDSLEY: Yesterday, Russian President Vladimir Putin gave the green light to build a road and rail bridge across the three-mile Kerch Straight that separates Russia from Crimea. There was a bridge built in 1944 by the Red Army after it liberated Crimea from the Nazis. But the structure collapsed within months because of flowing ice. Russia and Ukraine have never managed to rebuild it.

Eleanor Beardsley, NPR News, Kiev. Transcript provided by NPR, Copyright NPR.