How is the Crimea being absorbed into Russia?

Administratively, the Russian Federation incorporated Crimea as two entities: the Republic of the Crimea and the Federal City of Sevastopol. In addition to its regular administrative units, the Russian state (unconstitutionally) divides its territory into larger “federal districts,” headed by the president's special envoys, thus requiring the creation of a separate Crimean federal district—the ninth and the smallest in the country.

Local residents were to acquire Russian citizenship automatically, unless they refused it in writing. Very few people dared to do so, but some 20,000 left for Ukraine. For the majority that stayed, bu­reaucratic chaos accompanied the identification and registration pa­perwork changeovers, as well as the transition from private to state notaries and a different legal code. On the peninsula the Russian authorities soon established the same regime of controlling the media and suppressing dissent that was the hallmark of Putin's rule in Russia. A crackdown on Crimean Tatar organizations began al­most immediately. The long-serving head of the Mejlis and member of the Ukrainian parliament, Mustafa Dzhemilev, was physically stopped at the border when he was returning from Kyiv and had his passport stamped with a ban preventing his entry into Russia (and thus the Crimea) for five years. The same was done to the man who succeeded him as the head of the Mejlis. Police conducted searches in the buildings of Crimean Tatar organizations and closed down some of them. The situation took an ominous turn when the authorities also announced that those Crimean Tatars who had been squatting on the choice coastland for decades since their return from exile would be relocated to another area inland.

Crimea had been a subsidized region in Ukraine; it became even more of a money drain for Russia, reportedly surpassing even the nation's greatest cash-guzzler, Chechnya, in its first year under Russian rule.⁵ The railroad connection with mainland Ukraine had been cut, resulting in a disastrous tourist season in the summer of 2014. Russian ministries and state-owned corporations “organized” their employees for Crimean vacations, but the car and train route via ferry in the treacherous Strait of Kerch in the east involved long wait times. To add insult to injury, fortified Crimean wines did not even qualify as “wines" under Russian legislation and had to be marketed as “wine beverages." Thus, the two most profitable and most legendary Crimean industries suffered severe blows. Higher Russian salaries and pensions did materialize, but with them came higher prices. During the difficult winter of 2014-2015, the Ukrainian authorities made a point of extending to the Crimea nationwide electricity blackouts in order to emphasize the peninsula's reliance on power supplies from the mainland.

Foreign investors would not consider Crimean-based projects be­cause of Western sanctions. Most major Western companies ceased their operations in the Crimea, and big Russian business arrived de­termined to play by its own rules. By far the grandest construction project to be funded from the national budget, the US$3.3 billion Kerch Bridge to connect Crimea to Russia, was handed without public tender to the company owned by Putin's childhood friend and judo partner, the billionaire Arkadii Rotenberg. The start of con­struction was delayed when the ruble fell and the Russian economy took a nosedive early in 2015. The bridge was finally opened under the new name of the Crimean Bridge for cars in 2018 and for railroad connection in 2019. However, Russia still relies on organized and subsidized vacation tours to fill Crimean resorts, and the supply of fresh water to the peninsula remains a problem. At least in the short run, Russia is not going to be able to deliver the hoped-for economic prosperity in the Crimea; the peninsula is bound to remain a heavily subsidized region.