Russia’s annexation of the Crimean Peninsula was never going to be popular with the international community. Seen more as a regional show of strength than an exercise in retaking territory that was rightfully its own, Russia was roundly criticized for its highhanded behaviour towards neighbouring Ukraine – whose sovereign borders previously included Crimea. Whilst Russia’s claim on the peninsula has in some quarters been called legitimate – even if its modus operandi in acquiring it wasn’t – its continued presence in eastern Ukraine in the key regions of Donetsk and Luhansk appear nothing more than sabre-rattling and posturing to remind Kiev that its behemoth neighbour is, despite its slip from global superpower status, still a regional force – something a few years ago that was called to Georgia’s attention.

Whilst a process of Russification has seen Crimea’s time-zone brought into line with Moscow Standard Time, it appears inward investment has been slow from outside of Russia. Indeed, to refer to Russian bankrolling of capital projects as inward investment is perhaps specious; although Crimea is completely abstract from the Russian landmass it is nevertheless considered as much an integral part of the Motherland as the Baltic Coast enclave of Kaliningrad. It is unclear if the manner of Crimea’s ‘reintegration’ into Russian territory has put off potential foreign investors either by way of protest, or through a fear of assets being seized in a similar summarily fashion by a de facto regime in effect controlled by the Kremlin.

I personally doubt whether Russia expects or wants foreign investment within Crimea, although its new breed of oligarchs and entrepreneurs might have been expected to pick up the slack created by financial limitations that have recently stymied Moscow’s ambitions. It is up to those closer to the situation to decide whether reports of corruption are apocryphal, hackneyed, or represent a grim, endemic reality in post-Soviet Russia and is ultimately the overriding reason why foreign and private investment in Crimea is less than forthcoming. Russia’s approach to harmonizing Crimea within its sphere of influence was unlikely to win it any new friends; as a charm offensive aimed at venture capitalists it leaves much to be desired. Moscow needs to firm up its commitment to the peninsula with government-backed hard currency or remove the bureaucratic opacity that is currently making Crimea a virtual no-go area for private investors. The subsequent sanctions effectuated by Russia’s actions in the region have though brought about a wider reluctance to invest within Crimea – a consequence it must surely have foreseen prior to annexation. If the underpinning of capital projects by state-backed finances isn’t forthcoming Russia’s self-proclaimed legitimate seizure of Crimea is further undermined, although from the very start this has very much been a case of Russia ‘going it alone’. Only time will tell if the Russian Bear has dug for itself one hole too many.

Source material originally posted by Eurasianet.org