News / Europe

    Annexed by Russia, Crimea Could See Growing Financial, Travel Woes

    A sign displaying currency rates is seen in Simferopol, Crimea  March 22, 2014.
    A sign displaying currency rates is seen in Simferopol, Crimea March 22, 2014.
    Daniel Schearf
    Russia's annexation of Crimea from Ukraine could see the peninsula's economy suffer and the region isolated from the international community.

    The crisis in Ukraine already had put a drain on many banks, making the process of withdrawing cash at automatic teller machines (ATMs) hit and miss.

    Russia's takeover of Crimea made transfers of currency from banks, most of them located in mainland Ukraine, to the southern peninsula an even bigger challenge.

    ATMs are running dry across Crimea, as cash dries up and banks are forced to put strict limits on withdrawals, leading to long lines of unhappy customers.

    Western sanctions cut off Visa and MasterCard credit services to at least two Russian banks.

    Russia's Foreign Ministry says a transitional period will be in effect until January 1, 2015, to organize Crimea's integration into its economic, financial, banking, legal and government systems.

    Rumors are spreading in Crimea that the changeover from Ukraine to Russia's banking system could cut off credit cards altogether, at least for some days.

    At least one hotel in Sevastopol, the base of Russia's Black Sea navy fleet, warned guests it might not be able to accept credit cards from Monday.

    Crimea's economy also could take a big hit from lost tourism.

    Western tourists are likely to avoid the Black Sea resort area now that it is associated with Russian military aggression.

    Images of Russian troops and balaclava-clad armed militias knocking down gates at Ukrainian bases and threatening journalists were circulated widely in Western media, along with those of rowdy pro-Russia rallies with overt anti-Western messages.

    Complications abound

    Even if Western tourists wanted to visit, all fights to and from Crimea were suspended following Moscow's moves to annex the territory, except connections through Moscow.

    Crimea's tour operators are beginning to realize their business could suffer, although it may be mitigated to some extent by increased Russian tourism.

    Despite Russian President Vladimir Putin's signing documents last week for what Moscow says is a legal annexation, Crimea's transition from Ukraine to Russia passport controls has not been completed.

    Airport staff in Simferopol say they are still operating under visa rules used as an autonomous region under Ukraine and do not know when they will switch to Russia's likely tighter controls.

    Russian visa restrictions may be imposed where there were none before, specifically on Western journalists who are able to operate with tourist visas in Ukraine.

    More ominously, there are conflicting reports on what happens to Ukrainian citizens in Crimea who do not want to become Russian nationals.

    A controversial referendum on March 16, pushed by Crimea's Moscow-backed leaders, claimed 97 percent of voters wanted to become part of Russia. But some estimates say as many as 20 percent may want to keep their Ukrainian passports.

    Russia already is handing out its passports and is giving Crimeans one month to decide if they want to retain their Ukrainian citizenship.

    Crimea's leaders say those who choose to remain citizens of Ukraine would be cut off from Russia's social benefits, but they did not make clear how that would affect their legal status and other rights.  The ambiguity raises concerns of a worst case scenario where Ukrainians living in Crimea could be forced to get visas to stay in their homes.

    Ukraine retaliated against Russia's grab on Crimea by making dual citizenship illegal and is considering instituting visa requirements for Russian visitors where currently there are none. 

    If Moscow tries to seize more of Ukraine's territory in the east, where pro-Russia groups are demanding their own referendums to join Russia, and Russian troops are massed near the border, relations would deteriorate further and Kyiv could cut off land routes to the peninsula. 

    Ukraine also supplies the vast majority of Crimea's water and electricity, which it may try to use as leverage to squeeze Moscow's new prize.

    Simferopol on Sunday night experienced on and off electricity blackouts.  Crimea's pro-Russia Prime Minister Sergei Aksyonov tweeted there also were partial electricity failures in Yalta, Kerch and Feodosia. He urged people to "find out the reasons" behind the outages.

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