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Crimea and the depletion of Russia’s resources

Crimea and the depletion of Russia’s resources
Article by: Vitaly Portnikov
Translated by: Anna Mostovych

At first glance it is difficult to find a connection between the disappearance of funds in Russia’s Reserve Fund and the annexation of Crimea. The need to spend money from the fund was linked, among other things, to the “drop” in oil prices, which no longer allow Russia to live on their profits. But here we touch upon the issue of Crimea. Because the issue is not just Russia’s profits. The issue is also Russia’s expenses.

And these expenses, first of all, are connected to the occupation and the subsequent annexation of the Crimean peninsula. Naturally, not because money has to be spent on the stolen peninsula. After all, it is just one more subsidized region. But because the annexation of Crimea has given rise to the Kremlin regime’s confrontation with the civilized world. To exorbitant military expenses. To newer and newer geopolitical adventures — from the Donbas to Syria. To sanctions that prevent leading Russian companies from obtaining loans, as they did before the “return of Crimea.” In short, to a whole set of economic, political, financial, and social problems. And yes, oil prices– where would they be without them

As a result, the Reserve Fund, which was created to cover deficits in the Russian Federation’s state budget, has been depleted. But the budget deficits have not gone away. Russia’s expenses have not gone away. All of this will have to be paid for.  Thus, if the “Crimean issue” has depleted the Reserve Fund, it will have to deplete Russia’s National Welfare Fund next.

This fund was created for future generations of Russians. For the development of infrastructure, for investments in strategic projects. In short, for the future — in the event the oil prices finally  “collapse.” But hardly anyone in Russia is thinking of such a future.

Unless they are thinking about the presidential elections, which the Putin regime has complacently scheduled for the same day as the Crimean annexation — a tragic day for Russia. Now, as the ruler draws nearer to these elections, he will have to demonstrate social stability and the support of citizens. And this means money will have to be spent from the remaining fund.

And what will happen when even this fund is depleted? Don’t you understand? Let us just try to imagine it. If Putin and company spend all the money that the era of crazy oil prices has brought them, then the Kremlin will begin to use Crimea itself as a bargaining chip in the hope of Western support. The restoration of international law, the recognition of the illegality of the annexation, the search for a solution that would help Moscow save face after giving up Crimea in exchange for the lifting of sanctions and Western aid to the sinking Russian state — these are the goods that the Kremlin can bargain with. And in my view, they will not price them very high.

So, as a result of one geopolitical adventure, Russia will lose both the Reserve Fund and the National Welfare Fund, as well as any hope for the future development of the country and also, of course, Crimea. I will not even begin to discuss the ruined relations with Ukraine and the lost lives and fates of thousands of people who have died on the battlefields of the “hybrid war,” who are suffering in prisons, who were forced to leave their homes. I have no need to mention all that — it is discussed and written about daily in Ukraine. And soon — when the gilding on the regime peels off –Russian journalists will begin discussing it as well.

It is hard to imagine a better illustration of the “do not steal” commandment.

Translated by: Anna Mostovych
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