On political and economic history of the Crimea during "zero years" of the 21st century (Part I)


Activists of the Crimean organization of the Party of Regions meet their leader, the Prime Minister Viktor Yanukovych on September 1, 2007 at the opening of the viaduct of Alushta-Yalta highway. Photo by M. Rozenstein, especially for BSNews

Andrei KLIMENKO,
Chief Editor of BSNews and "Bolshaya Yalta News",
Honoured Economist of the AR Crimea

Translation from Russian
by Alexey SOLOVIEV,
BSNews

Photo from the Photo Series "The Political Faces"
by Michael ROZENSHTEIN

Deputy Chief Editor of "Bolshaya Yalta News",
especially for BSNews

The year has started, the one of the 20th year post-Soviet anniversaries of 1991-2011, and the Crimean anniversary of the referendum on re-establishment of the autonomy of January, 20, 1991 is the first in this line. This is the year of reflection and comprehension for the whole area, which is persistently referred to as "post-Soviet". 20 years, that’s really a lot of time. And through these notes your author wants to encourage the Crimean and non-Crimean intellectuals to think over the route, the autonomous one and not only ...

These sketches do not claim to be comprehensive and all-inclusive. A lot of the processes and tendencies are just drawn with a dotted line, the many others cause the author to realize their incompleteness and, thus, bring him a feeling of self-disappointment.

Some events were omitted in order not to diverge from the logical line. The author hopes that his modest attempt will act as an irritant agent for the Crimean scholars and publicists, as the right time has come to consider these 20 years of the Crimean history.

By the middle of the zero years there was the impression that the Crimea was not any longer a creator of any evident problems in terms of security and development prospects. But it appeared to be an illusion. In this state and with this kind of antecedent history the Crimea reached the make-or-break year of 2005.

In 2002-2003, with the end of the "communist" period in the autonomy and resignation of leader of the Crimean Communists Leonid Grach from position of the Chairman of the Verkhovna Rada of the Crimea, the acute conflict between representative and executive branches of the Crimean power, terminated or substantially relented after long period of its escalation since 1998. Tandem “Boris Deich – Sergey Kunitsyn” managed then to move the traditional rivalry between the Crimean parliament and government in peaceful direction, though “the under the carpet fighting” did not stop during this, almost serene period.

During these years of “the Kuchma of the late stage”, the sharp conflict between Ukraine and Russia in 2003 over the island of Tuzla was resolved with the help of active position of the Crimean authorities.The Crimean population treated the Russian Federation’s actions over Tuzla with surprise and lack of comprehension and in general did not show a lot of reaction to the proclamation of official course of Ukraine’s aspirations toward NATO. After this stress relations with Russia entered the period of smoother phase.

Frequent visits to the Crimea of the Ukrainian President Leonid Kuchma, who by that time became practically subject to “restrictions on foreign travels”, the initiation of a large number of events and receptions at the peninsula, mainly within the CIS framework, created the effect of certain reconciliation and even some kind of “the dawn of love” of the Crimea toward Ukraine.

Leonid Kuchma, and Romano Prodi in Livadia. Photo by M. Rozenstein, especially for BSNews

In 2000 – 2004's the adoption, with an active support of the President Kuchma, of the Law of Ukraine on territories of priority development in the Crimea and FEZ "Port Crimea" intensified the investment processes at the peninsula, especially in Yalta and in the Northern Crimea. And, though these were mostly not foreign, but Ukrainian and Russian investments through offshore jurisdictions, the positive dynamics in this area was observed. Moreover, according to the experts’ estimates, the Russian investments prevailed.

It is necessary to note that almost all new objects in the field of tourism – such as the Palmira-Palace Hotel and the Oreanda Hotel’s entertainment center in Yalta, the Crimean Riviera (now Radisson Hotel) and recreation pension hotel “Morje – Mindalnaya Roscha” in Alushta, as well as the grain terminal in Kerch fishing port and a number of the other objects were constructed (or, at least, started) during these years.

The post-crisis (the crisis of after 1998) economic growth in Ukraine, which started in 2000, triggered the increase in rapid growth of active asset prices in the Crimea (especially the ones on land and residential real estate), the sector of "elite housing”, cottage village communities and private mansions experienced construction boom, especially in the sea coast areas; from year to year the incomes of citizens and local budgets used to grow; demand for holidays in the Crimea was on increase among the citizens of Ukraine; every year there was considerable growth of number of tourists (*). Business activities were on increase in all sectors of the economy.

At the same time, the result of 1998 crisis was completely new situation in resort development: in comparison with the Soviet period for the first time the stable ratio came into being regarding the number of the Ukrainian and Russian tourists with the proportion of about 5:1. The Crimea de facto became the domestic resort of Ukraine at that time.

Alongside with this, the years of 2003-2004 saw the acute, snowballing growth of corruption of the Crimean "elite", which very soon lead to serious consequences and would be one of the main challenges for development and security in the Crimea in all the meanings of this word.

1st President of independent Ukraine Leonid Kravchuk, the then leader of the SDPU (o). Photo by M. Rozenstein, especially for BSNews

Crimean “political class”, which with the kick-off of the “land and construction fever” experienced the taste of great sums, reaped in those years the first fruit of multiple, explosive swelling of corruption gains. During this period they created, tested, fixed on a daily basis and made common the major practices of legal, semi-legal and shadow know-how and schemes of privatization and sale of land and real estate, selling of "signatures" in the licensing system related with construction. This was the technological foundation of systemic corruption in the second half of 2000s.

Besides that, during this period there was the beginning of the process, which can be called “elite’s betrayal” – the massive and rapid psychological and mental degeneration of the Crimean political elite which has not passed the test of the dollar and betrayed, in fact, the ideas of “Crimean regionalism” and the strategic development of autonomy (thus, as the result, quoting of the word “elite” becomes clear and customary).

Kiev massive inspections of the Crimean land infringements, that took place during this period (especially in 2003), resulted not in the punishment of bribe-takers, but in the resignation of Prosecutor General of Ukraine S. Piskun. After that, the Crimean “elite” has learned how through land allocation to “settle accounts” with the controlling structures of Kiev and made conclusions about its total impunity; at the same time there was formation of the corruption market price on government positions and positions in local governments related to the issue of permits for various types of business and as well as the process of establishment of the corruption vertical, including even selling of the positions of officials with small authority, rapidly enveloped all the main spheres of the peninsula’s life.

Let’s remark that this was encouraged by the provisions of the Constitution of Crimea of 1998 version, which contained the principle of binding agreement with the Verkhovna Rada of the Crimea (in person or by its chairman) of a large number of appointments to public positions – up to the deputy heads of municipal and district departments of Internal Affairs and the tax authorities. It is a paradox that these provisions were included into the Constitution on the initiative of the leader of the Crimean Communists, but developed into the feed box for their main enemies.



Viktor Yanukovych – yet the Prime Minister of Ukraine in times of the President Kuchma. Photo by by M. Rozenstein, especially for BSNews

In 2004, the corruption business has already become the main part of everyday life of the corps of Crimean bureaucrats and deputies, while the size of corruption income developed into a crucial factor and the main motive for taking any decisions. Since then, any other motives of "elite’s" actions virtually vanished, except the ones of the size of corruption earnings and fear of losing position.

By this time even talks on the strategic themes of perspective development of the peninsula terminated for a long time. The latest manifestation of attempts of strategic approaches was the order of the Council of Ministers of the Crimea on development of strategy for the period until 2015. The first phase of this work was completed and published by June 2004.

In the future – except for a brief period in 2005, when the government was headed by Anatoly Matvienko, appointed to the Crimea by the President Yushchenko, the strategic development of the Crimea had been stopped and was resumed only in late 2010.

By the year of 2004, the Crimean principal business of "zero" years – the sale of land and construction of luxury apartments with sea views – involved large numbers of the Crimeans:

construction and development companies, real estate agencies, notaries, law firms, architectural planning and land management organizations, judicial and law enforcement bodies. Land broker age started to flourish.

The welfare of tens of thousands of people depended in these years on this shady business:

the ones involved in the maintenance of technological schemes of the informal land market and the inflating bubble at the construction market and the other ones directly involved in real-estate speculation. As well as common workers – up to builders and employees of construction materials shops and warehouses…

Besides, the growth of shadow income of “elite” and stratum of entrepreneurs, connected with land schemes, lead to the sharp increase of their “glamorous style” consumption and start of the rapid development of prestigious showrooms, restaurants, spa centers and other facilities of prestigious consumption, as well as foreign tours for holidays and recreation in the exotic countries.


"Russians for Yushchenko" – pre-electorally in support of Viktor Yushchenko in Simferopol, on he leftone of the leaders of Russian organizations of the Crimea – Sergey Shuvaynikov, 2004. Photo by M. Rozenstein, especially for BSNews

At this time interests of significant part of small and medium-sized businesses objectively coincided with the ones of the Crimean "elite". An active layer of society, interested in both such business and such "elite", was formed in the Crimea very quickly.

Precisely this very layer delegated party activists, candidates of deputies to the local councils at various levels. The mass purchase of the deputies’ mandates becomes a widespread practice. At the same time a direct relationship was developed: the price of the mandate of a deputy started actually to be determined by the price of land at the informal market.

By this time we can refer fixation of the certain balance between the government and the Mejlis of the Crimean Tatar people – the development of mechanism of joint response to emergencies, thus, the acuteness of the problem of the land squatting ceased.

At the same time – against the background of “the land boom” – among some of the Crimean Tatar activists at different levels there emerged and then became ingrained such a phenomenon as business on land squatting. The rapid spread of corruption absorbs, among the others, the funds intended to fund the programs of resettlement of formerly deported people; some leaders and activists of the Crimean Tatar national movement became part of the corruption schemes.

Overall, one gets the impression that the problem of the Crimean Tatars, given annual increases of its state funding entered more peaceful path after the violent conflicts of 2003.

In this, almost serene state, the Crimea came to the end of 2004 – the beginning of 2005, enjoying the full confidence in victory of Viktor Yanukovych in the presidential election.

continued

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