Russia’s annexation of Crimea has resulted in startling disruption to everyday life for the peninsula’s residents, with banks running out of money, prices soaring and problems affecting water supplies.
Russian President Vladimir Putin on Friday last week flew into the peninsula for the first time since Moscow wrested control of Crimea from Kiev in March to make a Victory Day appearance.
In the runup to Victory Day — which marks Nazi Germany’s surrender to the Soviet Union in World War II on May 9, 1945 — the huge task of assimilating a region almost the size of Belgium with 2 million people was becoming more and more apparent.
Disgruntled crowds have been standing in line outside banks up and down Crimea since the annexation and last week, one Sberbank Russia branch had a sign on the door announcing that all the bank’s branches had been closed.
“What should we do?” an elderly woman asked upon seeing the notice.
“What should we do? Let’s break down the door, take out the cash machine, open it up and see what’s inside,” a man named Oleg responded with a slightly ominous chuckle.
“And split it up between everyone,” another man said.
The sign on the door promised that the bank would resume operations this week “in a new format” and that “all obligations to clients will be met in full,” but it was not clear by whom.
“Guys, they fired us. We don’t know anything either,” said a bank employee who was peppered with questions by locals after he opened the door to let a woman out.
Bank closures have been one of many inconveniences and unsolved issues in Crimea following the Russian annexation. Prices for groceries have also risen and water flowing from Ukraine to the arid peninsula has been drastically reduced, but many residents are still prepared to give the Kremlin the benefit of the doubt.
Nikolai Novinsky, a surgeon who fought in World War II, said that besides his pension, many of his other benefits had been disrupted. His bank has closed and he will have to travel to Kiev to get his savings — a trip he does not feel it is safe to make at the moment.
“The transition period is a little bit difficult. Everything is hung up... I think things will change for the better [as part of Russia],” he said.
The currency situation was always going to be tricky, since Crimea migrated away from using the Ukrainian hryvnia and adopted the Russian rouble.
On Tuesday last week, the National Bank of Ukraine declared it illegal for any Ukrainian banks to continue operating in Crimea, compounding the problem.
According to the national bank, four Russian banks were operating in Crimea as of the end of last month, but only one of them — Rossiisky National Commercial Bank — was widely represented, with 116 branches in the region. Meanwhile, 80 Ukrainian-accredited banks were operating branches in Crimea when the region joined Russia in March, only two of which were applying for Russian licenses, it said.
Measures have been taken to compensate the clients of four Ukrainian banks which the Central Bank of Russia ordered closed on April 21, including PrivatBank, where many of Crimea’s 2.4 million residents receive their pensions and salaries. The bank, owned by pro-Kiev oligarch and newly appointed Dnepropetrovsk Governor Igor Kolomoisky, had operated 339 branches and had 790,000 private clients on the peninsula.
On Thursday last week, a new Protection Fund for Crimean Depositors had begun operating out of Privatbank offices in the Crimean city of Simferopol, taking applications to compensate account holders for deposits of up to 700,000 rubles (US$19,900). It will reportedly hand out up to 30 billion rubles in compensation, money that comes from the Russian government, a fund employee told the Guardian.
Nina, a PrivatBank client who was applying for compensation at the fund, said the bank closures were a “Ukrainian problem” that was now being solved by Russia. She said she was more worried about the “huge corruption” under former Ukrainian president Viktor Yanukovych continuing in the new Crimea, since many officials from the previous regime had remained in their positions.
Account holders with Sberbank Russia and other banks do not know what will happen to their savings, and the scarcity of functioning banks and cash machines has resulted in huge lines.
“I think these are just temporary difficulties. I trust Russia more than I trust Kiev,” said the elderly woman at Sberbank Russia, who declined to give her name, but said she had been born in Russia and lived in Crimea for more than 50 years.
“They shot police who were just doing their duty,” she added, referring to violent clashes between protesters and Yanukovych’s riot police during the anti-government Euromaidan demonstrations this winter in Kiev.
Sberbank Russia’s closure came without warning, or Oleg would have withdrawn as much of his deposits as possible, he said.
“We’re satisfied,” he said about the decision to join Russia. “But if they return our money we will be even more satisfied. We’re happy we got away from Kiev, but this suffering isn’t good. People depend on money all the same.”
People stood for hours outside the downtown branch of Chernomorsky Bank for Development and Reconstruction waiting to pay taxes, utility fees and conduct basic transactions which were previously done online or at various banks and government offices.
An accountant who identified herself as Yevgeniya was No. 75 on a list of 127 people at one cashier’s window, waiting to make a payment for window repairs in her office. She said that Crimea’s situation was “uncomfortable,” but that she voted to join Russia because the “standard of living is higher there.”
Moscow has promised 55 billion rubles from the federal budget to cover Crimea’s budget deficit and has made numerous additional allocations, such as 7 billion rubles to subsidize transport links with the Russian mainland.
Pensioners around the city said they had received a 25 percent increase in their payments last month and had been promised that pensions would double, but at the same time, prices for food have shot up. Grocery store clerk Flyura Mustafova said products had risen in price by as much as 30 percent.
“There’s enough food, but it’s expensive,” she said.
Food prices are likely to go up further due to problems with local agriculture and with deliveries from Russia and Ukraine. At the moment, delivery trucks from Russia can only reach Crimea via a ferry across the Kerch Strait. Lines of trucks there and at the new border with Ukraine — where most of Crimea’s food comes from — have reportedly grown several hours long.
Eldar Mustafayev, a former Turkish Airlines representative who returned to farming when his employer left the peninsula after the referendum, said the canal bringing drinking and irrigation water from Ukraine’s Dnieper River into Crimea was dry near their village of Novy Mir.
Radio Free Europe’s Crimea site reported that the Ukrainian and Crimean authorities were not able to agree this year on payments for water supplies and the Crimean side disrupted technical processes to bring new water into the canal.
As a result, Mustafayev’s family did not plant the 10 to 15 hectares of fruit and vegetables they normally would on land near the canal, he said. These are water-intensive crops that bring more profit than the 200 hectares of grain they also plant. Rice growing in their region has been completely aborted this year and the onion crop has also been seriously affected, he added.
Mustafayev is a Crimean Tatar, part of an ethnic group that makes up about 15 percent of the population, most of whom boycotted the referendum because it did not include an option to remain part of Ukraine.
“I expected these problems. It’s common sense,” Mustafayev said. “We needed to understand that we were running into a lot of problems that will negatively affect our livelihood. Food prices are rising and they haven’t closed the [Ukrainian] border yet.”
“Pensions will double, but food prices will double as well, so it won’t make a difference,” said Ildmy, a Crimean Tatar pensioner who declined to give his last name. “Soviet times have come back, so of course people will say they are satisfied.”
Asked to elaborate, he answered with a saying: “My tongue is my enemy.”
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