In our series of articles entitled \u2018The Economy of Oppression\u2019, we will examine which Crimeans have lost out and which have gained financially as a result of the Russian occupation.<\/strong><\/p>\n Andrii Yanitsky, for the Center for Journalist Investigations\u00a0<\/b><\/p>\n <\/p>\n On 28 February 2014, the controversial Russian politician Vladimir Zhirinovsky stood on the steps of the building of Sevastopol City Administration, which had already been seized by the Russian occupants, and waved a wad of banknotes.<\/span><\/p>\n \u201cI\u2019m giving 30,000 hryvnias for flowers [for the women]. Hand them out to old spinsters, pregnant women, divorcees, married women and those with lots of children! So that they all know that Russia is a rich country. We\u2019ll give everyone everything!\u201d \u2013 <\/span>shouted the politician<\/span><\/a> (now deceased; he died in Moscow in 2022).<\/span><\/p>\n Instead of giving the money to the women, he handed it over to his political ally in Sevastopol, Ivan Komelov. Komelov replied that \u201cthe money would be accounted for\u201d and passed on to the office of Russian occupation governor of Sevastopol Alexei Chaly.<\/span><\/p>\n Zhirinovsky gives money in occupied Sevastopol in March 2014. Screenshot of video of Russian propagandist site ForPost (quality of photo enhanced).\u00a0<\/span><\/i><\/p><\/div>\n This tragicomic scene sums up the entire economic policy of the Russians in Crimea. After a brief period of political bribery, the money ended up in the hands of the occupants themselves. But let us take it one step at a time.<\/span><\/p>\n Year of grand promises\u00a0<\/b><\/p>\n In April 2014, Crimean pensioners received a quarter more money from the Russian occupation authorities than they had the previous month. In May, the extra-payment <\/span>rose<\/span><\/a> to 50%; in June, to 75%; and from July onwards, it amounted to 100% of the pension previously awarded under Ukrainian law. Thus, in just four months, pension payments for Crimeans had effectively doubled. No formal procedure was required; the extra-payment was <\/span>calculated automatically<\/span><\/a>. (By 2015, the occupied peninsula had switched to the Russian system for calculating pensions, and payments were reduced for certain categories of pensioners.)<\/span><\/p>\n At the same time, the Russian occupation authorities were increasing the salaries of public employees. Not by a factor of two, but for many people the change was noticeable. The peninsula was literally awash with money.\u00a0<\/span><\/p>\n Propagandist leaflets on the fence in Simferopol with comparison of prices and salaries between Russia, Autonomous Republic of Crimea and Sevastopol on the eve of illegal referendum in March 2014. Photo: Irina Garina \\ \u201cNovaya\u00a0 Gaseta Yevropa\u201d<\/span><\/i><\/p><\/div>\n The scale was enormous. At the start of the occupation, there were 524,000 pensioners in Crimea (excluding Sevastopol, though the situation there was similar), whilst a further 140,000 people were employed in state-funded institutions. Together, this amounts to almost 34% of the Crimean population. And if we take their families into account, it is reasonable to assume that the majority of the Crimean population received financial incentives from the Russian occupants during the first year of the invasion.<\/span><\/p>\n In May 2014, the Russian occupation authorities allocated nearly 45 billion Rubles (around 950 million Euros at the exchange rate at the time) as additional expenditure to increase pensions and wages on the peninsula.<\/span><\/p>\n This policy was tantamount to <\/span>large scale financial bribery<\/b>. Russia attempted to buy the silence of the Crimean people with money, while those who objected were <\/span>dealt with by the Russian para-military called self-defence\u201d forces<\/span><\/a>.<\/span><\/p>\n The rise in subsidies was not the result of economic growth. Factories did not suddenly start producing twice as many goods, nor did the number of tourists double. It was Moscow that was pumping money into the pockets of Crimeans.<\/span><\/p>\n The Ukrainian hryvnia remained in circulation for some time, but the Russian authorities gradually replaced it with Rubles. Moreover, an inflated exchange rate of 3.8 Rubles to the hryvnia was applied when converting salaries. For price and tariff adjustments, the rate was <\/span>3.1 Rubles to the hryvnia<\/span><\/a>. For a short while, residents of the peninsula felt as though their wages had risen while prices had remained the same. (You can\u2019t fool the economy: prices also rose over time, but we will cover this in detail in a separate article).<\/span><\/p>\n The change in currency was part of a wider transformation. Companies were switching to Russian legislation and converting their documents to Russian formats – under simplified procedures. For some companies, this opened up new opportunities and new markets. For others, however, it meant losing partners and markets.<\/span><\/p>\n A special tax policy<\/span><\/a> was in place for the occupied territories. In January 2015, Russia introduced a free economic zone regime on the Crimean peninsula. Participants in the scheme were granted exemptions from income tax, property tax, land tax and insurance contributions.<\/span><\/p>\n This was a response to international sanctions, designed to encourage companies to invest in occupied Crimea. At the same time, such companies would have to recognise the peninsula\u2019s status as part of Russia and legitimise the occupation.<\/span><\/p>\n Russia has also begun to pour billions into rebuilding the peninsula\u2019s infrastructure in order to integrate it into its own economy. Much of this spending was intended to replace transport and energy links with mainland Ukraine. In August 2014, the Russian government approved <\/span>a federal target program<\/span><\/a> for the socio-economic development of Crimea and Sevastopol.<\/span><\/p>\n Unlike one-off bribes to the population, investment in infrastructure had long-term economic consequences. It was intended to create demand for construction works, materials and transport in Crimea, and thus to support the peninsula\u2019s economy. In reality, money from the federal budget often ended up in the pockets of Russian contractors; in other words, the benefits went to companies close to the occupants themselves, which were involved in the distribution of the funds.<\/span><\/p>\n So, at the start of the occupation, Russia used three economic tools to bribe the local population:<\/span><\/p>\n – immediate payments into pensions and the salaries of public sector employees<\/span><\/p>\n – tax breaks for businesses<\/span><\/p>\n – investment in infrastructure.<\/span><\/p>\n But there was another important consequence of this policy. Crimean economy was becoming increasingly dependent on financial injections from the Russian occupation authorities.<\/span><\/p>\n How Ukrainian authorities underpinned invaders\u00a0<\/b><\/p>\n Russia seized Crimea by force, but was unable to immediately provide it with everything it needed. The peninsula remained dependent on mainland Ukraine: electricity, water and food supplies continued to come from Ukraine in the early days following the occupation. This dependence on the mainland potentially gave Kyiv economic leverage over the occupants, but it was in no hurry to make use of it.<\/span><\/p>\n At the time of the occupation, Crimea was <\/span>approximately 84%<\/span><\/a> dependent on supplies from the Ukrainian power grid. Despite this, the Ukrainian authorities did not cut off supplies, and at the end of 2014 <\/span>agreed (!) to new energy contracts with Russia<\/span><\/a>. The contract provided for 100% of the occupied Crimea\u2019s electricity needs to be met by Ukraine, which was a condition for the supply of Russian electricity to Ukraine, <\/span>according to the Centre for Journalist Investigations<\/span><\/a>.<\/span><\/p>\n The situation only changed in November 2015, when unidentified activists (rather than the Ukrainian government) damaged electricity pylons in the Kherson region. In other words, Russia had nearly two years to set up an alternative energy supply route.<\/span><\/p>\n Ukrainian trade in Crimea did not cease immediately either. In August 2014, the Verkhovna Rada of Ukraine passed a law establishing the \u201cCrimea\u201d Free Economic Zone. As <\/span>reported by the Centre for Journalist Investigations<\/span><\/a>, in the first year alone since the law came into force, Ukrainian goods worth approximately $1 billion were officially (!) imported into the occupied peninsula. Ukrainian businesses continued to profit from the occupation – and all entirely legally. It was not until September 2015 that activists (rather than the Ukrainian government) organised a trade blockade of Crimea. The supply of most Ukrainian goods to the peninsula was not officially banned until January 2016, while the law on the \u2018Crimea\u2019 Free Economic Zone remained in force until as late as 2021.<\/span><\/p>\n Unlike the blockade on the supply of electricity and goods, the supply of water via the North Crimean Canal was cut off as early as spring 2014. This dealt a blow to irrigated agriculture, which depended on the canal. However, some Ukrainian politicians attempted to lobby for the resumption of water supplies to the peninsula even while the occupation was underway.<\/span><\/p>\n The spoils economy: money was handed out to some, while others were robbed\u00a0<\/b><\/p>\n While Russia was increasing pensions and wages for some Crimeans, it was taking away enterprises, land and property from others. The occupants\u2019 generosity had a downside.<\/span><\/p>\n As early as March 2014, Moscow <\/span>\u2018nationalised\u2019 – and in essence stole – 131 Ukrainian state-owned enterprises<\/span><\/a> in Crimea, including all the ports, the railway and the world famous \u2018Magarach\u2019 and \u2018Massandra\u2019 wine-making enterprises.<\/span><\/p>\n The occupants called this \u2018nationalisation\u2019, although legally Ukraine had not relinquished its ownership rights. Russia had no legal grounds to dispose of this property. The occupants\u00a0 subsequently transferred some of the seized enterprises to private owners with close ties to the Kremlin.<\/span><\/p>\n Among the main beneficiaries of the seized Ukrainian assets were entities linked to individuals in Putin\u2019s inner circle – Yuri Kovalchuk and Arkady Rotenberg. The former <\/span>acquired<\/span><\/a> \u201cMassandra\u201d and \u201cNovyi Svit\u201d wineries. <\/span>The latter acquired health resorts<\/span><\/a> \u201cDyulber\u201d, \u201cMiskhor\u201d and \u201cAi-Petri\u201d.<\/span><\/p>\n![\"\u0416\u0438\u0440\u0456\u043d\u043e\u0432\u0441\u043a\u0456\u0439](\"https:\/\/investigator.org.ua\/wp-content\/uploads\/2026\/11\/foto-zhyrynovskyj-rozdaye-groshi-1024x493.png\")
<\/a>![\"\u0410\u0433\u0456\u0442\u0430\u0446\u0456\u0439\u043d\u0456](\"https:\/\/investigator.org.ua\/wp-content\/uploads\/2026\/11\/znimok-ekrana-2026-11-02-130753.png\")
<\/a>