Why does Putin want the Crimea?
If the President of the Russian Federation is to be believed his whole campaign is driven by the need to protect ethnic Russians from neo-Nazi extremists that they claim have infiltrated the new temporary government in Kiev.
That sounds laudable - until you look at the wider picture of how Russians are actually treated in their homeland today. Russia has very serious social problems with drug and alcohol abuse and HIV Aids, but the state does virtually nothing to help. Ethnic minorities are treated with disdain whilst the gay community has been forced underground. Those close to the Kremlin enjoy limitless wealth whilst real poverty now affects over 20 per cent of the population. Clearly support for ethnic Russians in Russia is not a Presidential priority.
As for protecting ethnic Russians in Ukraine from neo-Nazis, well, there’s another conflict of interest. Some would say that there are more neo-Nazi politicians in the Russian Duma than there are in Ukrainian Rada and that they have been there since the Liberal Democratic Party of Russia (LDPR) was founded 20 years ago.
So it would be natural to ask why all sudden the interest in Crimea, as well as South and East Ukraine. Crimea is a part desert, part mountainous region most famous for its history, tourism, vegetables and sweet wines - as well as the Sevastopol port Russia uses as a naval base. The South of Ukraine is primarily farmland whilst the East is home to the former Soviet mining, coal and steel industries - all of which are in need of massive investment and are a major competitor to similar industries in the Russian Ural regions.
To date President Putin has wasted the £33 billion that he spent on building the image of a new Russia at the Sochi Winter Olympics; his aggression has caused the Rouble to slump requiring the Central Bank to step in at a cost of £7 billion, and the Russian stock market seems to be in a nose-dive.
The total cost to Russia of this Crimean adventure might reach £43 billion and that is without the longer-term damage of potential targeted sanctions.
Why go in? The answer, we think, is simple: oil and gas. Putin’s whole campaign against Ukraine could be nothing more than a land grab to ensure that Gazprom, a company in which he has considerable personal interest, controls who, how and when exploration and extraction will begin.
According to Kremlin insiders the annexation of Crimea has been 6 years in the planning.
By annexing all the land adjoining the Black Sea, Russia would also annex the offshore rights and anything found therein. It doesn’t matter that as of today the discoveries have been relatively small. If serious quantities of oil and gas were to discovered it will be too late - and that is a risk President Putin would not be prepared to take, as it would undermine his entire economic structure.
In pictures: Ukraine crisis
In pictures: Ukraine crisis
1/12 Ukraine crisis
People shout slogans during a pro Russian rally at a central square in Donetsk. Pro Russian activists continued to gather on Saturday in the eastern Ukrainian city of Donetsk, as Russia was reported to be reinforcing its military presence in Crimea.
2/12 Ukraine crisis
In the same pro Russian rally, demonstrators show their support. Ukraine's ambassador to Russia and a deputy Russian foreign minister held a "cordial" meeting on Saturday, Moscow said, without giving details of any discussion of Russian-occupied Crimea.
3/12 Ukraine crisis
Crimean ethnic tatars stand on the roadside as Russian troops move towards to Simferopol in the settlement of Kok-Asan, some 70 kilometres from Simferopol in Crimea.
4/12 Ukraine crisis
Russian troops stand on a roadside in the settlement of Opytnoye, some 70 kilometres from Simferopol.
5/12 Ukraine crisis
Armed members of the first unit of a pro-Russian armed force, dubbed the "military forces of the autonomous republic of Crimea" march before the swearing-in ceremony in Simferopol, Ukraine. Some 30 men armed with automatic weapons and another 20 or so unarmed, were sworn in at a park in front of an eternal flame to those killed in World War II.
6/12 Ukraine crisis
A group of Cossacks march past a statue of Soviet revolutionary leader Vladimir Lenin in Simferopol as tensions in the area continue to rise.
7/12 Ukraine crisis
An armed member of the first unit of a pro-Russian armed force, dubbed the "military forces of the autonomous republic of Crimea" signs the oath during the swearing-in ceremony in Simferopol,
8/12 Ukraine crisis
9/12 Ukraine crisis
Ukrainian soldiers load their armed personnel carriers (APCs) into boxcars in the western Ukrainian city of Lviv. Pro-Kremlin militia fired warning shots as unarmed foreign observers tried to enter Crimea on the 8th.
10/12 Ukraine crisis
An abandoned naval ship sunk by the Russian navy to block the entrance is seen in the Crimean port of Yevpatorya on March 8th.
11/12 Ukraine crisis
Ukrainian sailors stand guard on top of the Ukrainian navy ship at the Crimean port of Yevpatorya.
12/12 Ukraine crisis
Crimea's pro-Moscow leader Sergei Aksyonov speaks to the media in Simferopol on the 8th March. He has defended a decision to hold a referendum on whether the region should join Russia, saying on Saturday that "no one" could cancel the voting.
Frankly it doesn’t matter if the Crimea never produces a drop of oil. Stopping production alone would preserve the Kremlin’s domination of the supply of energy from Russia. However all the signs are that the onshore and offshore fields will live up to expectation.
Exploration of the Black Sea off Crimea has gone into overdrive. ExxonMobil, Chevron, Shell, Repsol and even Petrochina have begun to show a real interest in working with Kiev to develop the entire Ukrainian sector.
Offshore magazine reports that Exxon and Rosneft have already made encouraging finds in the Russian sector near Novorossiysk whilst in the Romanian sectors test drilling by ‘OMV’ has found interesting deposits, so much so that the major oil companies are now bringing in serious deepwater drilling technology. Trans Euro Energy has already found commercially viable resources of natural gas on the Crimean mainland.
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This would give another reason for why Putin wants to hold onto the port of Sevastopol – also an important naval base - as it is a perfectly-located deep water port capable of servicing the oil fields and the massive drilling technology, and it’s barely 100 kilometres (60 miles) from the exploration zones.
But it’s not just the offshore energy resources that could be of interest to Putin. Included within Southern and Eastern Ukraine are the major export terminals in the port of Odessa, the military ship building yards at Nikolayev, a major oil refinery, massive chemical plants and grain export silos, hydro-electric plants along the Moldavian border in the Russian controlled Transnistra region, two of the largest nuclear power stations in Europe, three huge solar power stations in Crimea, the extensive coal-bed methane gas fields in the Donbass basin, plus the largest resources of magnesium on the planet and huge stocks of coal and iron ore.
Add to this is the £12 billion saving he would make by running the new South-stream gas pipeline overland through Crimea and Southern Ukraine as opposed to under the Black Sea to Bulgaria and you can see that £42 billion is quite a cheap price to pay - especially when the West has such a short and selective memory.Reuse content