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Now That Russia Has Crimea, What Is Moscow's Plan?

Jun 5, 2014
Originally published on June 5, 2014 5:58 pm

Less than three months after Russia annexed Crimea, Moscow is committing billions of dollars in aid and tax breaks to make the Black Sea peninsula a showcase of development.

But there's at least one major problem: The region has a deeply ingrained reputation for corruption and organized crime, a reputation that already taints some of the region's newest leaders.

After Russian troops seized control of the Crimean parliament in February, one of the first leaders to emerge was a 41-year-old businessman and politician named Sergei Aksyonov.

Although Aksyonov and his Russian Unity party held only three seats in Crimea's 100-member assembly, he was named acting prime minister.

Just a few weeks later, he was celebrating Russia's annexation of Crimea on March 18.

"We're going home!" he told a cheering crowd. "Crimea is in Russia! Thanks to the support of Russia, its people and its president."

Allegations Against Crimea's New Leader

For Aksyonov and his colleagues, the annexation seems to be opening a world of possibilities.

But Mark Galeotti, a professor at New York University and an expert on organized crime in the former Soviet Union, says Aksyonov has been dogged by allegations that he has longtime links to Crimea's underworld.

"For years, the Ukrainian police have been saying that the elite in Crimea, even by the standards of Ukrainian politics, was thoroughly interpenetrated by figures who were in organized crime or connected to organized crime," Galeotti says.

He says police reports identified Aksyonov, who went by the nickname "Goblin," as a member of a cigarette-smuggling gang.

Tatyana Kurmanova, a journalist who investigated Aksyonov for the International Press Center in Simferopol, says the allegations about Aksyonov's criminal past became very public in 2009. That's when Mikhail Bakharev, a prominent member of the Russian Society of Crimea, a group that promotes Russian culture, tried to have Aksyonov ousted on the grounds that his membership would hurt the group's reputation.

"[Bakharev] brought up the police reports," Kurmanova says. "Aksyonov filed a defamation suit, but the court ruled against him because he couldn't prove the reports were false."

Kurmanova says court records and other evidence against Aksyonov later went missing.

There are also allegations of criminal activity against Vladimir Konstantinov, the speaker of the Crimean parliament.

Sergei Mokrushin, a correspondent for the Independent Press Center, investigated Konstantinov's construction company, Console.

"Console would get a permit to construct an apartment building, and it would build a foundation, or maybe several stories, to convince people that construction was underway," Mokrushin says. "Then people would prepay the company for apartments in the building. Once Console had the money, the work would stop."

Mokrushin says many people were taken in by the scheme and never got their money back. He says Console, which is now bankrupt, also had government contracts to build several kindergartens, work that also was never finished.

The reporters say it's unlikely now that anyone will pursue cases against Aksyonov or Konstantinov.

Talk Of Casinos

The economic stimulus that Russia is preparing for Crimea is expected to include a permit for casino-style gambling, something that is only allowed in a few zones in Russia.

That's an attraction for organized crime networks from Russia, says New York University's Galeotti, as is Crimea's potential to be a new center for smuggling everything from Afghan heroin to counterfeit designer goods.

"My concern is precisely that Russia will not move in to clean this up, because after all, at the moment, Russia depends on the local elites to actually run this area, and therefore wants to keep them sweet by not trying to crack down on them," he says.

Russian President Vladimir Putin issued a decree last month that temporarily exempts public officials in Crimea from a Russian law that prevents public officials from engaging in business. The Crimean politicians now have until the end of the year before they have to comply with that and other laws that would require them to declare assets and report potential conflicts of interest.

In the meantime, Galeotti says, competition among gangs could turn Crimea into an increasingly dangerous place, or even spark conflicts in Moscow, where many of the gangs are based.

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AUDIE CORNISH, HOST:

As the separatist conflict in Eastern Ukraine turns increasingly violent, Russia is consolidating it's hold on its newly annexed territory of Crimea. The Russian government is planning to spend billions to make Crimea a showplace of development. The coup there put some obscure politicians in charge of what may soon be a region awash in money. NPR's Corey Flintoff reports.

COREY FLINTOFF, BYLINE: As Russian troops seized control of the Crimean Parliament in February, one of the first leaders to emerge was a 41-year-old businessman and politician named Sergei Aksyonov. Although Aksyonov and his Russian Unity party held only three seats in Crimea's 100-member assembly, he was named acting prime minister. Just a few weeks later, he was celebrating Russia's annexation of Crimea.

(SOUNDBITE OF ARCHIVED RECORDING)

PRIME MINISTER SERGEI AKSYONOV: (Through translator) We're going home. Crimea is in Russia thanks to the support of Russia, it's people and it's president.

FLINTOFF: For Aksyonov and his colleagues, the annexation seems to be opening a world of possibilities. Russia has promised to invest billions of dollars in Crimea to renew its infrastructure and turn its rundown resorts into a tourist showplace. Mark Galeotti a professor at New York University and an expert on organized crime in the former Soviet Union says there are questions about the men who will be controlling this money.

MARK GALEOTTI: For years the Ukrainian police have been saying that the elite in Crimea, even by the standards of Ukrainian politics, was thoroughly interpenetrated by figures who were in organized crime or connected to organized crime.

FLINTOFF: He says that Asksyonov, in particular, was reported by various sources to have been a member of a cigarette-smuggling gang who went by the nickname Goblin. Tatyana Kurmanova is a journalist who investigated Asksyonov for the International Press Center in Simferopol. She says a prominent newspaper editor brought the allegations about Aksyonov's criminal past to the public.

TATYANA KURMANOVA: (Through translator) The editor offered information from police reports. Aksyonov filed a defamation suit. But the court ruled against him because he couldn't prove the reports were false.

FLINTOFF: There are also allegations of criminal activity against Vladimir Konstantinov, the speaker of the Crimean Parliament. This is Sergei Mokrushin, another correspondent for the Independent center.

SERGEI MOKRUSHIN: (Through translator) Mostly, I was investigating shady deals by the construction company Konsul, which was founded by Konstantinov.

FLINTOFF: Mokrushin says Konsul would build a few floors of an apartment building then pre-sell the unbuilt apartments to investors. But the apartments were never built and the investors never got their money back. The reporters say that key evidence against both men went missing. Even before Aksyonov and Konstantinov came to power. Now, they say it's unlikely that anyone will pursue cases against them. The economic stimulus that Russia is preparing for Crimea is expected to include a permit for casino style gambling - something that's only allowed in a few zones in Russia. Mark Galeotti says organized crime networks in Russia are trying to link up with Crimean gangs that could give them a piece of the action.

GALEOTTI: My concern is precisely that Russia will not move in to try and clean things up because, after all, the moment Russia depends on the local elites to actually run this area - and therefore, wants to keep them sweet by not trying to crack down on them.

FLINTOFF: In fact, President Putin issued a decree last month that postponed implentation of a Russian law in Crimea that prevents public officials from doing commercial business. The Crimean politicians now have until the end of the year to comply with that and other laws that require them to declare assets and report potential conflicts of interest. Corey Flintoff, NPR News. Transcript provided by NPR, Copyright NPR.