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Overview of Crimea Oblast Area: 27,000 sq. km Population: 2,200,000 Geographical Location: The Crimea is a peninsula, which is located in the extreme south of Ukraine, and washed by the Black and Azov seas. Its coastline is almost 1000 km long. The peninsula is equally far from the Equator and the North Pole, its form resembles a rhombus, extending 200 km from the north to the south, and 325 km from the west to the east. In the north, the Crimea is linked with the neighbouring Kherson oblast by the 7-km long isthmus of Perekop.

More then 100 nations and nationalities inhabit the Crimea. The Simferopol (370,000 people) is the capital of the Crimea. The largest cities of the Crimea are Sevastopol (380,000 people), Kerch (180,000), Yevpatoriya (110,000), Feodosiya (90,000), Yalta (90,000).

The climate is moderate continental in the north, and Mediterranean in the south.

Yalta, Alupka, Simeiz, Gurzuf, Miskhor, Livadiya, Foros, Alushta are health resorts based along the southern shore. The Sevastopol and Balaklavska bays are the most convenient bays on the Black Sea coast.

Among the most important raw materials of the region are iron ores, ordinary and flux limestone, salt (from the Syvash lake) and gas.

Of special significance are recreational resources: beaches (512 km of the coast line), curative mud deposits (Saks, Chokracks, Bulganak), mineral water springs (about 200 water wells). Only 30 % of the balneological resources are currently used in the Crimea.

There are four national reserves in the Crimea: the Crimean, the Karadag, the Yaltinsky mountainous forest and the Cape of Martyan.

From the ancient times, the Crimea had been the place where different cultures, tribes and peoples coexisted together. The civilisations of Antique Greece and Rome, Ancient Rus and Byzantine, the Khazars and the Balkan region states interacted in the territory of the peninsula.

The first inhabitants of the Crimea were the Scythians. The tribes that came here in the 8th century B. C. from Middle Asia composed the bulk of the Scythians. Before the 4th century B. C., these tribes founded a mighty military power - the Scythian Kingdom.

In the 6th century B. C., in the eastern part of the Crimea, in the place of the modern towns of Kerch and Feodosiya, the Greeks of Miletus founded the town of Panthicopeus, which the Greeks called Bosporus, and the fortress of Kafa. In the western part of the Crimea, Chersonese (founded in the 5th century by settlers from Heracles Pontus) was of special importance. From the end of the 3d century B. C. to the 4th century A. D., the outskirts of the present-day Simferopol were occupied by Scythian Neapol, the centre of the Skythian tribes.

In the early medieval, Taurica was penetrated by Turk-speaking tribes of the Khasars and Pichynegs, in the 11th century the tribes of Kipchaks (Polovtsy) occupied almost all the Crimea but Chersonese and Bosporus. That time, Sugdey (now Sudak) became an important centre of international trade, where, apart from the dominating Greek population, Russian, Alan, Armenian merchants, and settlers from the Asia Minor dwelt. By the beginning of the 13th century, Taurica was invaded by the Venetians who were later subdued by the Genoeses. At the same time, there existed some small independent towns, principalities, and demesnes.

The invasion of Taurica by the Mongol hordes started in 1223. In 1239 Baty Khan subdued the steppe part of the Crimea, destroyed the local husbandry and took control over the population, the Alans, the Kipchaks, the Slavs, the Armenians, the Greeks, etc. The city of Krym (now Stary Krym) had became the administrative centre of the Crimea. Since the 14th century, the name of Krym (Crimea) had spread all over the peninsula, and replaced the previous name of Taurica. There existed some demesnes, still independent from the Mongols, Genoese colonies of Kafa, Sudak, Chembalo (Balaklava), and Kalamyta (Inkerman), which exported fur, leather, silk, spices, dye-stuff, and slaves to Europe.

In 1443, Hadgi-Girey Khan founded the independent Crimean Khanate. The city of Krym (Crimea) remained the capital. At the beginning of the 16th century, a new residence for the Gireys dynasty, Bahchisaray, was built. The Crimean Khanate also included the Black Sea steppes and the Taman peninsula.

In 1475, the Crimean Khanate was conquered by the Osman Empire and lost its sovereignty.

According to the Kuchuk-Kaynardgysk Treaty with Russia of 1774, the Ottoman Porta recognised the independence of the Crimean Khanate. The Manifesto of April 8 1783 declared the unification of the Crimean Khanate with the Russian Empire. On February 2 1784, the Tavriyska oblast was formed in the territory of the former Crimean Khanate which later, in 1802, was reformed into a Russian administrative province (gubernia). By the end of the 18th century, the population of the Crimea exceeded 100,000 people, the Tartars predominantly.

Since the ancient times, the Crimea was attractive by its healthy climate. Many noblemen, merchants, industrialists, the military elite lived and rested here. Names of many scientists, writers and artists are linked with the name of Crimea: A. Pushkin, A. Ayvazovsky, E. Repin, A. Chehov, A. Kuprin, Lesya Ukrainka, M. Kozyubynsky, F. Shalaypin, A. Gorkiy, M. Voloshin, V. Versayev, A. Grin, M. Tsvetayeva.

The economy of the Republic of the Crimea was formed under the influence of natural resources and peculiarities as well as the advantages of the geographical location of the peninsula. The Crimea has favorable natural conditions for the development of agriculture, recreation industry and some industrial productions, such as the extraction of gas, iron-ore, flux limestone, building materials, and soda and bromine compounds production.

The labour-intensive machine-building and metal-processing are the prevalent fields of specialization of the Crimean economy. The Crimea is known to be a supplier of food industry equipment, TV-sets and radio equipment, pneumatic devices, electric welding and agricultural equipment, tankers, floating cranes, and hydrofoil ships.

The agriculture of the Crimea is historically oriented for the development of farming. The viticulture, horticulture, tobacco-growing, essential oil-bearing plant-growing and grain farming are the branches of its specialization. In the cattle-breeding of the Republic, the priorities are dairy and meat cattle-breeding with an essential development of pedigree-breeding and such a specific branch as the poultry farming.

A special place in the economy of the Crimea is occupied by enterprises, manufacturing consumer goods. They produce ready-made clothes, footwear, leather goods, and knitted-fabric clothes. They supply market with perfumery and cosmetics, haberdashery and furniture. The Crimean metallurgy, machine-building and chemical industry considerably contribute to the consumer goods manufacture. Kerch Metallurgical Works have developed production of enamel kitchen utensils; machine-building companies of Sevastopol and Simferopol produce communication means; chemical enterprises of Krasnoperekopsk and Saki produce fabric dyes, potassium permanganate, bleach and detergents.

The Crimean fine dessert wines and champagne stand very high in the world market. The essential oils of the Crimea have also won a well-deserved recognition.

The recreation industry of the Crimea counts over 600 health centers of curative and prevention profile. Health centers (sanatoria) are mainly concentrated in the South Coast of the Crimea and health resort of Yevpatoria. In the South Coast of the Crimea they mainly treat adults, while Yevpatoria health resort is for children. There are a number of tourist camps and motels in the mountainous part of the Crimea. Foreign tourists are being served at "Yalta" and "Oreanda" hotels, as well as at the "Glade of Fairy Tales" motel situated on the southern sea-coast.

The economy of the Crimea is distinguished with its high degree of involvement in the geographical division of labor. Only one tenth of the goods, produced by the Crimeans, remain in the peninsula, while the rest is supplied for interregional and international exchange.

Attempts are made to set up free economic zones in the ports of Sevastopol and Kerch.

More than 190 joint ventures have been registered in the Crimea, 60 of them are industrial, their main foreign partners are from Germany, Turkey, and Russia. In 1999 production of the joint ventures totalled USD 30 million. A number of joint operations have been established in Western Europe, North and Latin America.

Foreign trade amounted to USD 249.5 million in 1999, including USD 127.3 million in export and 122.2 million in import. The Crimea has a positive trade balance with 38 countries. The export in 1999 was 97,9% of that in 1998, the import - 82,2%. The Crimean companies exported services to 86 countries for USD 68.8 million and imported services from 38 countries for USD 15.2 million.

In 1999 production increased in fuel, oil extraction, and chemical industries. Gross agricultural production grew by 7%. Grain production reached 980,000 tons, and sunflower reached 49,000 tons (12,5% more than in 1998).

As of January 1, 2000, 2,607 enterprises of the Crimea became privately owned. Now the private sector enterprises account for 16% of the total number of companies; 15% in construction; 26% in transport; 20% in trade, and 22% in public catering.

During the recent years, as a result of many objective and subjective factors of the economic transition period, business activity in all sectors has considerably decreased, living standards worsened, and a number of problems in the region development have been reveled.

In order to radically reorganize the national economy, a comprehensive long-term program for social and economic development and restructuring of the Autonomous Republic of the Crimea has been developed, covering the period through 2010.

In order to encourage investment and introduce new equipment and technology, the Crimea is implementing the policy of creating a favorable climate capital influx to the Crimean economy. In accordance with the Decree of the President of Ukraine No. 740/99 dated June 27, 1999, a special investment regime providing certain tax and customs incentives started operating on January 1, 2000 in the areas of priority development (Kerch, Feodosia, Sudak, Alushta Yalta, Eastern Crimea and "Sivash").

One of the first examples of its implementation is the creation of experimental economic zone "Sivash". The first and foremost purpose of the experiment is to create conditions for the region development by supporting chemical enterprises, keeping the existing jobs and creating new non-chemical enterprises.

The second purpose is to develop new forms of economic relations. The project provisions include the following:

1. The territory of the zone has no special customs bounds or barriers;

2. Not all enterprises but only the subjects of the NCEEZ "Sivash" are eligible for the privileges. established in February, 1996:

- goods being imported by the subjects of the Experimental Economic Zone "Sivash" for the needs of their production are exempted from customs duty and value added tax;

- 50% of the normal tax rate on condition of reinvestment;

- foreign currency earnings are not liable to mandatory sale.

During 3 years, 8,600 jobs were preserved and more than 1,200 new jobs were created. The overall employment at these enterprises increased by 1000 in 1999 alone.

The plants started gaining profits, paid off the wage arrears and began to make payments to the local budget, thus allowing to reduce budgetary indebtedness in social payments and pensions. Reduction of taxation burden positively influenced operation of the companies that became the subjects of the "Sivash" zone.

In all, since the beginning of the activities, 39 investment projects have been submitted to the Ministry of Economy of Ukraine by the "Sivash" Administration. At present, the Cabinet of Ministers of Ukraine has approved 30 projects, whose total budget is USD 83.5 million. For 3 years, 19 subjects of the "Sivash" Zone, eligible for privileges, have received privileges of more than UAH 13 million.

On the other hand, more than UAH 63 million of taxes were paid to the budgets of different levels by the subjects of the "Sivash" zone. Industrial production increase is observed annually during the implementation of the experiment. While the population of the area is less than 4% of the Crimean population, the area's production exceeds 23% of the all-Crimean production, which is due to the operation of the "Sivash" zone subjects.

Infrastructure of the economic zone is being developed. License customs warehouse of the "Sivash-Terminal" company operates, the insurance company "Kassandra" and the audit firm "Audit-Service" are accredited. The company "North-Crimean Center of New Technologies" provides information services through Internet. A telephone exchange of the Ukrainian mobile network operates in the region. A system of electronic payments using plastic cards is created. Some post-terminals are placed in the town. A branch of the Tavrichesky Institute of Business and Law trains economists, lawyers, and managers.

Annual exhibitions "SIVASHEXPO" and business conferences are traditionally held with the participation of government agencies of Ukraine and the Crimea.

In June 1999, a Decree of the President of Ukraine "On Special Investment Regime in the Territories of Priority Development of the Crimea" was adopted. According to the Decree, operation of the "Sivash" zone is planned for 30 years as one of the Crimean territories of priority development.