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Major economic consequences as Crimea splits from Ukraine

Major economic consequences as Crimea splits from Ukraine
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Crimea’s economy relies heavily on tourism, with Black Sea resorts like Yalta attracting large numbers of summer holidaymakers, both Ukrainians and Russians.

Even before the referendum that voted to break away from Ukraine, tour operators had reported a big fall in sales and cancellations.

Rather vague official figures have services making up 60 percent of gross domestic product.

That includes tourism – officially put at six percent – but it is impossible to calculate its exact contribution as much of the business is cash-in-hand.

Industry – including chemical processing and iron ore mining – accounts for 16 percent, with 10 percent from agriculture.

The land is intensely farmed. Wheat, corn and sunflowers are the main crops, along with livestock and fruit production. It is also one of Ukraine’s main wine producing regions.

But that agriculture needs water, which mostly comes from outside Crimea, from the Ukrainian mainland. More than 80 percent is brought by canal from Ukraine’s Dnieper River.

Energy is another vital import. According to some estimates, Crimea could just about be self sufficient in natural gas – extracted from the Black Sea – though currently two thirds of its power needs come through the rest of Ukraine.

Crimea has some solar and wind energy power generation capacity, but over 80 percent of its electricity also comes from the mainland.

The Kyiv government has also been earning the equivalent of about 70 million euros a year from Moscow by leasing its base in Sevastopol to house the Russian Navy’s Black Sea Fleet.

Part of that deal was a discount on Russian gas supplies to Ukraine.