Russian officials are weighing a proposal to create a gambling zone with casinos and hotels in Crimea, the Black Sea peninsula it annexed from Ukraine, according to four people with direct knowledge of the planning.
Officials discussed the option at a March 21 meeting led by Deputy Prime Minister Dmitry Kozak, people said, asking not to be identified as the information isn’t public. Russia’s Economy, Finance and Regional Development ministries have an April 15 deadline to present a plan of the gambling project with spending and revenue estimates, the people said.
Russia is seeking to make Crimea less reliant on the state budget. The region may run a fiscal deficit of about 55 billion rubles ($1.5 billion) this year, which Russia plans to fully cover, Finance Minister Anton Siluanov said last week in an interview on state television. Russia had a budget surplus of 30.5 billion rubles, or 0.3 percent of economic output, in the first two months of 2014, according to Finance Ministry data.
Russia may direct at least $2.8 billion of emergency budget reserves this year to subsidize Crimea, the peninsula it annexed from Ukraine, to two people with knowledge of the plans said earlier.
The government estimates 100 billion rubles to 130 billion rubles are needed to support Crimea and the port city of Sevastopol, home of Russia’s Black Sea Fleet, the people said, asking not be identified as planning is confidential. The amount may swell to 260 billion rubles to raise state pensions and salaries to Russian levels, one of the people said.
President Vladimir Putin, facing the weakest economic outlook since 2009 and first-quarter capital outflows that may exceed the level for all of last year, defied the U.S. and European Union’s threats of sanctions to absorb Crimea, a predominantly Russian-speaking region. Putin last week ordered Crimean pensions to be increased “without delay.”
Should the gambling area in Crimea be created, it will be part of a so-called special economic zone, which gives tax breaks for the companies located within, according to the people. Prime Minister Dmitry Medvedev gave an order to ministries to develop proposals for Crimea, which will be presented to the government, his spokeswoman Natalya Timakova said by phone yesterday, without elaborating on the types of plans being considered.
Ilya Djous, a spokesman for Kozak, declined to comment if there’s an order for ministries to work on proposals to create a gambling zone.
“All proposals to stimulate the economy are under consideration,” Djous said by phone yesterday. “They will be known when a decision is made.”
Russia banned gambling across the country starting in 2009, except for designated areas in four regions — Krasnodar, near Crimea in the southwest; the Kaliningrad exclave between Poland and Lithuania; Altai, on the border with Kazakhstan and in Vladivostok on the Pacific coast. The only operational resort is Azov City in Krasnodar, with construction under way elsewhere.
To contact the reporters on this story: Evgenia Pismennaya in Moscow at [email protected]; Ilya Arkhipov in Moscow at [email protected]; Yuliya Fedorinova in Moscow at [email protected] To contact the editors responsible for this story: Hellmuth Tromm at [email protected]; Balazs Penz at [email protected]; John Viljoen at [email protected] Torrey Clark.