by Batko Milacic for the Saker Blog
Saki gas combined heat and power plant of the KRYMTETS company in Crimea
From August 26 to 30, a group of international journalists had the opportunity to visit Crimea and see how the European Union sanctions affect Crimea. The author of this article was among that group of international journalists. As a reminder, Crimea became part of Russia again in 2014. In March of that year, a referendum was held in Crimea, where the absolute majority of citizens were in favor of unification with Russia. This is not surprising considering that even while Crimea was part of Ukraine, the majority of citizens were pro-Russian and spoke Russian.
When in Kiev during the Maidan revolution, the legitimate government was overthrown and a new anti-Russian government was brought in power with the logistics of Washington, the local population in Crimea did not accept it!(1) As people in Crimea say: ’’ We have been waiting for a long time to come back to our motherland Russia’’. This is exactly how the return of Crimea to Russia began.
However, after the return of Crimea to Russia, the harsh sanctions of the European Union against Crimea immediately followed. In short, the Crimean sanctions by European Union consists of a complete import and investment ban for the area of Crimea and Sevastopol the black sea fleet port.
And this is where we come to the key question, how did the sanctions affect Crimea? Based on everything I’ve seen, I can safely say that the sanctions have had a positive effect on Crimea.
In Crimea, wine production is increasing every year. A huge amount of money has been invested in new wineries as well as in the quality of the wine. Today, Crimean wine is better than most European wines. Sanctions had a positive effect on wine production, as the large Russian market, plus the Asia Pacific region, was opened up to Crimean wineries. Notable Crimean winemakers today include: ‘’Alma Valley’’, ’’Massandra’’, ‘’Inkerman’’, ‘’Gold beam’’, “Koktebel”, “Magarach”, “Suter”, “Novyi Svit”, “Legend of Crimea”.
Apart from wine, which has been produced in Crimea for more than 2000 years, I could see that other areas are rapidly developing in Crimea. This primarily refers to Crimean agriculture, the results of which are visible to everyone. Also, Crimea is developing technologically, so today batteries for electric cars are produced in Crimea. With those batteries, electric cars will be supplied all over Russia, and in the coming years, exports outside of Russia will also begin. Certainly, tourism has a very important place in the economy of the Russian Republic of Crimea. What can be immediately noticed when arriving in Crimea on the new highway that was built and which is excellent is the huge number of tourists. Also, works on new roads and renovation of old ones, which were not invested in during the Ukrainian rule, are visible everywhere.
Pilot period of operation of the first made-in-Russia turbines completed at Saki gas-fired power plant
At the Saki gas combined heat and power plant of the KRYMTETS company, the Republic of Crimea, we could see that a two-year experimental period of operation of the gas turbine units, made in Russia for the first time by domestic specialists, was 100% completed without using of imported components and specifically for this project.
The need of creating such a natural gas-fired power station arose 8 years ago. After Crimea returned to Russia, Ukraine abruptly cut off the power supply of the peninsula by blowing up of the main power lines. Crimea being 80% energy dependent on mainland plunged into darkness. The peninsula was urgently provided with mobile power systems and began to actively build new, local generation facilities.
During the visit at Saki gas-fired power plant
A complication during this process was by sanctions as it was impossible to bring imported equipment to Crimea, and almost all generation facilities in Russia were built with the use of Siemens and General Electric’s equipment. At the time Russian manufacturers developed and produced exclusive equipment specifically for the Saki gas-fired power plant. Therefore, all the turbines, boilers and other generating equipment of plant have factory set serial numbers, starting from the first one.
Saki natural gas-fired power plant with its total capacity of 120 megawatts (MW) was built in a year – a record-breaking time for such kind of objects. Usually it takes at least 2.5 years. In the same time, the plant was built without attracting of any budgetary funds, solely by the investor – the KRYMTETS company.
After the launch of the new gas-fired power plant, all the attention of specialists was riveted to the operation of the equipment – no one knew for sure how it would behave in operation. But now the pilot project of the first Russian gas-fired power plant based on Russian equipment and Russian software has been completed after two-year tests in the conditions of increased loads of the Crimean region have proved that Russian equipment works with high efficiency and has proven itself better than imported ones. Such a result determined that the turbines used at the Saki gas-fired power plant are recommended for installation at other natural gas-fired power stations of the Russian Federation, and also, after meeting domestic demand, they will be exported to friendly countries. In the same time, the Saki gas-fired power plant will become a training ground and a learning center for specialists who will operate this equipment at their power plants in other regions and countries.
In addition, this year the first virtual power plant in Russia was put into commercial operation on the basis of the Saki gas-fired power plant. This is a digital twin of a real power plant and is a prototype of the plant’s existing production facilities: turbines, boilers, auxiliary equipment, electrical installations, etc. The digital model helps to change the parameters of the equipment and make improvements much faster and safer than working in manual mode. The created software product is a domestic development as well and was created from scratch by Russian specialists.
And now the management of all the processes at the Saki gas-fired power plant is carried out only with the use of Russian software.
Currently, representatives of the largest Russian energy supply companies regularly visit Saki gas-fired power plant to get acquainted with the operation of equipment in industrial conditions and prepare for its implementation at their facilities.
Amazing how differently adversity is dealt with in Russia compared to the West where the honchos throw up their hands and the gen-pop lay down their lives in drug overdoses, which those very same honchos’ profit by. This plant is nothing short of amazing … and the timeline? Mind blowing.
Thanks very much for this informative article. It’s great that Crimea has thrived, despite these wicked sanctions.
I wonder if Crimea, or Russia in general, will eventually become a refutation of the free trade dogma that is damaging the West. If Russia is actually improving under the sanctions, doesn’t they inadvertently make the case for protectionism?
I’m not an economist, though. Thanks to Trump’s protectionist policy, I kept my job, only to lose it in 2020. So I’m interested in the “Free Trade” debate, even if I don’t understand all of it.
It is likely that some trade is good. And certainly, if there are things you need that you absolutely cannot make yourself, you need to trade for them. But the normal rationale advanced for “Free Trade” is the theory of comparative advantage advanced by David Ricardo back in 1817. And there are several basic problems with both the theory itself and with the way free trade boosters use it.
So first of all, Ricardo’s theory is about trade–not about investment. In fact, Ricardo’s theory pretty much assumes that there is no international investment, that capital formation is basically national. But modern free trade agreements are as much or more about freedom of investment than they are about trade itself. Ricardo’s theory has nothing to say about this, and as far as I know there is no economic theory which has a lot to say about uncontrolled foreign direct investment being a good thing for a country’s economy. In practice, there are a lot of reasons to believe that’s actually a bad thing.
Second, Ricardo’s theory, since it assumes capital formation being national, and since the math doesn’t extend to situations where local development of export industries is driven by foreign investment in which the foreign investors pocket the profits and ship them abroad again, does not apply to the modern trade environment at all. Period, full stop–it is irrelevant to modern actually existing “free trade”. So all arguments made in favour of modern free trade, dominated by international investment such as by transnational corporations, based on Ricardo’s theories of comparative advantage, are completely bogus–they actually have NO theoretical basis.
Third, Ricardo’s theory ignores the element of time, and the possibility of change. In the real world, countries wishing to develop regularly make deliberate efforts to develop and improve their capacity in selected industries, thus CHANGING what fields they have comparative advantage in. But free trade makes such efforts impossible. So even if free trade maximized a lower-tech country’s trade income IN THE MOMENT, it would cripple the country’s efforts to improve its terms of trade in the longer term.
Fourth, Ricardo developed the theory for ideological and nationalist reasons. At the time, Britain was the great manufacturing power of the world, and it wanted to stay that way. Ricardo was British; his theory was intended to persuade other countries to continue not developing manufacturing industries but to instead specialize in, say, agriculture or mining raw materials, so they would continue to have little option but to sell raw materials cheap and buy British manufactures dear. It is foolish to trust such a theory.
My opinion is that in the modern actual world, full of footloose capital shifting investment around the world, free trade does not have that much effect on economic growth per se. Rather, what it does is to give greater power to international investors and take power away from workers and national governments. The lack of restrictions on both trade and investment give investors the power to move to wherever costs are lowest without forfeiting any sales or capital. This means that first, they can choose places with low wages and corporate taxes and few regulations (environmental, safety, food quality, labour conditions) and ideally with strong anti-union laws and so on. But it also gives them the POLITICAL power to THREATEN such moves if their demands for these things are not met. So for instance, if workers attempt to unionize, they can threaten to leave if unionization succeeds. Or if governments make plans to increase minimum wages, or increase corporate taxes, or mandate paid overtime or vacation days, industries can threaten to relocate. Even the implicit threat has created a major chill, where governments rarely dare to put forward people-friendly policies for fear of the reaction of “markets”.
But if trade is NOT free, and capital movement is controlled, moving is a much less serious threat. If someone who moves their factory abroad will, in doing so, lose their ability to sell to the local market, they need to think long and hard before trying it. Footloose capital loses a great deal of leverage, and the ability to set rules locally increases. And of course, industrial policy dedicated to developing local industry, which tends to be in violation of free trade agreements, becomes much more workable.
Thank you Purple Library Guy for your excellent piece, which was so succinct, well argued, informative and to the point. I learned a lot in a few short paragraphs. Exemplary!!
I thought it was mindboggling that the EU was sanctioning Crimea (the “victim” of the “annexation”). But it shows very well that democracy and self-determination are only empty words for this despicable bunch of apparatchiks.
Also a fine demonstration of Ukraine’s “thinking”: instead of making a fair profit selling energy to Crimea, they blow up the lines.
> “was built in a year – a record-breaking time for such kind of objects”>
IMHO the achievement in Crimea is about as close to perfect as can be, And yes, one year to build is far faster than I would have expected. I have been closely involved in such projects in CONUS, from a few MW to >1,000. (FWIW I would have guessed 2 years would be very fast. The excavation/foundation/concrete alone, let alone the machinery…and the inescapable, obvious, fact that they had the fitters…who obviously were experts, as they did not make material screw-ups!)
Our Russian Brothers have shown the world their superb organizational and technical ability is excellent. Quite possibly the best in History. It’s an astonishing achievement.
Now those fellas will be building in many places. What a crew! It must have been a great project and fun!
The Crimean wines sound pretty nice too! Will they also distill brandy?
According to the OECD, Russia has the best educational system in the world. This article shows us that “human capital” is the most important type, and “investment” in it gives incomparable results.
Exciting report curious how many miracles they accomplished building that bridge, no small feat. Especially given it’s western approved target status.
Saw a piece some time ago where Putin was visibly irked by young people getting a tour of wine facilities. Would assume that having a wine industry for so long Crimea’s consumption is somewhat healthier than vodka soaked regions.
Gosh I got experience with Turbines and am an electrician. I wonder if I could get a job as a janitor or something. Pretty solid painter since 13.
After 3 years the youngest kid on board a nuke sub 74-77 my skin is pretty thick. I could be the butt of all their anti-US and Canadian jokes. Probably tell even better ones.
Seriously I would rather die doing something useful than spend another hour paying taxes to fools dumb enough to think they can win a war against the whole world, but just stupid nuts enough to try yet another international experiment on all us they supposedly cherish.
I personally think the US hate their own honorably discharged vets as much or more than they hate active duty Ukraine fodder. Why do so many kill themselves?
Staying in N. America is starting to feel a little suicidal, gosh am I able to learn Russian? I didn’t get my electrician license till I was almost 60.
Or stay here and vote RFK jr on an independent ticket with Putin as his VP. See this is exactly what Maria is talking about when she says americans live in a fantasy land.
I bet money Putin is still anti-alcohol.
Interesting to see someone else with very similar thoughts to mine. It makes one ponder if we aren’t alone after all. Sure wish I could invest in BRICS+ system some how but alas, I’ll watch my Canuckbucks dwindle to nothing, along with my pension. I’ll hold the dustpan for you frankly while you sweep. We could learn Russian together eh?
Canada, like Russia has vast underpopulated lands, is rich in minerals and natural resources, and has enough fertile soil to feed the populace. We need to be educating and encouraging our younger generation to end our subservience to the big next door neighbour, and become more self sufficient. Imagine what Canada could accompish if the US was kind enough to slap severe sanctions on us!
I know that we currently have no political parties or leadership that works in the interest of the people our citizens, but I think our efforts would be better spent trying to establish an alternative in Canada than in learning Russian (not that I am ever against learning something new!). And in the meantime, plant a garden – pensions and low wages go much further if you can grow a quantity of your own food!
Frankly, stay and work your own patch, you can’t run forever. North America is a big place with lots of fertile ground and good people to work it. Putin has pulled his country out of the plutocratic grip of the Oligarchs. FDR did the same for the U$A with his socialist New Deal, his socialist TVA, and his Glass-Seagal act against Main Street banks misusing depositors’ funds for speculative investment. The U$ Oligarchs planned to assassinate FDR, a plan that was thwarted by patriotic General Smedley Butler (author of “War is a Racket”).
There is good ground and good seed in North America. Stay to work the good ground, to plant the good seed and cut down weeds. That’s what Putin did. The price is, that Oligarchs will hate you; Putin and FDR have shown that it is price worth paying.
Hey Doc, Yeah actually broke ground on a garden this spring. Learned a lot. Ate a bit. Could raise hell in the Spring. Just so they know, I would work for Russia, gladly.
As a person who probably gives too quickly, the benefit of the doubt, am not impressed by all this surreptitious, underhanded, back stabbing, all be it cool, bull. Get in my face and kick my butt fine, but poison my grandchildren with FDA approval? They are gutless, treasonous, spoiled rotten, villains.
Hey Al, typically Canadian we try to do the hardest task first, learning Russian. Thanks for reaching out. Live in a small town and don’t often feel part of a team last little while. That seems the most crucial aspect of the propaganda. You are on your own.
This site screams we are not alone. I will not pledge loyalty to the current Canadian Government, but will die to save all its peoples from enemies foreign, but especially domestic. I take pledges more seriously than this lot.
Newfunlaner moved to trono. Got a job driving bus. Came to a stop, handicapped fella in a wheel chair there. Opened the door and said, “how ya gittin on” Sorry my accent is out of practice…
I know, take it to the café, but it feels like a clique there to me. Just sayin’
“The Crimean wines sound pretty nice too! Will they also distill brandy?”
Home distillation is legal in Russia – you can get “cognac” (amber coloured distilled wine) all along the Black Sea coast. Russian cognac is cheap – Georgia makes reasonable cognac (Ararat).
Crimean wines are certainly among the best Russian wines but the claim they are anywhere near as good as European fine wines should be taken with a pinch of salt.
For some reason Russians accept low quality goods. Opening up their markets to Western goods didn’t seem to improve local products or encourage competition (particularly with foodstuffs). Now sanctions mean more stuff has to be produced locally and the quality isn’t so good but people buy it anyway. Michael Hudson might laud the fact that Russia has developed a cheese industry – as a consumer I wish they developed a good cheese industry. Wine, beer and vodka ditto.
“first made-in-Russia turbines completed at Saki gas-fired power plant”
Only surprise that high quality space technology Russia has been so long dependent on western gas turbines technology. Now that shameful weakness has been eliminated.
It is surely not a ‘shameful weakness’ if a country is dependent on another, for specific technologies. Such ‘dependency’ happens all the time and only becomes ‘shameful’ when the media and politicians aim to score points against an adversary.
Sure, it seemed strange for Russia to be 100% dependent on imported chicken from the USA…only to then respond to sanctions by sourcing 100% from domestic production and then also exporting it…thats low level technology This really did not matter in the overall scheme of things and only became an issue when it was politicised…
But it has also worked both ways: if we all know that the USA has been totally dependent on Russian rocket engines…and on the Russian space assets to transport to the ISS…then trade in the spirit of cooperation is not ‘shameful’ but a convenient manner in which one buys technology cheaper from ‘another’ source.
I well remember in the 1980s, the UK Ministry of Defence was loudly criticised in the British MSM for purchasing ball bearings from the Czech Republic…This episode (IMO shameful and illogical as it related to a strategic asset such as a Tank) only came to light when the British admitted that the Czech ball bearings on British Tanks failed prematurely but were so much lower in cost compared to UK suppliers, that it was worthwhile sourcing from an adversary….
Russia only produced compressors up to 25 MW and imported Rolls-Royce Trent systems for Nordstream 1 in 2008.
2014 Siemens bought R-R Energy Division and re-badged R-R compressors
Russia is human-resource constrained and cannot make everything. Building compressors May have involved resources needed to build Iskander and Yars
No one can build everything
Russia MUST NOT depend on the West in anything
Anything. It is deadly dangerous …
Being an exporter of much needed raw materials (oil, gas, coal, minerals, etc.), Russia needed to get something valuable in return. The otherwise gargantuan trade surplus was lowered by importing high-tech machinery, consumer goods and services.
Decades ago heard the Russian navy had ships that were gas turbine fired. They could fire them up and had to cut the mooring lines with hatchets they got underway that quick. We were mostly steam powered and took hours to get a head up. Was the Russian part total bs or what? Us taking forever to make steam was not bs.
Really the thing is, the confidence of succeeding at different things grows, and even if you don’t get it right 1st off you know you will eventually. Not true with democracy.
On a joyful note, the best Crimean wines are from the Saperavi grapes. It can be no doubt that it is the vine planted by Noe after the Flood when ”Noe began to be a husbandman, and he planted a vineyard”!
Another “shot themselves in the foot” moment for Europe. Who, in the real world, will now use Siemens?
They’ve been proved unreliable and it seems, inferior, by a product which mainly exists because of European stupidity.
It is not just stupidity. It is sheer malevolence.
Exactly!
Also few Western companies will have access to the inexpensive raw materials to manufacture such products competitively.
Still, I’m hoping Russia has stopped selling uranium and rocket engines to the satanic Empire.
I doubt Siemens R-R products are inferior at all. The after-sales service is distinctly poor
Thumbs up, well done, and all the best wishes..
Age hasn’t been kind to Nudelman, she’s put on 4 stone in 8 years, resulting in 3 chins. She’s the more evil reincarnation of Maddie Albright. I hope she’s near the top of the list of candidates of a future War Crimes Tribunal.
With all them wines…Crimea shoots up to top 3 of my retirement destinations.
I hope “the west” cuts off all connections with Russia…only that way Russian engineering and IT sector will skyrocket.
Russia had fall of GDP in second quarter. In July fall of 4.9% which is maybe normal under these conditions but it is not good at all.
Russia has to adjust to sanction regime ASAP and to overturn this negative trend.
Amazing when you don’t have so many lawyers, bankers and MBAs…
This case shows – among many others – the accursed nature of globalism, and the blessed opportunity Russia now has of becoming truly independent of and free from that curse. And it is an opportunity available – for a limited length of time – to many other nations.
One of the poisonous elements of that ideology (globalism) is the creation of an interlocking and interdependent relationship between the different regions – not even nations/which become irrelevant – of the world. Such was the initial subtlety with which the whole world was seduced into giving up national industry, banking and agriculture, under the whorish pretence of efficiency and economy; who can argue against such plain advantage?… until the imperial powers decided to use their acquired monopolistic technology, money printing and food production in order to impose their political and social engineering agenda upon any still-existing nation that rejected such agenda.
Were it not for Russia’s existence and capacity to resist, survive and prosper at this historical moment in time the rest of the world – it seems – would have plunged into a hopeless quagmire of impotent compliance.
It is rather surprising to discover, for the layman, how technologically dependent of some critical imperial know-how Russia has been to this very day, even after over twenty years of having set a course of establishing national dignity and sovereignty.
The Russia psyche seems to thrive under adversity. Who can forget how Stalin took Russia from an agrarian backwater to a nuclear armed space faring superpower in less than twenty years.
Not surprising that when western politicians or their puppets are removed from the equation, things start to get back to normal and countries start to prosper. It’s not a fluke, the same happened in China. Meanwhile, we in the west are left with rising poverty, energy shortages and massive inflation.
Saki natural gas-fired power plant with its total capacity of 120 megawatts (MW) was built in a year – a record-breaking time for such kind of objects. Usually it takes at least 2.5 years. In the same time, the plant was built without attracting of any budgetary funds, solely by the investor – the KRYMTETS company.
Is Krymtets a private company or a nationalised company ?
Where did the Krymtets company get their currency from to build it ?
It will be written on the bank notes of currency which “state ” provided the funds.
When Krymtets spent the “state ” currency to get the both the skills and real resources to build it was it inflationary ?
Michael Hudson explains the HUGE difference if a private sector company built it or if a nationalised company built it.
https://michael-hudson.com/2017/03/why-deficits-hurt-banking-profits/
if I could give just one piece of advice to any society throughout history it would be this: don’t let your bourgeoisie become rentiers.
What many free marketers don’t realise is that the private sector of a given industry often exists as a peripheral cluster around a state-led anchor company/policy.
The bigger scale (heavy machinery) the more this is rather than smaller (restaurants) for example.
The free marketers don’t realise they get their currency from the state. It is written on the front of every bank note they have ever received in their lives.
That banks apply for a licence to issue ” state ” money.
https://gimms.org.uk/2022/06/05/mmt-banking-primer/
As written now by many, the sanctions worked better than protective tariffs since they enforced autarky. Russia’s goal is now to become technologically independent or sovereign as Putin says. That’s happening at an ever increasing pace. If you can find a way, buy Russian bonds.
Crimean Success.
We can thank Mr. Putin for that because a lot of things depend on the leader. But also, on the plus side, it is clear the entire Russian leadership seems unusually sharp.
I recall a saying that “If Russia manages to be left alone and undisturbed by enemies for 20 years, she becomes another country.” A good explanation.