Europe

Russians count the cost a year after Crimea annexation

President Putin addresses supporters outside the Kremlin Image copyright EPA
Image caption The crowd was put at more than 100,000 by state-run media, although many were in organised groups

They came on to Red Square in their thousands this week to mark the first anniversary of Russia's annexation of the Ukrainian region of Crimea.

But one year after Russian soldiers furtively moved into Crimea and seized control, what has been the cost for Russia itself?

Drifting away

Inevitably, the star attraction of Wednesday's celebrations was Russian President Vladimir Putin, who appeared on stage to tell the crowd that the Russian people "had shown amazing togetherness and patriotism in supporting the aspirations of the people of Crimea and Sevastopol to return to their native shores."

Many were clearly in organised groups, brought in for what was a carefully-crafted display of patriotism.

At times the comperes struggled to rouse the crowd to join in with the familiar chants of "Russia, Russia" and "We are together".

It was also noticeable how many people started drifting away well before it was scheduled to end.

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Media caption'Max' explains how his mortgage payments have more than doubled

Oil and sanctions

In a small cafe in central Moscow, I met a man who's suffering severely from the fall-out from the Crimea operation.

He didn't want his real name to be disclosed, so he calls himself "Max".

He works as an IT expert with a foreign company here and he is one of thousands of people who in recent years have taken out mortgages to buy apartments in US dollars instead of roubles.

Over the past 12 months the rouble has lost almost half its value against the dollar.

This is thanks to a combination of the collapse in oil prices and sanctions imposed by the United States and the European Union in response to the annexation of Crimea and Russia's conduct in the eastern Ukrainian regions of Donetsk and Luhansk.

"Of course we had it coming," says Max.

"I could have told you straight away (after the annexation of Crimea) that foreign companies operating in the Russian market would leave the country. It means outflows of investments, a fall in the national currency as well as economic recession."

Russian economy in numbers

Since Crimea annexation March 2014

16.7%

annual Russian inflation rate (March 2015)

  • 61.3 Russian roubles to a US dollar on 19 March 2015

  • 36.4 Russian roubles to a US dollar on 19 March 2014

  • 4% contraction in Russian GDP predicted for 2015

Getty Images

The dramatic fall in the rouble against the dollar means Max's monthly mortgage payments have now doubled and are more than his salary.

The only reason he can still stay in his home and provide for his young son is because he has taken a second job in the evenings and weekends and because his wife also brings in a salary.

Biggest concern

While Max fears losing his home, others fear the sharp increase in prices over the past year.

Inflation has now shot up to almost 17% from 11.4% in March 2014.

The increase in food prices is thought to be even higher, partly because of the Kremlin's decision last summer to ban some food imports from countries which imposed sanctions on Russia.

A recent opinion poll by the Levada Center showed a marked increase in the number of people who said inflation was their most pressing concern:

  • 82% were worried about inflation
  • 43% were concerned about poverty
  • 38% were worried about unemployment

According to the poll, 55% said they did not believe the government was tackling the problem.

But this is not the only post-Crimea headache for the Kremlin.

On the international stage, Russia's relations with the West have plummeted to by far their lowest ebb since the collapse of the Soviet Union almost 25 years ago.

Image copyright Getty Images
Image caption US forces began delivering tanks and other armoured vehicles in Latvia earlier this month

Western anger at Moscow's decision to send troops into Ukrainian territory has not only led to sanctions, it has also resulted in Nato bolstering the defences of member states near Russian territory.

Earlier this month, the US army started delivering tanks and other military vehicles to the Baltic states and Poland.

Initially, they are taking part in a major military exercise in the region involving more than 4000 troops from nine countries including the US.

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Media captionEx-navy commodore Konstantin Sivkov says Russia's military has to respond

But then there are plans to keep the equipment in the area while US troops continue to rotate in and out as part of Operation Atlantic Resolve.

The Americans also say they are helping build the capacity of non-Nato countries such as Moldova and Georgia to defend themselves.

One of Russia's greatest fears has been encirclement by Nato, so perhaps inevitably Moscow's response has been a massive show of force by its own army, navy and air force.

On Thursday, the armed forces chief announced that in total 80,000 troops and 220 aircraft were now taking part in a series of exercises across the country to test combat readiness.

"Nato's activity has escalated by many times," says Konstantin Sivkov, a former Russian navy commodore and now a military analyst,

"Naturally, Russia should respond by enhancing its armed forces' combat readiness."

They have to hold drills to be ready for "possible surprises" from Nato, he adds.

It is a situation that could escalate dangerously.

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