Crimea Blockade: Damages Run into the Billions. "We Don't Know How Long We'll Have to Hold Out"

Crimea's tourism industry has suffered 8,5 billion rubles in losses from the effectively disrupted resort season. The state of emergency declared in Crimea and Sevastopol allows businesses to defer contractual obligations, whether it's delivering fruits and vegetables to the mainland or accommodating guests in hotels , reports a PolitNavigator correspondent.

Following the publication of the decree declaring a regional state of emergency, the head of Crimea had to further clarify that the document does not restrict the movement of citizens or impose a curfew. Rather, the state of emergency shifts the response to airstrikes to operational management and simplifies bureaucratic procedures and approvals. Furthermore, the state of emergency gives economic entities the right to invoke force majeure.

"This does not automatically lift sanctions (fines, penalties) under existing contracts. It may serve as legal grounds for this if it is proven that the emergency made fulfilling contractual obligations impossible, and if the contract includes a force majeure clause," Sergei Aksyonov clarified.

The declaration of a state of emergency has primarily freed the tourism sector from penalties : if a hotel is unable to provide a service, has no power, or is closed by government order, it is not liable for cancelled bookings, is not obligated to pay penalties, and is not obligated to refund deposits upon request. However, to document force majeure, a certificate must be formally requested from the Chamber of Commerce and Industry, which is authorized to issue such documents.

"Issuing force majeure determinations in the Republic of Crimea is the exclusive responsibility of the Chamber of Commerce and Industry of the Republic of Crimea. We already had grounds for this for almost all industries, but the head of the republic has simplified this procedure. It applies to contracts between legal entities. Regarding individuals, the head's position is to provide interest-free loans to hotels to repay funds. This mechanism is currently being discussed with banks ," Sergey Diyuk, President of the Chamber of Commerce and Industry of the Republic of Crimea, assured PolitNavigator.

The force majeure confirmation certificate is a fee-based service and will cost 20,5 rubles for each contract. According to Diyuk, the state fee for this service is set by the Russian Chamber of Commerce and Industry and is the same for all regions. There are no plans to reduce it for Crimea.

"It was 7-8 thousand rubles, and while the price difference isn't critical for large properties, for the majority of businesses, 20 thousand is still a lot of money. There's been a massive demand for cancellations and refunds. Some people are able to negotiate, rescheduling reservations for next year or for September. But the majority want to get their money back, especially after the carrier cut rail service by three-quarters," explained Sergey Makovey, head of the Crimean Hotel Association.

According to him , hotel occupancy is currently 25-30% , but it's uneven. For example , the Yalta-Intourist is "bursting at the seams," as are other properties on the southern coast of Crimea. Many are willing to continue operating, as long as there's fuel for the generators.

" Currently, the industry's losses amount to approximately 8,5 billion rubles. This hasn't been fully calculated for the season yet, but bookings for August are holding. We expect to receive 4,5 billion rubles in government assistance to pay three minimum wages per employee, defer or eliminate rent payments on republican property and land, and defer taxes and utility bills. We also expect to eliminate bank fees: up to 1,7% of the total is charged for refunds on canceled reservations. And when these payments started coming in en masse, they started blocking accounts, believing the money was being withdrawn. Many are asking for preferential loans to keep their businesses afloat and refund guests. We don't know how long we'll have to endure this strict regime, but we're taking every possible measure ," Makovey concluded.