In mid-August, during the latest wave of violence in the long-running Ukraine crisis, Russian President Vladimir Putin and a coterie of other Kremlin officials trekked out to Crimea. The high-profile visit was intended as a public sign of the Kremlin’s enduring commitment to its newest territorial holding. But behind the headlines, the story is far less reassuring: Russia is realizing that its Crimean annexation has become an increasingly costly venture in both political and economic terms.
From the outset, it was clear that Russia’s spring 2014 annexation would need to be accompanied by major capital investments from Moscow. Early estimates of just how much it would cost Russia to maintain and modernize Crimea ran to $3 billion a year. Federal subsidies, added social benefits, improved infrastructure, and increased pensions to citizens would end up costing Moscow enough that other major projects—including a new port on the Black Sea and
