A walk down a lane in Crimea is not the very same it used to be a few days back; a small region of Ukraine is now full of Russian flags; all thanks to a historic referendum that voted the independence of Crimean state and its willingness to join Russia. On March 16, 2014 Crimean public voted in favour of the referendum to join Russian as a federal state. So how did this astonishing act of a state of an independent country preferring another country to take it in its arms happened at the first place? Let’s decode the entire political drama.

Firstly let us understand what triggered a chaos in Ukraine which was by large peaceful in recent times before all this melodrama happened. It all began on 21st November last year when the now disgraced Ukrainian President Viktor Yanukovych refused to sign an Association Agreement with EU and instead stressed for closer ties with Russia. Association Agreement commits Ukraine to economic, judicial and financial reforms to converge its policies and legislation to those of the European Union. This led to massive protests in line with intensity of 2004 Orange revolution in the country with protestors clashing with government police truncheons.

Now more interesting was the character of Russia in the entire play. Within days of the outburst, Russia offered Ukraine 15 Billion USD from buying of Ukrainian government bonds and a reduced gas price that Ukrainians pay. Moreover, after Viktor Yanukovych was ousted, Russia soon declared its intentions to have Crimea in its fold. What made Russia so interested in Ukrainian’s internal matters is something less to ponder and more to analyse upon. Before we do that let us understand the implications and ramifications this so called illegal annexation had on Ukraine as well as on Russia.

Russia was soon threatened by US and other western and European powers with series of tough sanctions pitched against it if it doesn’t pacify its military aggression in Crimea. Russia has also been thrown out of the much talked G-8 group which consists apart from Russia; Canada, US, UK, France, Italy, Japan and Germany. The major sanctions include freezing of US-held assets of those responsible of what happened in Ukraine and enabling a Russian gas Boycott, which affects the Russia’s some 100 billion USD gas export to European countries. In all these Russia found its much needed amiable support from India as well as China, China was actually the only nation that abstained from vote on implicating sanctions on Russia.

On the other hand, Ukrainian common man has been the biggest loser in the entire crisis. Ukraine is now combatting with debt repayments and financial blues. The country badly needs at least 35 billion dollars over two years to avoid bankruptcy. Moreover, the political instability and the great divide between Russian speaking populace and rest of Ukraine will remain a big scar for a long time from now. The only good out of all bad was helping hand from IMF as well as from that of EU in reviving the slumbering economy. IMF has recently agreed for a 18 billion bailout in return of certain austerity drives from the government side.

On a broader canvas let us analyse how world economy will be affected by Ukrainian crisis. Firstly it is pretty clear that gold prices are definitely going to rise as gold has always been safe haven for investments during war times. Secondly it is going to lower stock values in the backdrop of political and financial instability of the region. Moreover, it’s going to be really tough time for European countries in the wake of rising energy prices and slower economic growth.

Much of analysis has been done on causes and effects of the Ukrainian crisis let us now understand why Russia is so interested in Crimea and Ukrainian internal matters. Crimea was part of Ukraine; then under the banner of Soviet Union ever since Soviet leader Nikita Khrushchev gave the peninsula its native land. This hardly mattered until the Soviet Union broke up in 1991 and Crimea ended up in an independent Ukraine. Despite that, nearly 60 percent of its population of 2 million identify themselves as Russians. Moreover historically Sevastopol has served as protective zone for Russia to help it out of any unwanted invasions.

Moreover, it holds a very important demographic importance for both Ukraine as well as Russia. The biggest reason perhaps Russia has to retain Crimea was to maintain its age old Black sea fleet. Through which Russia could have better influence on European regions. Crimea’s temperate climate makes it a popular tourist destination for Ukrainians and Russians, especially Yalta. A s a result of a mix of intensely farmed landscape as well as mines and chemical processing plants, Crimea accounts for 3 % of Ukraine’s GDP.

No matter what ever were the Russian interests in Crimea, the way Russia acted was definitely unfortunate. Russia could easily take away Crimea because of lack of leadership in Kiev, on the other hand leaders at Kiev should have understood the dynamics of Crimea and undertook appropriate steps like giving adequate representation to Russian speaking people in Crimea at national stage. The entire scenario should act as a trigger for other countries to very well understand the political, social and economic dynamics of every troubled region in their political boundary to avoid such cataclysmic turn of events