Geography/Demography

One of Russia's southernmost regions, Krasnodar krai borders the Sea of Azov to the west, the Black Sea to the south, and the Caucasus Mountains and Georgia to the south east. Transportation routes crossing the krai connect Russia and Central Asia to the Mediterranean Sea, Central and Western Europe, Africa, and the Middle East. Krasnodar covers an area of 75,500 square kilometers and is located 1,500 kilometers from Moscow.

Five million people inhabit Krasnodar Krai, of which 54.2 percent live in urban areas. Cities in the region with populations of more than 100,000 include Krasnodar, Sochi, Novorossiisk, and Armavir. Krasnodar city, capital of the krai, is located on the Kuban River and was founded in 1793 as a settlement of Kuban Cossacks. Key ports located in the region include Novorossiisk, Tuapse, Temryuk, Yeisk, and Kavkaz.

Krasnodar is rich in natural resources. The northern two-thirds of the krai lies in Russia's fertile Black Earth zone and the region is well known for its extensive agricultural production. Krasnodar's Taman Peninsula is a promising area for oil and gas extraction. Krasnodar also contains several natural mineral springs and enjoys a near- Mediterranean climate, with long summers and short winters.

Local Economy

Agriculture is the largest sector of the Krasnodar economy. More than 120 different crops and animal products are cultivated in the region. Other important sectors include oil and gas, power engineering, machine building, and metal working. Machine tools, agricultural equipment, machinery for the petroleum industry, food-processing equipment, and textiles dominate local manufacturing.

The extraction of natural resources is a major component of Krasnodar's economy. Important local resources include crude oil, gas, manganese, iron, phosporites, zeolite, rock salt, mercury, mineral water, balneological muds, and building materials. Raw materials comprise three-fourths of Krasnodar exports. Consumer goods constitute an additional 20 percent of exports. The balance consist of machinery and equipment.

Tourism makes a major contribution to the local economy. The krai's Black Sea coast has often been referred to as the "Russian Riviera." At the peak of the tourist season, more than one million tourists visit the city of Sochi. Visitors, including 200,000 foreigners a year, journey to Sochi for recreation as well as for medical treatment. The proximity to the Caucuses mountains provides the opportunity to experience the seashore and downhill skiing within a s hort distance of each other. Sochi and other Russian Black Sea resorts have become the premier domestic vacation spots as a result of the loss of competition from Yalta and Sukhumi (now in Ukraine and Georgia, respectively) since the breakup of the Soviet Union. Inadequate infrastructure hinders the development of this sector of the Krasnodar economy.

Foreign firms are no stranger to Krasnodar. Currently there are 258 joint ventures operating in the krai with foreign capital of $153 million. American firms are actively involved in the region. Phillip Morris invested $40 million in the JSC Krasnodartabkprom, Pepsi Co. has devoted $5.9 million in the Sochi Non-Alcoholic Beverage Plant, ABB Lumus Crest of New Jersey is building a 180,000 barrel-per-day oil refinery in Krasnodar with LUKoil. After the success of its first hotel in Sochi, Radisson plans another hotel and ski resort in the region. Other American firms such as Monsanto, Cargill, and Petroseed have also been involved in the agricultural sector of this region.

Industry

More than 93,000 enterprises operate in the Krasnodar Krai, of which 539 employ more than 100 workers. More than 43 percent of the Russian food-processing industry is located in Krasnodar Krai. Between 1989 and 1995, more than 17,000 new small businesses registered in the Krai. These new small businesses employ 33 percent of the working population of this region.

A number of other large enterprises operate in the region. Sedin, Tochmashpribor, Vesoizmeritel, and Zavod Krasnodarselmash are involved in machine building. A number of chemical plants are located in Krasnodar, as well. Clothing and footwear manufacturing enterprises are also common. The Novorossiisk Cement Plant is one of Russia's leading manufacturers of cement.

Despite Krasnodar's considerable energy sector, fuel and power shortages a serious problem. The krai's electric power requirements are twice the local generating capacity. Existing thermal power plants are in need of modernization. Krasnodar receives half of its power supply from neighboring Rostov Oblast and Stravropol Kai, which are themselves unable to meet their own power demand.

The environmental situation in this region is tense especially in the areas surrounding Krasnodar and Novorossiisk, and in the Apsheronskiy, Krymskiy, and Kalininskiy rayons (districts). Mountain forests are being cut down which upsets the water balance causing water shortages in some towns.