SIMFEROPOL, Crimea (Reuters) - Prime Minister Dmitry Medvedev flaunted Russia's grip on Crimea on Monday by flying to the region and announcing plans to turn it into a special economic zone, defying Western demands to hand the region back to Ukraine.

The visit, hours after Russia held talks on Ukraine with the United States, is likely to anger Kiev and the West, which accuse president Vladimir Putin of illegally seizing the Black Sea peninsula after a March 16 referendum they say was a sham.

Shortly after landing in Crimea's main city of Simferopol with many members of his cabinet, Medvedev chaired a Russian government meeting attended by Crimean leaders and outlined moves to revive the region's struggling economy.

"Our aim is to make the peninsula as attractive as possible to investors, so it can generate sufficient income for its own development. There are opportunities for this -- we have taken everything into consideration," he told the televised meeting, sitting at a large desk with Russian flags behind him.

"And so we have decided to create a special economic zone here. This will allow for the use of special tax and customs regimes in Crimea, and also minimize administrative procedures."

In comments that made clear Russia had no plans to give back Crimea, he set out moves to increase wages for some 140,000 state workers in Crimea, boost pensions, turn the region into a tourism hub, protect energy links with the peninsula, and improve its roads, railways and airports.

Russia Vladimir putin Dmitry Medvedev Ukraine