By announcing the “incorporation” of regions whose very borders are not precisely defined and recognized by anyone, the occupation authorities are trying to install in their territories dubious banks, marginal telecom operators and a motley contingent of managers. Forcible passportization and changing of flags does not solve the problem of absence of normally working government institutions, so the real state and customs border with Ukraine is de facto still in the same place. The declared martial law only aggravates the absurdity of the status quo.
Suicide Leaders and a Penal Colony for Government Officials
«We can only call each other with these SIM cards»
Sanctioned banks and border checks
Vladimir Putin has imposed martial law on the territory of the four regions occupied by Russia, whose annexation he announced last month. Martial law, a measure from the arsenal of domestic politics, is being imposed on territories that no one in the world but him considers Russia. This brings to mind another episode involving Putin.
Back in November 2016, during the Russian Geographic Society awards ceremony, Putin dropped the phrase: “Russia's borders don't end anywhere.” Today, his words have come true: after some occupied and even unoccupied regions were declared as Russian territory, the country's borders have passed into the realm of uncertainty - no one in the world recognizes their legitimacy. Instead of an imaginary border, there is a dynamically changing front line, and not in favor of Russia. A month after annexation, it is impossible to find a map of the “new borders of the Russian Federation” in official sources: it seems it does not exist, just like the borders themselves. Kremlin spokesman Peskov also confirmed this, responding evasively: “We will continue to consult with the residents of these regions about the borders.”
Such a map was published by RIA Novosti on October 5, the day President Putin signed the law making the new areas a part of Russia. (However, ten days later the Russian Geodesy and Cartography Center responded to media inquiries that “the borders had not been finally approved”):
The treaty on the incorporation of the Zaporizhzhia region into the Russian Federation confusingly states: “The boundaries of the territory of the Zaporizhzhia region are determined by the borders of the territory of the Zaporizhzhia region that existed on the day of its formation and the day of the incorporation of the Zaporizhzhia region into the Russian Federation and the formation of a new entity within the Russian Federation.” The treaties with the “DNR”, “LPR” and the Kherson region use a similar language.
Suicide Leaders and a Penal Colony for Government Officials
As a result of the so-called referendums, a bizarre conglomerate of “acquisitions” ended up under Russia’s rule. Crimea, seized in 2014, was joined by the territories of two quasi-states in Donbass (“LNR” and “DNR”), as well as the partially occupied Kherson and Zaporizhzhia regions and two districts of the Nikolaev region, the occupiers being in too much haste to even invent an intermediate status for them. In the annexed territories there is a predictable chaos of governance: there are simultaneously military authorities, “civil-military administrations” and the government apparatuses of the “people's republics” that were formed during the eight years of their unrecognized existence.
Different territories have different levels of governance. Over the past eight years, the “LDNR” has developed its own administrative cadres, which include surviving militia field commanders, local politicians from the Party of Regions and the Communist Party, as well as Ukrainian security forces who defected to the separatists. Recently, the local elite has been saturated with Russian cadres. A good example here is the “DNR” - the head of the “republic” Denis Pushilin is a veteran of the “Russian spring”, the local parliament is headed by a former deputy of the Communist Party, Vladimir Bidyovka, and the government is run by a Russian official Vitaly Khotsenko, a finalist of Kirienko's “Leaders of Russia” contest. The situation in the “LNR” is similar: the head of the “republic” is Leonid Pasechnik, a former SBU officer; the government is headed by Sergei Kozlov, a field commander in 2014-2015 (with former deputy governor of the Kurgan region Vladislav Kuznetsov as first deputy prime minister); and the People's Council is headed by former Party of Regions activist Denis Miroshnichenko. Administrations in the districts of the Luhansk region seized after the full-scale invasion are also occupied by former local Party of Regions figures.
The presence of Russian appointees is more visible in the newly occupied Kherson and Zaporizhzhia regions, and local staff is noticeably lacking. Regular assassination attempts on occupation officials do not make these positions more desirable, although some of the local elite initially saw in collaborationism a way to preserve their power - “only” under a different flag. The occupation administrations in both annexed regions are headed by local businessmen, former Party of Regions MPs Vladimir Saldo (Kherson) and Yevgeny Balitsky (Zaporizhzhia). However, the actual power is concentrated in the hands of the heads of the “governments”: in the Kherson region the government is led by a Russian official, Sergei Eliseev, former vice-governor of the Kaliningrad region, and in Zaporizhzhia by another Russian, Anton Koltsov, former head of the Vologda region government.
Being sent to the occupied territories is sometimes like being sentenced to a term in a “penal colony” for Russian officials guilty of misdeeds. The fate of Colonel Alexei Katerinichev is illustrative: in 2021, as an official of the Ministry of Emergencies, he accompanied his chief Yevgeny Zinichev on the ill-fated trip to Kitabo-Oron waterfall, where the Minister of Emergencies died in an accident. After this incident, Katerinichev was sent to the reserve and resurfaced again as first deputy of the occupation administration of the Kherson region. He was killed as early as September 30, 2022 as a result of shelling by the AFU. Another example is the “commandant” of Energodar in the Zaporizhzhia region, Russian citizen Alexander “Volga” Molokov, former head of the housing and utilities directorate in Alushta, who was sentenced in 2019 to four years for bribes.
Emergencies Ministry official Katerinichev, who had accompanied his chief Zinichev on a fateful trip to Kitabo-Oron waterfall, was exiled to the Kherson region, where he himself was killed by AFU shelling
To fill the personnel shortage, “Leaders of Revival”, a contest analogous to the “Leaders of Russia”, has been launched in the Kherson and Zaporizhzhia regions. The winners will receive one million rubles each, and the finalists will be included in the provincial cadre reserve, “from which they will be appointed to senior positions in state and local government after training.” The event is somberly and ironically referred to as a “suicide contest” on social media.
There are rumors in the media that the new territories will be merged into the Crimea Federal District (with Dmitry Rogozin at the helm), or that they will join the Southern Federal District, which includes Crimea. Since the interests of the different clans of the Putin elite are obviously behind this, no quick solution should be expected.
For several years there has been a process of administrative assimilation of the local population on the territory of the “DNR” and “LNR. Since 2018, after Putin's decree on the simplified granting of Russian citizenship to residents of Donbass, there has been active passportization. On the eve of the 2021 Duma elections, residents of the “DNR” and “LNR” began receiving SNILS (individual insurance account numbers) on a mass scale, necessary for electronic voting (the votes of Donbass residents assigned to the Rostov region helped United Russia candidates a great deal at that time).
After the annexation announced by Putin, according to the agreements on the “incorporation” of Ukrainian regions into the Russian Federation, “citizens of Ukraine, the LNR and DNR, as well as stateless persons permanently residing in these territories, are recognized as citizens of the Russian Federation.” It is assumed that all residents of the occupied territories will be automatically recognized as Russian citizens, as it was in 2014 in Crimea. It is worth mentioning one administrative inconsistency: the high-profile campaign to obtain republican passports, which was conducted for several years in the “LDNR” (their receipt was an obligatory step before obtaining a Russian passport), turned out to be pointless - with the incorporation of the republics into the RF these documents, as well as car license plates, are no longer valid (although they were de facto legalized in the RF).
Nevertheless, the occupation authorities are dissatisfied with the pace of passportization, especially in the territories of the Luhansk and Donetsk regions seized this year. The Insider's sources in the region report that local authorities are forcing residents to urgently obtain Russian IDs, otherwise threatening to deprive them of social benefits and the ability to get a job or do business. “This blackmail has been going on since before the war, when holders of Ukrainian passports were required to obtain either a 'republican' passport or a Russian one immediately and were warned that Ukrainian passports would soon be invalid. If the police stopped you on the street and you only had a Ukrainian passport with you, they could take you to the police station for identification. Now there is a deadline to change the passport before the new year,” says a resident of Luhansk. The Pension Fund of the LNR, for example, issued a recommendation to the “citizens of the republic” to obtain a SNILS before January 1, “because it may be needed in various areas of life in connection with the gradual transition to the Russian legislation.”
Local authorities threaten residents into urgently obtaining Russian IDs
The head of the Ukrainian Luhansk Military and Civil Administration, Sergei Gaidai, confirms: “Starting January 1, any payments - salaries, social benefits, money transfers - will be made only via an individual personal account. However, in order to open one, one must have a Russian passport. The authorities won't force anyone to do this - they will simply leave you without money.”
However, according to our sources, the active issuance of passports in Donbass has been suspended “for technical reasons” according to official reports since the Ukrainian Armed Forces launched a counterattack,
In the Kherson and Zaporizhzhia regions, the situation for the occupation authorities is even more bleak: a large part of the population is openly hostile, and even pro-Russian residents are in no hurry to obtain Russian citizenship since the region can be liberated by the AFU at any time.
Even before the annexation, on May 25, 2022, Putin signed a decree on simplified admission to Russian citizenship of residents of the annexed territories, and on July 11 of the same year he extended that right to all residents of Ukraine.
According to local residents, passports are being issued primarily to pensioners, whose personal data are obtained by the occupation administrations during the processing of social benefits. In addition, the occupation authorities put pressure on local businesses. Kherson political scientist Vladimir Molchanov (who left Kherson after the occupation) describes the pressure for Russian citizenship in the following way: “First, entrepreneurs paid for the so-called permits to conduct economic activity, they received them and continued working. And then suddenly they were required to register with the Russian tax authorities... Accordingly, they had to open accounts with Russian banks, and that required a Russian passport.”
Ukraine does not recognize passports issued in the occupied territories. Moreover, criminal liability has been introduced for officials who force Ukrainians to acquire Russian citizenship. The “simplified citizenship” of the Russian Federation is not recognized in Europe either.
«We can only call each other with these SIM cards»
There are mobile operators working in the “LDNR” - Phoenix in Donetsk and Lugakom in Luhansk. At one time, these mobile operators were created on the basis of “requisitioned” equipment of the Ukrainian communications company Kyivstar. Mobile numbers in the Donbass, along with Russian numbers, still use the Ukrainian area code +38.
However, not all residents of the occupied Donbass are able to use local mobile communications services: after the start of the Ukrainian armed forces' counterattack in the Kharkiv region, which resulted in their reaching the administrative border of the Luhansk region, local occupation authorities disabled mobile Internet throughout the Luhansk region. Locals report that the authorities attribute the lack of Internet to technical problems or efforts to connect to Russian networks, but few people are convinced. Telephone services in Luhansk also work poorly, it is impossible to reach local operators' numbers from Ukraine or third countries, and communication with Russian mobile numbers works intermittently.
After the beginning of the counterattack by the AFU in the Kharkiv region, the occupation authorities cut off mobile Internet in the entire Luhansk region
In the south of Ukraine, in the Kherson and Zaporizhzhia regions, the occupants disconnected Ukrainian mobile operators back in summer 2022, although communication persisted in some areas. As an alternative, the occupation authorities began distributing SIM cards with Russian numbers. These mobile packages are called “On Call” and are apparently issued by the Crimean mobile operator K-Telecom. The owner of the Crimean cellular operator K-Telecom is the Lebanese investor Pierre Michel Fattouch, a longtime partner of MTS in Armenia.
The quality of communication leaves much to be desired, locals say: “We can only use these cards to call each other inside the city. Moreover, the Internet speed of this provider is so low that we have to go to the center of the city on Khmelnitsky Avenue or 50th Anniversary of Victory Avenue and look for a spot where the Internet is available. In the private sector it is impossible to use WhatsApp, Telegram or Viber with this card”. Nevertheless, the demand for these SIM cards is high, they are being resold for 1,000 hryvnias apiece (the official price is from 75 to 200 hryvnias).
Sanctioned banks and border checks
In the occupied territories, the Ukrainian hryvnia is being replaced by the Russian ruble (this has already happened in the “LDNR” territories). The head of the occupation “government” of the Kherson region, Sergey Eliseev, promised to make the process of switching from the ruble to the hryvnia gradual. But it does not seem to be possible to remove the hryvnia from circulation by the end of the year, although all social payments are made in rubles. At the same time, the exchange rate of the Ukrainian currency has been artificially lowered both in the South and in Donbass. Kherson journalist Kostyantyn Ryzhenko noted the specifics of the foreign exchange policy of the occupation authorities in a conversation with The Insider: “They are trying to motivate the population with money, they hand out 10-20 thousand rubles in the form of “aid.” At the same time, there is a car nearby where the money can be exchanged for hryvnias (stolen from local banks).”
The Russian influence is also being strengthened by the advent of Russian banks. In June 2022, it was announced that a branch of Promsvyazbank would begin operating in the “LNR” and “DNR.” This state-owned Russian bank (100% owned by the Federal Property Management Agency, until 2018 it was owned by the Ananyev brothers, but then it was sanitized and handed over to the state) has been a backbone for servicing the Russian defense industry complex since 2019. It is headed by Pyotr Fradkov, the son of former prime minister and foreign intelligence head Mikhail Fradkov. After the full-scale invasion of Ukraine began in February, Promsvyazbank fell under U.S., British and Singapore sanctions and was disconnected from the SWIFT interbank transfer system. Since then, it was decided to use it as a financial tool in the annexed territories: in April it started working in Crimea, in June in the “LDNR” and then in the occupied territories of Southern Ukraine. The bank’s operations ended ungracefully in the occupied Kharkov region: on August 15, its branch was opened in Kupyansk, a month later, on 16 September, the city was liberated by the Ukrainian army.
Now PSB issues “Mir” payment cards to their occupied clients, which they can use to withdraw cash and transfer money from the cards of other Russian banks. The same financial services are provided in Donbass by the International Settlements Bank, registered in South Ossetia. This commercial organization has been working with the “LNR” and “DNR” since 2015; it played a key role in building the shadow financial system.
Other Russian banks have so far refused to operate in the occupied territories of Ukraine. However, after Putin announced the annexation of Donbass and the Kherson and Zaporizhzhia regions, we can expect that Russian state banks will gradually begin to give up this taboo - they have nothing to lose, the Western sanctions have already isolated them from the leading markets.
Russian banks have so far refused to work in the occupied territories of Ukraine. But now they have nothing to lose
However, until recently, residents of Donbass relied more on “popular” methods for their financial transactions with Russian relatives – they used trusted bus drivers or the office of Our Post (a transportation company organized by Donetsk businessman Eduard Kibok for linking Russia, Crimea, and the “LDNR”).
Speaking of transportation. Despite the fact that the border between the Russian Federation and the former “people's republics” has been officially abolished, border checks still continue. Even a former Verkhovna Rada MP and one of the Novorossia leaders Oleg Tsarev complained about this: “All people arriving at the border crossing are required to undergo the procedure of “filtration.” Thorough ID checks of citizens of the new regions are understandable, although they should be stopped, but checking residents of other Russian regions is completely absurd. Artificially created situations where people have to wait for many hours do not spark positive emotions...”. On October 5, the border separating Crimea from the Kherson region became an administrative border, but according to witnesses, the hours-long checks still continue – the authorities are looking for Ukrainian saboteurs. It seems that despite the “endlessness” of Russia's borders, which Kirill Stremousov, one of Kherson's “gauleiters” recently praised in his poetic performance, the Russian authorities have no particular confidence in their territorial acquisitions, and the real, rather than imagined, police and customs border of Russia is still where it was before the war.