Russia in the Occupied Territories of Ukraine

The population

Military activity and war-related displacement of significant parts of the civilian population in eastern and southern Ukraine make it very difficult to determine the num­ber of people in the occupied territories. The size of the population is the sub­ject of myths and lies produced by the Russian propaganda machine. As a result, the figures projected by Ukraine and various Russian institutions are extremely contradictory.

According to official Ukrainian sources from January 2022, the overall popula­tion of the areas now occupied by Russia was 6.373 million people. The oblasts of Donetsk and Luhansk already experienced a significant migration outflow after the beginning of the war in 2014. In December 2022, the International Organisation for Migration counted some 2.9 million who had left the occupied territories after the start of the full-scale invasion as referred by UNHCR. Based on these figures, the total population of the areas occupied by Russia can be estimated at around 3.47 million people. This is roughly equivalent to the 3.227 figure used by the Russian Federal Compulsory Health Insurance Fund in its draft budget for 2024. According to the Russian Ministry of the Interior, 2.82 mil­lion Russian passports have already been issued by September 2023, with a further 400.000 to be issued by the end of 2023.

The preparations for the strongly manipu­lated Russian presidential elections in March 2024 led to a sudden and sus­picious increase in the numbers given by Russia: In February 2024, the Central Elec­tion Commission of the Russian Federation determined the number of voters in Rus­sia’s “new regions” at a total of 4.56 mil­lion. The official election report even speaks of 4.812 million voters, of whom 4.732 million allegedly turned up to vote. These figures are clearly manipulated to improve Putin’s results.

The situation in the frontline territories remains volatile. Ukrainian and Russian sources confirm that people continue to leave. According to estimates based on figures published by the Russian State Sta­tistical Service (Rosstat), between 90,000 and 100,000 people may have left the “new regions” in 2023. There is also some inflow of people from Russia attracted by higher salaries and low house mortgages, but again, exact numbers are difficult to ascertain.

Forced Russification

The reality of the occupation also means the continuation of war crimes and gross violations of human rights. Russia sys­tem­atically violates its obligations as an occu­pying power under the international human rights law and the international humanitarian law. The occupying forces do not allow international organisations and independent journalists to enter the territories. Based on eye-witness reports, Ukrainian NGOs, the Office of the UN High Commissioner of Human Rights and net­works of investigative Ukrainian and West­ern media try to shed light on life under Russian occupation.

Civilians in the occupied territory are per­manently exposed to various forms of repressions and violence. Between 24 February 2022 and 31 December 2023, the OHCHR recorded 687 cases of arbitrary detention of civilians (journalists, civil serv­ants, public officials, civil rights activists and others) for opposing the occupation. The real figure is likely to be much higher, because most cases are not public. Depor­tations, arbitrary violence, including sexual violence, ill-treatment and torture are com­monplace, not only in the detention centres but throughout the territory under Russian control. Public protests and other forms of resistance to the occupation are being sup­pressed by the Russian armed forces and the Russian occupying authorities. Elemen­tary freedoms, such as the freedom of expres­sion (including the expression of Ukrain­ian culture and identity) or movement, are stifled. There is no protection against intrusion from the occupying forces, either in terms of private sphere or con­fiscation of property. Russia rules the areas it controls through fear and intimidation.

The naturalisation of the population in disputed territories, known as passportisation, has long been a tool of Russian policy. In the occupied territories of Ukraine, it is also used to force the population into obedi­ence. There are numerous reports of people being denied basic rights and access to basic services, including health care and medicine, wages, pensions and other social services, because they do not have a Rus­sian passport. Male residents of the occu­pied territories with Russian passports risk being conscripted into or pressured to “vol­unteer” for the Russian army. According to a presidential decree from April 2023, resi­dents without Russian passports will be considered “foreign citizens” after December 2024 and may be subject to persecution and deportation if they “threaten the con­stitutional order or national security”. In other words, without a Russian passport it is almost impossible to live in the Russian occupied territories.

Political, economic and military aspects of Russia’s occupation policy

As the forced “Russification” of the local Ukrainian population unfolds, Russia is sys­tematically pursuing the political and eco­nomic integration of the occupied territories.

The political-administrative integration started with the formation of governance structures in the four regions over the summer of 2022. The occupation authorities began to transform themselves from looting “roving bandits”, into “stationary bandits” interested in a steady flow of rents. These structures were tasked with staging referendums on 28 September 2022 to create a superficial impression of legitimacy, which implausibly claimed that between 87 and 99 per cent of the respective popu­lations voted in favour of joining the Rus­sian Federation. The referendums were used to justify the annexation of the terri­tories on 30 September 2022. In September 2023, the “single voting day” for local and regional elections was extended to the occu­pied territories for the first time. The for­mation of “people's councils” in the DPR and LPR, a “Legislative Assembly” in the Zaporozhye region, and of the Kherson “Regional Duma”, as well as the proclamation of huge major­ities for the Kremlin par­ty “United Russia” throughout the occupied territories, can be seen as the formal com­pletion of their political integration.

Economic projects

The “integration” of the occupied territories started in May 2022, when Russia began to provide assistance to the LPR in restoring infrastructure. But it is far from being com­plete.

In April 2023, a first “Comprehensive pro­­gram for the socio-economic development of the DPR, LPR, Zaporozhye and Kherson regions” was adopted to identify development goals and allocate funds for the period from 2023 until 2025. It was followed, in December 2023, by the state program on “Restoration and socio-eco­nomic development of the DPR, LPR, Zapo­rozhye and Kherson regions”. The publish­ed version of the programme consists of an introductory section outlining the general objectives of the Russian state’s policy in the “new regions”. There are eight annexes on priority areas for the distribution of subsidies. The programme does not contain any deadlines or benchmarks for the imple­mentation of the measures described. Some of its parts are closed to the public. The gov­ernment announced it just before the New Year on December 29, 2023, so as not to attract public attention. The money allo­cated per year for the implementation of the programme is about 1 trillion rubles (€10,76 billion). It was spent in full in 2023, even though the programme was adopted only at the end of the year. This and the fact that a large section of the program is clas­sified suggests that a significant part of it is used for military purposes like con­struction of defensive structures.

The civil priorities outlined in the state programme focus on infrastructure and communications, water and energy supply, housing and communal services, the service sector and the industrial and agricultural production. The priority projects for the actual restoration of what was destroyed during the war were the restoration of the energy infrastructure, the restart of enter­prises, the repair of roads and social facil­ities, the development of housing and com­munal services, the development of the banking system, and the construction of housing, which in new regions people can purchase under the two percent mortgage program.

The first major project was the emergency construction by the military of a 200-kilo­meter water pipeline from the Don in the Rostov region to Donetsk, carried out in rec­ord time in the first months of 2023. 2,500 people worked around the clock on the con­struction of the water pipeline. Water sup­ply of Donetsk through the Seversky Donets – Donbass canal had stopped shortly after the start of the full-scale invasion. As a result, households in Donetsk had water for no more than 2 hours a day. The construction of the water pipeline improved the situation, but did not solve the problem com­pletely. The authorities say that with­out gaining control over the northwestern part of the Donetsk region, a fundamental solution to the problem is impossible. The North Crimea Canal, which has not enough water since the destruction of the Kakhovka Dam in June 2023, is another infrastructure project. So are a number of transport and communication lines with dual, military and civilian purpose: the road and railroad connection between Russia and Crimea road, other road and rail connections to Russia, and a ring road around the Sea of Azov.

Infrastructure

In the area of housing, the main focus so far has been on the restoration of Mariupol, which Moscow wants to transform into a showcase of Russia’s positive role in the occupied territories. Other focal projects are the temporary regional centres of the occu­pation authorities in Genichesk and Melito­pol. In July 2024 Putin announced that “fed­eral agencies completed work on 11,262 ob­jects, including the construction of 62 apart­ment buildings, the restoration of 2,140 apartment buildings, as well as 321 objects of education, healthcare, culture, sports, etc.” According to him, more than 3,000 km of roads were repaired, more than 500 bank branches and offices were opened. These claims are difficult to verify in full. Inter­national and Ukrainian media and NGOs report about slow progress, corrup­tion and flawed construction projects.

According to the head of the Social Fund of Russia, Sergei Chirkov, in 2023, 2.5 mil­lion people living in “new regions” received payments from the Social Fund for a total amount of more than 204 billion rubles (€2 billion), these are pensions, unified ben­efits, sick leave and accident compensation, other benefits.

Businesses

The Russian government aims to create favorable conditions for the development of local business and the arrival of companies from Russia. Since the summer of 2023, a free economic zone (FEZ) has been operat­ing in the occupied territories, meaning benefits for 10 years, including reduced insurance premium rates; zero tax rate on profits received from the implementation of an investment project; exemption from corporate property tax; as well as exemption from land tax for three years. In July 2024, it was extended to Crimea and the neighboring Russian regions Rostov, Bel­gorod, Voronezh, Kursk and Bryansk. Since April 2024, a simplified procedure for creat­ing industrial parks and technology parks has been in effect. A number of measures have been taken to support small and medium-sized businesses, including pref­er­ential lending.

Occupational authorities claimed for all businesses – including pre-existing Ukrain­ian businesses – to be registered by Rus­sian standards. According to official Russian sources, more than 107 thousand new busi­nesses were registered: 49 thousand in the DPR, 37 thousand in the LPR, about 14 thousand in the Zaporozhye region and 7 thousand in the Kherson region. The most popular types of activities among small and medium-sized businesses in new regions are retail trade (56%), real estate activities (5.8%) and transportation (5.5%).

Currently, there are already more than 500 enterprises of different size employing about 67 thousand people. In 2024, it is planned to launch about forty more, in­cluding the Mariupol Metallurgical Plant named after Ilyich.

For each of the four regions, a socio-eco­nomic development program was adopted in mid-2023. All of them, as well as plans for the modernization of the coal and metallurgical industries of Donbass, were included in the Strategy for the Sustainable Development of the Azov Region until 2040, developed by the Agency for Strategic Initiatives (ASI) jointly with the Russian Foreign Trade Bank (VEB).

According to a statement by Vladimir Putin in July 2023, more than 1.260 trillion rubles or €12 billion were allocated for the comprehensive development program of Donbass and Novorossiya. This is equivalent to one eighth of Russia’s colossal military expenditures on the war against Ukraine, which SIPRI estimates at €101 billion and one fourth of what was spent on the entire national economy in the same year. The same level of funding is planned for the coming years. Even though this is far from being enough for socio-economic recovery, it underlines the importance that the Kremlin attaches to the “new regions”.

Who does what in Russia?

Like Crimea after 2014, the “new regions in Donbas and Novorossia” are, first and fore­most, Vladimir Putin’s personal project. He is the “commander in chief” not only of the military operation, but also of the “inte­gration operation”. Telling a success story about the “integration” of the occupied territories into the Russian Federation is particularly important because Putin’s regime has failed to achieve the military aims it set out at the beginning of the full-scale invasion. This is why Putin pays a lot of attention to the process. He also partici­pates actively, holds regular government meetings on the progress of reconstruction and visited Mariupol in May 2023.

The government officials most visibly dealing with the “integration” of the occu­pied territories are Deputy Head of the Presidential Administration Sergey Kirienko and Deputy Prime Minister Marat Khusnullin. Kirienko heads the so called domestic political bloc in the Kremlin. His responsi­bilities stretch not only to the “new regions”, but also to managing Russian elections at all levels. His position has grown significantly more powerful since the beginning of the full-scale invasion. Marat Khusnullin (61), who began his political career in his home region Tatarstan, became Deputy Prime Minister for construction and regional development in January 2020. Other gov­ernment representatives involved in the process are Minister of Construction Irek Fayzullin, and, occasionally, Deputy Prime Minister Dmitry Chernyshenko, who over­sees the digital economy, science and education, and national policy. Kirienko, Khusnullin and other, lower-level government representatives regularly visit the occupied territories. The head of the Rus­sian government, Prime Minister Mikhail Mishustin, on the other hand, seems to have relatively little to do with what is happening there. Not only did he not visit the annexed territories, but he is only silently present at all meetings between Putin and the government on them. This is another indication that the “new regions” are the exclusive prerogative of the Kremlin.

The Crimea playbook adapted

Some aspects of Russia’s approach to the annexed territories in eastern and southern Ukraine follow the Crimea playbook after the annexation in 2014. The patronage system involving the Russian regions and certain corporations, organizations and enterprises, from Rosatom to the Ministry of Justice, cultural institutions like the Moscow Art Theater and leading Russian universities, clearly replicates the model developed for Crimea, because it worked effectively during the “integration” of the peninsula. Mechanisms developed in Cri­mea are also used directly. Thus, informa­tion and analytical support of the Program is carried out by the autonomous non-profit organization “Directorate for Information and Analytical Support of the State Program of the Russian Federation.”

At the same time, the Kremlin did not re­peat steps that proved ineffective in Crimea. For instance, the Ministry of Crimean Affairs, created in March 2014, caused competition and confusion among government institu­tions in Moscow and was dissolved the fol­lowing year. No such institution was set up for the purpose of integrating the occupied territories in eastern and southern Ukraine. Instead, the focus is on unity of command and control directly from the Kremlin.

The same approach is observed in relation to the Special Economic Zone created throughout the occupied territory in accord­ance with Federal Law No. 266-FZ dated June 24, 2023. To manage it, it was decided not to repeat the mistakes of Crimea and not to create a special structure, but to entrust everything to the “Territory Devel­opment Fund”, which acts as a management company and a single customer in the construction industry. The authorized body for regulating the free economic zone is the Ministry of Construction of Russia. As of April 3, 2024, 100 participants in the free economic zone declare an investment volume of 52 billion. As of July 24, 2024, 171 organizations entered the free eco­nomic zone; they plan to provide jobs for 66 thousand people, investing more than 74 billion rubles. These are agricultural enterprises, sewing workshops, factories, coal industry companies and even individual entrepreneurs.

Regional industrial development funds have been created to finance business proj­ects. By agreement with the Federal Indus­trial Development Fund they offer joint loans for regional projects, with 90 per cent of the borrowed funds provided by the fed­eral fund and 10 per cent by the regional fund.

To finance housing construction using extra-budgetary funds, a mortgage mecha­nism has been introduced at two percent. In March 2024 Marat Khusnullin declared that there was great demand for mortgage housing: “we have already prepared urban potential for eight million square meters, and new construction sites are being added every month, where housing construction is already underway at the expense of extra-budgetary funds”.

The system of regional patronage

The role of the Russian regions in the newly established patronage system is manifold. As early as May 2022, Sergei Kirienko declared that, by Putin’s decision, Russian regions would take patronage over the regions of the Donetsk and Lugansk People’s Republics. Later on this approach was extended to the Russian occupied parts of Zaporizhzhia and Kherson region. According to a state­ment by Marat Khusnullin, the patronage will last at least until 2030. As in Crimea after 2014, patronage includes the erection of defences, funds for construction and restoration work, the provision of materials, equipment and skilled work force. It also includes the secondment of middle and lower-level management personnel. Each region has to send several dozen regional and municipal officials and specialists to its, and large ones – more than a hundred.

The patronage system has several purposes: First, the tasks of rebuilding the war-torn occupied territories are diverted away from the federal centre, which would not be able to cope with them all. Second, the regime turns the reconstruction of the terri­tories it destroyed in the war into a “com­mon cause”, a nationwide construction project. Thirdly, the patronage system is intended to create horizontal ties between “new” and “old” regions.

The patronage system also helps to diver­sify and cover up the financial costs of “integration”. As a rule, the spending of the regions-patrons amounts millions of euros per year, The money comes from regional budgets and through levies from local busi­nesses, the proportions may be different.

Tens of thousands of citizens from almost all regions of Russia, as well as guest workers, are directly involved in the resto­ration and construction of transport and utility infrastructure, the housing sector, and enterprises. The very model of such “people’s construction” is partly a combination of quitrents and corvee, known from Russian history, with the Kremlin shifting the economic burden to the regions, and partly a demonstration of popular participation in the “integration” of the occupied regions.

According to the head of the Ministry of Construction, Irek Faizullin, at the begin­ning of December 2023, “33 thousand people were involved in work in the con­struction complex of four regions; at peak times, the number of construction workers reached 60 thousand, including local residents.”

The assignment of patron regions to individual parts of the occupied regions of Ukraine took place in two waves: in July–August 2022, when 42 Russian regions signed an agreement on patronage, and in April-June 2023, when 40 more were added to them. The Kremlin initiated the second wave, which covered mainly front-line cities and areas of the Zaporozhye and Kher­son regions, can be considered a revi­sion of the Kremlin’s calculations for a relatively quick complete occupation of the relevant regions and a transition to working with what is available.

As can be seen from table 1 (www.swp-berlin.org/publications/products/comments/ 2024_Comment_Petrov_Table1.pdf) Mos­cow is assigned to the capital Donetsk and Lugansk, St. Petersburg and the Tula region – to the showcase of restoration and the cen­ter of metallurgy Mariupol, the miners’ Kuz­bass to the miners’ Gorlovka, Tatarstan – to Lisichansk and Rubezhny LPR… Large regions with large budgets received larger plots, small ones – smaller areas.

The second front in Russia’s war: between Potemkin villages and real integration

Russia’s occupation policy pursues several goals. It is supposed to strengthen the bridge­head for further confrontation with Ukraine and the West; to demonstrate the success of the “Special Military Operation” and the care of the Russian state for the local population. It also aims to reduce the financial burden of war and occupation making the occupied territories to economically self-sufficient.

The restoration and development of “new regions” is the largest infrastructure project in Russia at present, with the goal of their rapid and complete “integration” and demonstration of the advantages of living as part of Russia. This is a continuation of the war through economic means. It is very important for the Kremlin to demonstrate that it is more effective here than on the battlefield.

The “second front” opened in mid-2022 in the form of “integration” of Donbass and Novorossiya has features of hybridity, just like the main war that began in February 2022. It is characterized by a combination of “Potemkin villages” with the solution of real military and geostrategic problems; external occupation power with collaborators on the ground; the use of military methods to solve civilian problems and vice versa; and etc.

The colossal resources invested in the project for the restoration of “Donbass and Novorossiya” are evidence of the long-term plans of the occupation – “Russia forever.” At the same time, the Kremlin tries as much as possible not to advertise the extent of its spending on the occupied territories so as not to provoke negative reactions from its own population. There seems to be an awareness that Russians’ support for the inclusion of the “new regions” is restrained and will not extend to large-scale spending of budget funds.

The political, economic and societal trans­formation of the occupied territories and their “integration” into the Russian state in a situation of ongoing war faces many problems, but the Russian regime can also claim that it is making some progress in restoring some kind of normal everyday life. Combined with the repression and Russification of the local population, this means that the social and political fabric of the territories will be profoundly altered the longer the occupation continues.