Merge Policies: Will Russia succeed in reshaping the economic situation in southern and eastern Ukraine ?

Since the first weeks of the Russian military intervention in Ukraine, the unbridled Russian desire to bring the occupied Ukrainian regions closer to its orbit has emerged, in a policy that the Kremlin called a “campaign to integrate the areas under its control.” This is done through twinning Russian and Ukrainian cities, and trying to link Russia and the areas under its control within Ukraine. These policies were among a set of moves aimed at consolidating societal and political control over Ukraine, which included, for example, the granting of Russian passports to citizens of some areas of Ukraine, and the handing over of a number of Russian officials to high-ranking jobs in Moscow-controlled parts of Ukraine. These successive and successive moves raised questions about the nature of those policies, the purpose behind them, the extent to which Russia could succeed in integrating the economy of these regions into its own, and the potential impact of this on the course of the war.

Economic Connectivity

Moscow has sought to strengthen its presence in the areas under its control in southern and eastern Ukraine through economic programs that achieve hegemony over these areas, and link them to the Russian economy. In this context, Moscow has relied on a number of economic policies towards the areas under its control in Ukraine, the most prominent of which can be addressed as follows:

1- Expanded use of the ruble in commercial transactions: Currently, Russia is seeking to achieve economic hegemony over the lands of southern Ukraine that it is subject to; By introducing the Russian ruble, this becomes the tangible and expressive element of the integration between Russia and those regions; Where it has become possible to buy everything in rubles and the hryvnia (the Ukrainian currency), but the employees of the “Berdyansk” province controlled by Russia, are still receiving their salaries in the local currency, while the Melitopol province, located 100 kilometers west of Berdyansk, witnessed after the Russian control in the first From last March of this year, the arrival of the Russian currency through the neighboring Crimea.

According to the mayor of this pro-Russian city, Galina Danlchenko, according to statements reported by the Asharq Al-Awsat newspaper, “The boycott has become a two-currency area; Thanks to the open road, the ruble arrived in Crimea, and it became possible to resume trade relations with Russia, which were suspended after 2014; And that’s across the Crimean peninsula, which has been under Russian control ever since.

2- Building a new supply chain between Russia and the Ukrainian regions: According to the Director General of the Berdyansk Metallurgical Foundry “Alexey Androsenko”, “the foundry no longer has a logistic chain other than Russia, as a result of the Russian-Ukrainian war, and as soon as the raw materials run out, Androsenko is preparing to cooperate with a factory Steel (Alchevsk), which has more than 10,000 employees and since 2014 has been subject to pro-Russian separatists from Luhansk in eastern Ukraine.

Within this framework, Russia aims to build a supply chain capable of operating efficiently and effectively. What makes this a shining goal for Russia is the presence of the Berdyansk port, which represents a major economic advantage, especially as it has remained relatively safe despite the war, unlike the port of Mariupol, which was subjected to numerous attacks; Despite the attack on the port in late March, Alexander Saulenko, head of the administration established by Moscow in Berdyansk, stated that “the port and most of the berths are almost 100% ready, and the port infrastructure has been restored.”

3- Attempts to connect Ukrainian facilities and infrastructure with Moscow: Moscow has previously announced its desire to continue to control the lands in southern Ukraine around Kherson Province, with the hint that it may be absorbed directly into Russia such as Crimea, which was previously linked to Ukraine. In this regard, economic integration is already underway in that region; Grain supplies are trucked from that region to Crimea, and by ship to Moscow’s ally Syria. In addition, the Institute for the Study of War reported that the Zaporizhzhya nuclear power plant is currently being integrated into the Russian supply network and the Russian-controlled Crimean network.

It should be noted here that with the completion of Russia’s control over most of the areas in the Donbass Province in southeastern Ukraine; Moscow tended to connect the areas under its authority with the Crimea, which it annexed in 2014; This is via a network of roads, while the financial authorities of Russia in Ukraine announced, on June 29, 2022, the launch of bus and train service between Crimea and the cities of Kherson and Zaporizhia in southern Ukraine for the first time in eight years, and assigning the task of ensuring the safety of travel to members of the Russian National Guard.

4- Opening of a branch of the Russian Pension Fund in the Kherson region: On June 29, 2022, the pro-Moscow administration of the Kherson region announced the opening of a branch of the Russian Pension Fund to be responsible for paying state pensions, and the self-appointed authorities also announced the establishment of an office Russia to register births, deaths and marriages in the province, which reveals attempts to institutionalize Russian control in some Ukrainian regions.

5- Spending huge sums on the reconstruction of Russian-controlled areas:According to local officials in the Russian-controlled areas of Ukraine , Moscow intends to spend up to 3.5 trillion rubles, equivalent to $60 billion, on reconstruction projects in the parts under its control in the Donetsk and Luhansk regions of Ukraine. Moreover, Russia allocates huge sums of money for the reconstruction of the Donbass province under its control, while the Berdyansk province also received about 90 million rubles; The equivalent of 1.5 million euros, in financial aid from Russia.

Possible scenarios

When asked about Russia’s ability to achieve economic integration and full integration with the Ukrainian provinces under its control, there are a number of possible paths, the most prominent of which can be addressed as follows:

1- Russia stumbles in achieving its full economic goals in southern and eastern Ukraine: According to this scenario, Russia may be able to take more pragmatic steps in achieving economic integration with the southern and eastern Ukrainian regions under its control, which means partial realization of some economic integration policies; Where Moscow is content with obtaining partial economic gains, especially since without a tangible presence in the Ukrainian capital, Kyiv, and without its control over it, there is no guarantee for Russia to preserve its gains in southern and eastern Ukraine, and Russia cannot greatly influence the desired strategic change; It will still be difficult to manage the economy of these areas without any coordination with the capital; It seems impossible for cooperation to take place between them, given the lack of trust, the complete rejection of the idea of ​​occupation on the Ukrainian side, and the Russian rejection of calm efforts.

2- Depriving Moscow of potential economic opportunities: According to this scenario, the Ukrainian army may succeed in pushing Russia back and completely fail the economic integration policies adopted by Moscow; What deprives President Putin of great economic opportunities that may come from integrating the economy of the occupied Ukrainian regions into his country’s economy, and the matter may turn into fragility in the Russian reaction; What may contribute to prolonging the conflict for as long as possible. Perhaps striking the 11-mile-long bridge of the Kerch Strait, which connects Russia with Crimea, represents an obvious target for the Ukrainian forces that are obscuring the bridge with smoke and seeking to destroy it, but the Ukrainian armed forces do not yet have the means to actually strike the bridge from The $3.6 billion steel and concrete features a parallel length of road and rail, supporting up to 15,000 vehicles per day.

Ukraine’s deep-strike capabilities, however, are improving. This is evidenced by the success of the Ukrainian army through its Mi-24 helicopters and the Air Force with its Su-27 fighters and TB-2 drones, in launching deep strikes against Russian facilities, in addition to the Ukrainian army targeting last April a fuel depot in Belgorod in Russia, 25 km away. Miles north of the border with Ukraine, which raises Russia’s fears of losing its gains in Ukraine after fighting is approaching its fifth month.

3- Russia’s success in annexing and retaining the Ukrainian areas under its control: This scenario assumes that Russia will succeed in annexing the occupied areas of Ukraine to it, as it did before when it annexed the Crimea peninsula in southeastern Ukraine since 2014; Neither Ukraine nor the international community as a whole, with its sanctions and encirclement policies at the time, managed to budge the Russian position on annexation.

Perhaps during the next few period, referendums will be held in all the areas under the control of Russia, and the result will be in favor of the annexation of those areas to Russia, and then support for achieving more integration and full economic integration within the Russian economy, and to keep what it gained during the last period, thus inaugurating a new phase of the battle. It would definitely be in her favour.

Overall, it appears in light of the current and successive developments, how difficult it is to predict the course of the ongoing Russian war against Ukraine. However, Russia’s adoption of economic and social tactics alongside its military tactics, in the areas under its control, strengthens its front and increases the solidity of its position, if it manages to preserve its gains. In front of the Ukrainian attempts to destabilize Russia’s efforts in southern and eastern Ukraine, and to obstruct these annexations.

key words:

Ukrainian war