Integration of the Occupied Regions Going Better for the Kremlin than the War on the Battlefield
June 13, 2024
  • Nikolai Petrov

    Visiting researcher, German Institute for International and Security Affairs (Stiftung Wissenschaft und Politik)
Political scientist Nikolai Petrov looks at the Kremlin’s moves and strategy in the Ukrainian regions occupied and annexed by Russia and argues that another fight for the future of Ukraine is happening behind the front lines.
In 2022, Russia annexed four Ukrainian regions: Donetsk (the so-called Donetsk People’s Republic, or DNR), Luhansk (LNR), Zaporizhzhia and Kherson.

Data on the size of the occupied territories is not exact and has also been deliberately distorted. That is mainly because the Russian authorities claim to have annexed the four regions within their prewar borders even though a large part of the territory is not and has never been controlled by Russian troops: in Kherson Region Russia controls 16,400 square kilometers out of 28,400; in Zaporizhzhia 19,800 square kilometers out of 27,200; and in Donetsk (DNR) 14,000 square kilometers out of 26,500. Luhansk (LNR) is the only region fully occupied by Russia.

How many people live in the occupied regions?

Note that neither in Zaporizhzhia Region nor in Kherson Region do the occupation authorities control the prewar capitals. Henichesk, a small seaside town with a population of 20,000, whose only advantage is its distance from the front line, was named the temporary administrative center of the Russian Kherson Region immediately after the Russian army abandoned the city of (and capital) Kherson in November 2022. The temporary capital of the Russian Zaporizhzhia Region has been Melitopol (population 156,000 in 2015) since April 2023.

As for the population, Rosstat does not officially disclose statistics on the four new “constituent entities” of Russia. Based on Ukrainian data as of January 2022 – before the start of the full-scale war – 6,373,000 people lived in the part of Ukraine that is now controlled by Russia.

After the outbreak of the war, many people left. According to data from the International Organization for Migration, at the end of 2022 the number of internally displaced persons was 1.2 million for Donetsk, 0.7 million for Kherson, 0.6 million for Zaporizhzhia and 0.4 million for Luhansk. Data from Russia’s Federal Compulsory Medical Insurance Fund is consistent with this, indicating that slightly more than 3.2 million people live in the occupied regions. Nevertheless, in February 2024 the Central Election Commission counted an unbelievable 4.56 million voters in the DNR, LNR, Kherson and Zaporizhzhia regions.
“With the war still raging, residents of the ‘new regions’ continue to move deeper into Russia, away from the front line.”
Through 11 months of 2023, the net migration outflow from these regions amounted, according to Rosstat, to 87,600 people. Most often, they went to Krasnodar or Moscow regions. There is also some influx to the occupied territory from Russia’s interior, though it is not yet possible to quantify it. People are attracted by higher salaries and the offer of cheap mortgages at a 2% annual interest rate.
Putin's visit to Mariupol, March 2023. Source: YouTube
The Kremlin’s strategic goals

Russia’s military goals in the occupied territory are not advertised, while with regard to “civilian” goals Putin declared in January that “by 2030 the Donbas and Novorossiya should reach the Russian nationwide level in the key areas that reflect people’s quality of life.”

It appears that Moscow intends to convince Ukrainian citizens of the advantages of living “under Russia.” Social payments, the reconstruction of Mariupol, the construction of social infrastructure, etc. serve this purpose. The Kremlin's message to the Russian people is that Putin’s military strategy in Ukraine is successful.

The Russian authorities intend to create or restore infrastructure and logistics, most importantly, a network of railways and highways, for both military and civilian use. Putin personally pays considerable attention to these projects. For example, in March 2023 he unexpectedly visited Mariupol, where he inspected the progress of construction and reconstruction work in the city and had a meeting with grateful locals.

Putin’s meetings with government leaders regarding the rebuilding of the occupied territories are widely covered in the state press. At one of these meetings, held remotely on the eve of the recent presidential election, Putin announced that “last year we allocated RUB 1.083 trillion for a comprehensive program for the development of our historical regions, including the economy and infrastructure, healthcare and education, culture and sports.” The opening ceremony of social infrastructure facilities in all four regions was streamed.

At the beginning of April 2024, Putin, remotely, opened a perinatal center in Donetsk, a new residential area in Mariupol, a branch of the Volgograd Academy of the Ministry of Internal Affairs in Mariupol and a children’s and youth sports school in Luhansk, among other things.
Deputy PM for Construction and Regional Development Marat Khusnullin, who serves as Putin’s personal envoy to the occupied regions. Source: Wiki Commons
High-level officials from the government and the Presidential Administration, and especially those in charge of the occupied regions – Deputy PM for Construction and Regional Development Marat Khusnullin and First Deputy Chief of Staff of the Presidential Administration Sergei Kiriyenko – visit regularly. On the occasion of Kiriyenko’s visit in May 2024, the administration of the Russian Kherson Region posted on its website: “visits of top state officials to the liberated regions are becoming regular, which points to the special attention that high-ranking government officials pay to the development and integration of the new constituent entities of Russia. This is confirmation that the residents of Kherson Region have forever become members of a large Russian family and from now on can always look to the future with confidence.”

On August 11, 2022, shortly before the referendums on joining Russia, Dmitri Medvedev, whose official title is now the deputy secretary of Russia’s Security Council, visited the LNR, where he, accompanied by the most senior Russian officials, held a meeting with the heads of the DNR and LNR on measures to support the self-proclaimed republics.

Start of integration

Like its strategy in the war, the Kremlin’s plans for the integration of Ukrainian territory have changed more than once, as have the deadlines for their implementation.
All strategic planning in Russia is now tied to 2030, when Putin’s current presidential term ends. By then, all the socioeconomic parameters of the occupied regions are to be raised to the average level across Russia.

In May 2022, even before the annexation of the occupied regions, Russia began to provide assistance to the LNR in rebuilding infrastructure, and Putin ordered Russian regions to “sponsor” certain areas of the Donbas.

In September 2022, against the backdrop of the successful Ukrainian counteroffensive, Putin decided to urgently capitalize on what had been gained in the war and on September 23-27 staged “referendums” on incorporating the occupied regions into Russia, which had been postponed since the spring.
The announcement of new, albeit temporary, capitals of the occupied Kherson and Zaporizhzhia regions – Henichesk and Melitopol, respectively – can be considered a consolidation of the status quo and a renunciation of further expansion in the near future.
The agrotechnical university in Melitopol (in the spring of 2023, Melitopol was named the administrative center of the occupied part of Zaporizhzhia Region in Ukraine). Source: Wiki Commons
From August 30 to September 10, 2023, elections were held for regional parliaments in the Russian Donetsk, Luhansk, Zaporizhzhia and Kherson regions, as well as for municipal assemblies there.
The economic integration, meanwhile, began virtually right after the start of the initial, political phase but is still far from complete.

Adopted right before the New Year holidays, on December 29, 2023, seemingly so as not to attract public attention, the state program called Reconstruction and Socioeconomic Development of the DNR, LNR, Zaporizhzhia and Kherson Regions is mostly secret. The published part contains only general phrases without specifying tasks and deadlines, meaning government officials can publicly say that everything is going according to plan.

Lessons from Crimea: Russian regions ‘sponsoring’ annexed regions

In contrast to the experience of Crimea after annexation, the Kremlin has given up on creating new government bodies, as it did with the Ministry of Crimean Affairs and the Crimean Federal District, in favor of undivided command and control directly from the Kremlin and the government.

However, the program of “sponsorship” by Russian regions, created during the integration of Crimea in 2014-15, was seen as effective and is being replicated. Sponsoring regions, assigned a certain area of the occupation zone, are supposed to pass on governance know-how and help tackle socioeconomic and sociopolitical issues. In addition, sponsorship entails providing financial and economic assistance for the war-torn areas.

This assistance includes participation in construction and reconstruction – for example, building defensive lines, supplying materials, equipment and qualified personnel, and delegating middle- and lower-level management personnel. Each sponsor region must send several dozen regional- and municipal-level officials and specialists to its assigned area, while more than a hundred are sent from large sponsors.

Thus, problems are solved that could hardly be done amid rigid centralization, while the concept of “res publica” is put in action – the “new” and “old” regions have a common cause.

Sponsorship assistance to the annexed regions, as Khusnullin said in May 2024, will last to 2030. Currently, the vast majority of Russian regions are participating. Sixteen sponsor regions are active in occupied Zaporizhzhia, seven in Kherson, 33 in the LNR and 27 in the DNR, with 3,052 projects for this year alone.

With the exception of Moscow, St Petersburg and Tatarstan, which chose the areas they would sponsor, Russian regions were assigned parts of the Donbas and Novorossiya by the Presidential Administration through the plenipotentiaries of Russia’s federal districts.

The cities of Donetsk and Luhansk are sponsored by Moscow; Mariupol by St Petersburg and Tula Region; Makiivka by Khanty-Mansi and Sverdlovsk regions; Horlivka by Kemerovo Region; Lysychansk by Tatarstan; Melitopol by Sevastopol and Arkhangelsk Region; etc.

The sponsor system, among other things, helps decentralize and not advertise the financial costs of integrating the occupied regions.
As a rule, Moscow compensates regional sponsors for expenditures, which amount to hundreds of millions or billions of rubles a year.
The explosion of the Kakhovka dam, June 2023. Source: Wiki Commons
This can be gleaned from Putin’s meetings with governors in early 2023, which invariably began with a detailed report on involvement in the special operation and the reconstruction in the annexed regions (see, for example, here).

Among the priority projects in the annexed regions are those related to infrastructure and communications, including the North Crimean Canal, the land corridor to Crimea, road and rail connections to Russia; water and energy supply; housing and utilities; the service sector; and industrial and agricultural production.

The first step was the construction of a water pipeline from Rostov-on-Don to Donetsk and the restoration of water supply to Crimea via the North Crimean Canal (water supply had been interrupted due to the explosion of the dam at the Kakhovka HPP in June 2023).

Some of the projects – like a road stretching through the DNR and Zaporizhzhia and Kherson regions to Crimea (the “land corridor”) with a parallel railway, as well as a ring road around the Sea of Azov – serve both military and civilian purposes. Other plans include the integration of roads across all four occupied regions into Russia’s transport and logistics system.

Mariupol is intended to showcase the successful reconstruction of occupied Ukraine as a whole. In addition, the construction of a new city for 30,000 residents on the Arabat Spit, not far from Henichesk, is being discussed, with implementation already underway. It would serve as the administrative center of the Russian-controlled part of Kherson Region.

In April 2024, at a video meeting with Putin, officials reported on the completion in 2022-23 of work on many thousands of smaller facilities, like apartment buildings, kindergartens, schools and universities, including, for example, the Priazovsky Technological University in Mariupol.

Organization, management and costs

The “new regions” are, like Crimea before, Putin’s pet project. And as with the war, here too there is one “commander in chief.”

Among the government officials who deal directly with the Donbas and Novorossiya are the abovementioned Khusnullin, who acts as Putin’s personal envoy; Construction Minister Irek Fayzullin, subordinate to Khusnullin; and occasionally Deputy PM for Tourism, Sport, Culture and Communications Dmitri Chernyshenko, who also oversees the digital economy, science and education and national policy. At all meetings on the annexed regions, PM Mikhail Mishustin just silently sits there.
Successful integration – under the personal leadership and with the active participation of Putin – is especially important for the Kremlin to demonstrate considering the army’s underperformance on the battlefield.
Russia’s strategy in the Ukrainian territory occupied since 2022 is primarily about strengthening it as a base for further confrontation with Ukraine and the West and continuing the war in a sometimes more, sometimes less intense format.

The RUB 1.083 trillion allocated in 2023 for the comprehensive development program for the Donbas and Novorossiya is equivalent to a whopping tenth of Russia’s colossal military expenditures in 2023 – $109 billion according to the Stockholm International Peace Research Institute (SIPRI). Or a fourth of the amount spent on the entire national economy of Russia last year. In the coming years, funding for the occupied regions is planned to stay at that level.
The reconstruction and development of the new regions is Russia’s largest infrastructure project at present, with the goal of completely integrating them into Russia as quickly as possible.
The colossal resources invested are meant to demonstrate to the whole world and, most importantly, to Ukrainians and Russians the advantages of being part of Russia and the Kremlin’s care for the people on the ground. There should be no doubts about its intentions – the occupied regions are “Russia forever.” This is a continuation of the war through economic means, and it seems that the Kremlin is much more effective in this space than on the battlefield.

To facilitate the construction of housing without using budget funds, the abovementioned 2% mortgage was introduced, and, as Khusnullin said in April 2024, demand for mortgage-backed housing is high and the number of construction sites is growing every month. Meanwhile, tens of thousands of workers from almost all Russia’s regions, as well as guest workers from Central Asian countries, are directly involved in the rebuild, which is meant to demonstrate broad popular participation in the integration of the occupied regions.

However, support for the integration of the “new regions” on the part of Russians – already quite lukewarm – does not extend to large-scale public spending, and the Kremlin tries, where it can, not to advertise the scale of these expenditures.
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