Over a year under occupation: how Russia's plans fail in Ukraine

Parts of Kherson and Zaporizhzhia regions of Ukraine have been under occupation for more than a year. Russia is trying to integrate these territories into its own economic space in order to weaken their connection with Ukraine. In particular, the hryvnia came under attack as Russia seeks to replace it with the ruble. The occupiers have introduced new rules for getting social benefits and pensions: they can be received only by those who have become citizens of Russia.

The other day, Ukrainians who refuse to take the aggressor’s passports were declared “foreigners.” But neither economic nor power pressure or moral oppression allows Putin to take Ukrainians “in three days” even in the occupied territories.

Attempts that have not yet been successful

First, the Russians announced plans to introduce their currency into circulation in the temporarily occupied territories (TOT) from April 2022. Subsequently, in late April, “deputy head” of the occupation administration of the Kherson region Kiril Stremousov stated that this process would begin on May 1. According to him, there would be a “transitional period” in the region for another four months, when both rubles and hryvnias will be used simultaneously, and then there will be a full transition to the Russian currency.

In practice, however, it has turned out differently. For a long time, the occupiers did not manage to “knock out” the hryvnia. They launched a new attack on the Ukrainian currency immediately after the pseudo-referenda. In late October, the Russian authorities announced that from January 1, 2023, the ruble will become the sole settlement currency in the part of Kherson, Zaporizhzhia, Donetsk, and Luhansk regions of Ukraine controlled by the Kremlin. The Association of Banks of Russia calculated that 900 billion rubles should be brought to the captured territories to implement this plan. Then one inhabitant would receive an average of 100,000 rubles in cash (roughly 50,000 hryvnias) — assuming that eight million people would live in the occupied territories.

The Russian authorities allowed the use of the hryvnia until December 31, 2022. However, in the fourth month of 2023, when the Ukrainian currency was no longer supposed to be in circulation, it is still being used, albeit partially. Polina, a resident of the Kherson region (her name is modified for security reasons) whose parents live in its occupied part, told OPORA about this. She explained that you can pay in hryvnia both in cash (although more by stealth) and online by transferring funds from card to card. The last option is possible only where there is stable Internet.

According to her, the occupiers know that people use the hryvnia, so they deliberately lower its exchange rate. Sometimes it drops to 65 Russian kopecks per hryvnia, that is, 1,000 hryvnias can be exchanged for 650 rubles. Meanwhile, according to the official exchange rate of the National Bank of Ukraine as of April 18, 2023, 1,000 hryvnias can buy a little more than 2,500 Russian rubles.

The information that the Russians are setting an unfavorable exchange rate for the hryvnia is confirmed for OPORA by Bohdan (his name is modified for security reasons), who now lives in the temporarily occupied part of the Zaporizhzhia region. According to him, 1,000 hryvnias can be exchanged for an average of 800 rubles.

It is impossible to leave TOT, but the flow of hryvnias continues anyway

Askad Ashurbekov, a member of the Zaporizhzhia Regional Council, explains to us that the occupiers set a low exchange rate so that it would be unprofitable for people to use the hryvnia and they would switch to the ruble. What’s more, the cash hryvnia has nowhere to come from to the TOT, because since December 15 of last year, the occupying forces blocked the possibility for civilians to leave the occupied territories and enter them from the free part of Ukraine.

Previously, residents of TOT could, theoretically, go to the territory controlled by Ukraine and withdraw cash at any bank department, at the cash desk in pharmacies, supermarkets, and gas stations. In addition, those who had received pensions in cash, upon concluding a relevant contract, could get their funds at the departments of Oschadbank, any other bank, or Ukrposhta. It is difficult to say how many people used this option, but it contributed to the fact that the hryvnia, albeit in small quantities, still ended up in the TOT.

In addition, according to Mr Ashurbekov, the Russians blocked access to TOT for another reason. “I reckon it is related to the escalation of hostilities: first they attacked, now our counteroffensive is being prepared. Civilian logistics will unbalance the front line. Apparently, the Russians have such a logic. And the second logic – they understand that if the checkpoints are open, the colossal outflow of the population will continue. It will be noticeable that people do not want the “Russian world,” do not want to stay there. And the Russians need to show a different picture. Also, any contact with the free territories will strengthen ties with Ukraine, which the Russians are not interested in,” says Mr Ashurbekov, explaining the logic of the occupiers’ actions.

However, if there is no access to cash hryvnia in the occupied territories, it still gets there in a cashless form. Ukraine fulfills its financial obligations and transfers salaries to state employees, as well as pensions and social benefits for TOT residents by bank cards.

This information was confirmed by all our interlocutors. Also, according to Mr Ashurbekov, in the temporarily occupied territories, employees of regional communal enterprises, who did not agree to collaborate, continue to receive wages.

For those who received pensions in cash and now cannot leave for free territories, Ukraine has prepared detailed instructions on how to remotely create a bank account via the Internet and transfer their pension or other payments to it. That is, if until February 24, 2022, a person received cash payments through Ukrposhta, now they can transfer them to a card and have a resource for survival.

Either a Russian passport, or you will be deprived of livelihood

Instead, Russia actively imposes payments in rubles, seeking to make people who keep living on the TOT dependent on themselves. Thus, from March 1, the occupiers introduced new rules for receiving social benefits and pensions. As reported in the of National Resistance Center (NRC), now only those who have received Russian citizenship will be able to receive them.

Our interlocutors say: if someone refuses the passport of the aggressor country, such a person is threatened that Russian law enforcement officers will “come” to them and talk to them in a different way, that is “like with Ukrainian collaborators.” This status does not mean anything good, because the disappearance of pro-Ukrainian activists or even city mayors has been recorded repeatedly in the occupied territories. The fate of a large part of them is still unknown. For example, this applies to the mayor of Kherson Ihor Kolykhaiev, who was kidnapped by the Russian invaders on June 28, 2022. However, many Ukrainians, despite threats and not too optimistic prospects, do not take Russian passports as a matter of principle.

This information is also confirmed in the NRC. According to them, the occupiers are inventing new methods of coercion in order to speed up the pace of passporting, as Putin is personally dissatisfied with it. “In late March, Vladimir Putin expressed his dissatisfaction with the pace of passporting at the TOT. In response, the occupation administration developed passportization plans and launched the so-called mobile groups for passportization,” the organization’s press service reports.

The National Resistance Center notes that these groups visit the homes of the local population and “agitate” residents to get passports. Often, during such visits, the occupiers resort to pressure – from threats to the use of physical force.

Another example of such a policy is blackmailing car owners. By May 1, the occupiers demand that the residents of TOT reregister their vehicles in accordance with the laws of the Russian Federation. Cars without re-registration will be confiscated.

On top of that, according to the first deputy chairman of the Kherson Regional Council Yurii Sobolevskyi, the occupiers are threatening to limit access to medical services.

“They say that if there is no Russian passport, there will be no compulsory Russian-style medical insurance policy. If there is no policy, then there will be no medical services,” said Sobolevskyi during a briefing at the Ukraine-Ukrinform Media Center.

As we can see, the essence of forced passportization is that Russia pushes people to the limit of survival. They are left with no choice: either Russian citizenship, or they will take everything from you, deprive you of your income, and in the worst case, your life.

Read this article in russian and Ukrainian.