The Donetsk People’s Republic, a state under construction or a ghost state?

The huge administrative building gives a feeling of emptiness as you enter. Dressed in military fatigues, a soldier keeps the visitor’s register. “Passport!” he says coldly. The chair he is sitting on and the table he is leaning on are the only visible pieces of furniture in the large entrance hall. Although well maintained, the building show signs of abandonment. Empty rooms, no paintings or decorative items, and a deathly silence, with hints of a luxurious past.

We are in the Ministry of Information of the Donetsk People’s Republic (DPR), in the east of Ukraine’s territory. “We are occupying the premises of a former bank,” says Angelica Shkribitko, head of the journalists’ accreditation service. “The former owners have left,” she explains without giving further details. Words that could apply to the whole situation here.

Formerly under the sovereign rule of Kiev, the city of Donetsk and its region – the Donetsk Oblast – has become the de facto capital of a state still seeking autonomy and legitimacy.

Since the fall of President Viktor Yanukovych under popular pressure in February 2014 and the ensuing armed uprising in the eastern regions of the country, Ukraine has lost part of its territory. In addition to the annexation of Crimea by Russia following a referendum, two secessionist entities were created that same year in the Donbass region: the People’s Republics of Donetsk and Lugansk. Two independent states, but neither recognised by the international community, not even by their Russian neighbour who has nonetheless shown active support for them, given the historical ties which linked it to the Russian-speaking populations of this region.

“Your visa is ready,” announces Shkribitko, handing us the precious document. There is a stamp bearing the image of the new leaders, and the signature of the various officials, all on a piece of paper that seems to have been cut by hand. As you leave the ministry, you can make out the original inscription: ПУМБ, the Cyrillic initials of the “First Ukrainian International Bank,” on the roof of the building. Like a world that takes the place of another, the Donetsk Republic has put its mark on the buildings left by Ukraine. The black, blue and red flags of the separatist rebels are now displayed everywhere. Road traffic is intense and noisy during the day. Buses and cars parade on the main streets. As night falls, the city seems to be emptying of its inhabitants. The 11 p.m. curfew puts an end to all nightlife.

At the borders, the conflict still simmers

“I was born in the DPR,” reads one of the signs in the city centre on which a smiling child is accompanied by the number 5, to commemorate the five years of the republic’s existence. Five years of uninterrupted war which, according to the UN, has left 13,000 dead, and more than a million people displaced.

“There’s gunfire every day,” says Cyril Jaurena, head of department at the International Red Cross, stationed in Donetsk. “We work with around 30,000 households that have remained on the front line. We give them food, hygiene kits, and so on.”

Although a veteran of conflict zones, Jaurena explains his astonishment at the situation in Donbass: “It is the first time that I have seen people who voluntarily still live where there is daily shooting and bombardments. There is a strong connection to the land, to where they belong and these people, mostly women, prefer to stay at home, despite the war.” But what about the withdrawal of troops agreed between the warring parties in November 2019? “It only concerns a small section of the front,” sighs Jaurena. In fact, in mid-February 2020, a new deadly escalation in the other separatist region, that of Luhansk, reminded us that the warring factions have not given up the fight.

The election of Volodomyr Zelensky in May 2019 as President of Ukraine will have changed nothing despite presenting himself as the “peace candidate”, succeeding Petro Poroshenko. Meeting in Paris on 9 December 2019, President Zelensky and Russian President Vladimir Putin failed to reach an agreement on the future of Donbass, with Kiev demanding to regain control of the Russian-Ukrainian border as a condition for granting a statute of autonomy for the separatist regions and the organisation of elections. This was not foreseen in the 2015 Minsk agreements, signed during the prolonged first military phase of the conflict and on which Moscow based its negotiating positon.

“I see this as the people of Donbass uniting around a cause which is close to my heart: to live as one family with the Russian people,” declared Denis Pouchiline, head of the Donetsk People’s Republic during his inauguration 20 November 2018.

He succeeded Alexander Zakharchenko, killed in a bomb attack in August 2018, in a bar in downtown Donetsk. Some observers, such as the think tank Carnegie Moscow Center, or the Russian-language media Meduza, based in Latvia, see in it a takeover by Moscow of the leadership of the secessionist state, free of former leaders, inclined towards autonomy.

“Parliament, as a legislative body, is the real power. It is led by the man who became Prime Minister at the last election, Alexander Ananchenko,” explains Boris Litvinov, First Secretary of the Donetsk Communist Party. He knows local politics inside out, he was one of the founders of the secessionist entity and was, for a time, the Head of Parliament. “Mr. Ananchenko was born in Donbass, but he spent his life in Russia, representing the economic interests of Serhiy Kurchenko, a Ukrainian oligarch who now lives in exile in Moscow,” says Litvinov. On a more cautious note he adds that the Kremlin “does not control” the DPR, but “it influences it”.

The thorny issue of pensions

“We have been Russians at heart for a long time,” says Tatiana A. as she places her brand new Russian passport on the table. The young woman, a resident of Donetsk and a lawyer by profession, was able to take advantage of a decree issued by President Putin in April 2019, facilitating the granting of Russian nationality to the inhabitants of Donetsk and Lugansk. As she still has family “on the other side”, she wants to remain anonymous.

“As a lawyer, I no longer have the right to practice in Ukraine, but we continue to work underground with Ukrainian colleagues.” On what issues? “Pensions. The DPR considers that it is Kiev’s responsibility to pay for the people who have contributed all their life in Ukraine,” says the lawyer. “For almost three years, the Ukrainian state has frozen the pensions of many people living here, so we decided to take the case to court, arguing that by law, the Donbass is still Ukraine and we won.”

But there’s a problem: residents who wish to receive their Ukrainian pension must be officially registered as domiciled in the loyalist zone. Was it necessary to cheat on this point when taking the cases to the Ukrainian courts? “I would not call it cheating,” interrupts Tatiana, “Kiev owed them this money”. It’s a legal balancing act which is by no means easy and which, according to the lawyer, explains why today only around 45 to 50 per cent of retirees from the DPR receive their Ukrainian pension.

Faced with this reality, Donetsk pays (modest) retirement pensions to its citizens in Russian roubles, the currency used in the two separatist republics since the start of the conflict. Although illegal, some people collect pensions from both sides. “My mother receives 2,000 roubles from Ukraine (the equivalent of around €28 and paid in Ukrainian Hryvnias) and 3,000 roubles (€42) from Donetsk, that is still very small,” says Andrei P., a resident. “The trouble is that you have to report physically to the administration, which is why many elderly people cross the border regularly,” the young man tells Equal Times.

Tax collection and requisitions

How has the DPR managed to supplant the vacant state so quickly? From the start of the conflict, the new authorities ensured the payment of a corporate tax by all companies that remained in the territory and by those whose infrastructure had been requisitioned after the former owners fled the fighting. A case in point is the McDonald’s restaurants in Donetsk, which have since become DonMac, or that of the food stores which now belong to the new local chain called First Republican Supermarket (Первый Республиканский Супермаркет), which appeared in 2015.

Launched on the market in March 2016, the state-owned company Phoenix is a telephone operator that allows communication inside the separatist territory and to Russia (in addition to internet access). This new economic player inherited the infrastructure of the former Ukrainian telephone company Kyivstar, which stopped operating in Donetsk in 2015. On one of the boulevards in the city centre, the bright and lively sign of the Phoenix store stands out from the grey the buildings surrounding it. “Its prices are unbeatable. It’s almost a monopoly,” says one of the customers.

But all these new indigenous companies carry little weight in the economy compared to the region’s biggest asset: coal production. According to Ukrainian economist Oleksey Kushch, “90 per cent of the DPR’s export capacity consists of coal,” the total value of which is estimated at US$500 million a year.

But, as Kushch recalls, the general economic situation (the blockade by Kiev), the excess of coal in Russia (DPR’s main economic partner) and “the status of non-recognition”, which “implies sale price dumping” lower the value of exports to around US$300 million.

It’s a delicate economic situation which could encourage illegal trafficking in this raw material, as revealed by the Swiss newspaper La Tribune de Genève, in December 2019, and which, according to the economist, requires greater funding from the main protector of the rebel republic: the Russian Federation. “Russian donations to the DPR are thought to be US$300 million a year,” he estimates, since most of this data remains largely unknown.