The war in Donbas has been ongoing for 2,5 years. The economy of Donbas is devastated, and despite the ceasefire planned by the Minsk peace agreements battles take place on the frontline every night. Despite Vladimir Putin recently making his most revealing admission about Russia being “forced to defend the Russian-speaking population of Donbas,” Russia’s connection to the breakaway republic remains an unspoken secret.
However, the financial trail is hard to hide. France 24 journalist Elena Voloshina investigated who is paying for the separatist show during her visit to the “DNR.” Here we offer a summary of the report.
Russian military aid
Where does the ammunition come from?
Two militants that France 24 interviewed blamed, as the “DNR” always does, the Ukrainian side for the ceasefire violations. “We have enough ammunition and weapons to give a decent response to all the attempts to encroach on our territory,” Jelezniy, a militant brigade commander tells. But not thanks to Russia, he explains: “these are all trophies.”
But the men can’t explain how exactly they pick up so many trophies in an artillery war where direct contact between the sides is rare. Since Russia still denies providing military aid to the separatists, they stick to the official line, and to help push that line, have their own news agency – DONi, headed by the Finn Janus Putkonen, and funded by a Russian businessman. [The news agency became famous after an email leak on 3 August 2016 revealed how the “DNR” denied accreditation to disloyal journalists – Ed.]
Faking an attack on “DNR” positions for the cameras. It also doesn’t mind a bit of fakery to get the message across. France 24 witnessed how DONi journalists made plans with a “DNR” commander to stage an attack of “DNR” positions – by “DNR” militants wearing Ukrainian uniforms.
Turning rebels into an army
France 24 journalists noted the presence of Russian URAL trucks and Russian APCs as part of the Russian presence in Donbas. [This report corroborates findings by the Informnapalm investigative community, which identified 33 types of military equipment the Donbas Russian-backed separatist “republics” use that could have only come from Russia – Ed.]
[The Russian military commanders] are everywhere and nowhere at the same time. Everyone knows, and nobody talks about it.
“In 2014, I didn’t know what would happen later on. We all thought we would die for our activities. But now we feel that we are not alone, that we are supported. We organized into an army. We have equipment – URALs, vehicles I mean. Light armored vehicles. We get normal weapons now, not like before when we were running around with hunting rifles and clubs that we picked up from someone. These are the benefits of getting more structured. We are becoming a government.”
According to various sources, this military restructuring started in late 2014. On whose initiative? Nobody talks openly about Russia’s role.
One fighter explained under conditions of strict anonymity: “It was a popular revolt, but the people are not an army. 20 battalions could not fight effectively. You have to create, build an army, impose discipline. And the top brass directing this whole process is Russian.” According to him, the help is not much: a few dozen or hundred: “They are everywhere and nowhere at the same time. Everyone knows, and nobody talks about it.”
Struggling to find money
Russia restores buildings damaged by war
According to France 24, Russia is paying for the restoration of buildings damaged by the war, which is drastically needed by the civilian population. A “DNR” Commission draws up precise list of materials that people need. They have already promised to repair some 3,700 houses.
Denis Mourinets, who runs the largest construction firm in Donetsk, Design+, tells about the shipment of new windows from Russia that he received to repair a school. They were delivered by rail, but loose construction materials are brought in lorries, 100-300 tons at a time.
According to the “DNR construction ministry,” the paperwork is all centralized, and the Donetsk company Trust Donbas Story sends orders to Russia, receives and distributes the cargoes.
As Russia stopped short of recognizing the breakaway republic as independent, money can’t be transferred from the “DNR” directly to Russian banks – a headache for companies seeking to pay for imports from Russia. So, a scheme was developed with the help of another separatist state, one Moscow had recognized, South Ossetia: money is transferred from Donetsk to the breakaway territory in Georgia, and from there – to Russia. In Russia’s eyes, this scheme is legal.
But this is bureaucratically difficult. Viktor Stepanov, director of Donetsk’s largest market, explains: a national credit society had been created. You can put money on it in Donetsk and receive it in Moscow. The Russian companies with which “DNR” entrepreneurs work can open an account in this society, but the uncertainty of doing business with a territory at war scares many Russian companies away.
“DNR” attempts to raise money by nationalizing the market
At the market Viktor manages, war has taken its toll on business – trade activity fell by 90% since the war started. But Viktor Stepanov has a greater worry – nationalization. The “DNR” authorities passed a law declaring that this market should become state property. They offer compensation, but Stepanov says the whole process is illegal:
“It’s fully a raider seizure- all the markets are being seized like this. Armed people arrive at the market and place the administration outside of the door. And finito. Then people go to court, but it ‘s pointless.”
At the meeting of the council on nationalization, Andrey Melnikov, head of the “DNR Supreme Council” press service, explains that “DNR’s” “Russian brethren” regularly take part in the meetings, give advice, recommendations, other support. “Under the conditions that we have, we hardly would have survived without support,” he adds.
Chairman of the commission for the nationalization of market in the “DNR” colonel Sergei Zavdoveev tells that nationalization is a forced measure to bring money into the “republic’s” coffers: “The benefactors that are helping our republic aren’t made of rubber. This money will end. We need to launch ourselves. We can’t be parasites and live at the expense of others. For this we create the necessary laws and launch our enterprises, to create our budget and not be dependent on anybody.”
He talks openly about unnamed benefactors, but the “DNR” finance ministry won’t go even that far. It told the journalists by email that the budget was funded entirely by local taxes and charges.
For many in Donetsk, it is an open secret, but at the official level, the veil of secrecy remains firmly in place.
- Putin and Russia both far weaker than many think, three analysts say
- Putin likely to expand Russian invasion of Ukraine in January, Felgenhauer says
- Russian military analyst: The forces in Donbas are Russian Army
- Ukrainian military intelligence identifies top Putin’s generals conducting war in Ukraine