The depth of the economic crisis in the “People’s Republics” was highlighted by a bitter strike over unpaid wages in one of its biggest steel factories. There were also fresh reports of systemic divides between Donetsk and Luhansk. While the drive for integration with Russia continued overall, there were some marked nuances in the education sector. The COVID-pandemic also continued unabatedly amid signs that the vaccination campaign has come to a halt.
Metal workers’ strike continues
Low demand for steel and short supply of raw materials continued to trouble the economy in both “People’s Republics”. The dire situation was made worse by the financial woes of Vneshtorgservis, the secretive holding which controls some of the largest plants since they were seized by from their Ukrainian owners in 2017.
Workers at the Alchevsk Metals Factory, by far the biggest plant in the “LNR”, continued a strike that began in late April in order to get wages that have been unpaid since December. Vneshtorgservis executives apparently managed to prevent a planned march to Luhansk on 12 May (“Republic Day”) but failed to reach an agreement that would end the strike.
The ongoing labour dispute was nowhere mentioned in official media (the Alchevsk plant has not been mentioned by the official LITs news site since December 2020), but according to the “Secrets of the Lugansk Republic” Telegram channel, executives had offered to pay workers 120 per cent of at least one outstanding monthly wage. However, the strikers refused, asking for 170 per cent instead.
The anonymous channel reported on 14 May that workers had accepted an offer to get their January wages this month plus an extra payment in June. Workers at the plant’s railway department only accepted after executives threatened to redirect their raw material to the Yenakiive Metals Factory in the neighbouring “DNR”. That factory, which also employs thousands of workers, is apparently standing still since March, and workers have gone unpaid for 5 months, the Telegram channel reported, citing an unnamed user.
The dire economic situation and widespread wage arrears were also highlighted in an article published by the Russian Moskovsky Komsomolets newspaper on 14 May. The article quotes Moscow-based analyst Denis Denisov, who is originally from Donetsk, arguing that the “systemic wage crisis” in the metals sector is a consequence of the excessive secrecy in the “People’s Republics” economies: “The secrecy is so big that even economic actors inside the “republics” cannot themselves say who is responsible for what,” Denisov is quoted as saying.
Vneshtorgservis is thought to have been set up by the Kremlin and controlled by former Ukrainian businessman Serhiy Kurchenko, a close ally of former Ukrainian President Viktor Yanukovych, both of whom are based in Moscow. The company’s financial troubles triggered more speculation that Russia is preparing to hand over more factories to new owners.
Reports in March suggested that the Donetsk Metals Factory (known by its Russian acronym DMZ) has been handed over to Igor Andreev, a Donetsk businessman who owns food and retail companies, including a pelmeni plant. On 21 May the “Secrets of the Lugansk Republic” Telegram channel speculated that the Alchevsk plant might handed over Andreev, too.
The “LNR” saw two major strikes last year, when workers in two coalmines demanded to get outstanding payments (see our Annual Report 2020).
Frustration over disputes between Donetsk and Luhansk
The gloomy economic situation was aggravated by reports of growing unease in Moscow about the situation in the “LNR”. A report published on 14 May on the ritmeurasia.org website – a resource devoted to “Eurasian integration” – notes that growing alienation between Luhansk and Donetsk complicates Moscow’s efforts to run the “republics” according to its tune.
The report argues that bureaucratic hurdles like customs and bureaucracy between both “People’s Republics” now ensure that people from Donetsk are treated as foreigners in Luhansk and vice versa. The de-facto closure of the border between the two since the pandemic’s onset last year and the failure of “LNR” leader Leonid Pasechnik to show up at a conference in Donetsk in April is presented as evidence that both leaderships have fallen out with each other.
The report came on the heels of an 11 May post by the “Secrets of the Lugansk Republic” Telegram channel, which suggested that inspectors from Moscow expressed their dissatisfaction during a visit to Luhansk. As examples, the anonymous channel singled out the fact that “LNR” laws have been drafted on the basis of Ukrainian ones, while many “DNR” are based on Russian ones. It added that the inspectors had even squabbled with local Russian officials, who serve as Moscow’s permanent lieutenants (”curators”).
In a possible sign that Moscow is eager to mitigate any strife between Donetsk and Luhansk, “DNR” leader Pushilin made a trip to Luhansk, where he called for “integration with Russia” during a speech marking “Republic Day” on 12 May.
The fact that Moscow has chosen to set up two “People’s Republics” despite demands from nationalists to unite and/or annex them has been explained by the need to adhere to the Minsk agreement at least in paper. The three-part document brokered with France, Germany and the Organization for Security and Co-operation in Europe (OSCE) in 2014 and 2015, stipulates that Ukraine should regain control over the whole territory of both the Donetsk and Luhansk regions after the areas currently not under government control have been granted political autonomy.
However, visible divides between both “Republics” appeared already back in 2017, when “DNR” armed formations played a decisive role in the coup in Luhansk which ousted “LNR” leader Igor Plotnitsky (see Annual Report 2017).
More russification in the education sector
Meanwhile, the separatists continue to propagate their goal of maximum integration with Russia in the education sector. On 24 May the “DNR” claimed that by 2022 almost all graduates of Donetsk Technical University will receive diplomas that are recognized in Russia. The university currently has about 8,000 students. A similar path was chosen for schools. In March, the Donetsk separatists said that the Russian “Unified State Examination” would fully replace the previous final exams within two years.
The ”LNR” has also said that its universities issue Russian-style diplomas. However, the Luhansk separatists have been reluctant to introduce Russian final exams at school level. Separatist leader Pasechnik said in February that scientists should decide if this was necessary.
A report by the Kyiv Post published on 20 May highlights how teenagers are being relentlessly exposed to anti-Ukrainian propaganda as schools have replaced their Ukrainian textbooks and curricula with Russian ones.
Death toll from the pandemic continues to rise
Despite the fact that separatist officials hardly mention it anymore, the pandemic continued to rage in the “People’s Republics”. The “DNR” health “ministry”, which releases relatively credible numbers, continued to report positive rates of ore than 30 per cent of COVID tests in its daily updates on Telegram.
As of 24 May, the Donetsk separatists reported a total of 37,317 cases and 2,787 deaths. Assuming a real population 1.1 million, this means a death toll of 2,533 per 1 million, almost as high as Czechia’s 2,800 deaths per 1 million people.
Taken on a weekly basis, the “DNR” numbers reveal a spike in the week between 10 and 16 May, when it recorded 3,136 cases and 180 deaths – much more than in the weeks before (1,155 cases and 77 deaths) and after (1,621 cases and 130 deaths). The most likely explanation is the 9 May victory day holiday and ensuing mass celebrations.
As before, the “LNR” reported suspiciously low figures. As of 24 May, the Luhansk separatists claimed a total of just 4,637 cases and 429 deaths – just a fraction of the “DNR” numbers. The “LNR” weekly figures do, however reveal a fresh rise in cases – with 149 during the week from 17 to 23 May, compared to 88 and 104 in the two previous weeks. Death numbers were falling, however, from 20 in the week from 3 to 9 May, to 11 and 8 respectively in the subsequent two weeks. Unlike the “DNR”, where Victory celebrations went ahead largely unhindered, “LNR” authorities had cancelled all events for 9 May save the military parade, citing the pandemic.
No signs of vaccinations
The “People’s Republics” rolled out a vaccination campaign with the Russian Sputnik V vaccine in February and March, but the campaign has largely subsided after separatist leaders announced in April that all members of their military formations had been vaccinated. There is no reliable information of how many doses have been delivered and applied so far (see Newsletter 87). The “LNR” said in April that 45,000 people have been vaccinated at least once, including 30,000 who already received two shots – less than 5 per cent of an estimated population of 800,000.