By Galina Korol | 2024-04-25

KYIV -- Inflation, unemployment and widespread corruption are now hallmarks of Ukrainian areas occupied by Russia, say observers.

Every day the occupiers are turning inhabitants' lives into a struggle to survive.

An economic crisis is gaining momentum in the territories occupied by Russia in Kherson province, according to Yuriy Sobolevsky, first deputy chairman of the Kherson Provincial Council.

"The level of medical care, the level of utilities, the economic and humanitarian conditions -- everything has deteriorated significantly from what it was before the full-scale invasion. And the vast majority of [residents] remember perfectly well what it was like before and what it's like now," Sobolevsky said.

Prices "bite" for the most basic necessities under the occupation, he said.

"Prices for goods not produced in Kherson province are, on average, even higher than prices in Crimea, and prices in Crimea are higher than in most Russian provinces. So, it's understandable that inhabitants of the temporarily occupied territories find it difficult to buy the needed amount of all these goods and essentials," said Sobolevsky.

Andrey Orlov, a Melitopol resident and director of the Center for Strategic Development of Territories, also noted the increased prices.

"The presence of a large number of [relatively well-paid] soldiers is a factor, which has a very bad effect on the wallets of local residents of the temporarily occupied territories. We have observed this inflationary trend in these territories for two years," said Orlov, as quoted in an article published on April 12 on Radio Free Europe/Radio Liberty's News of the Azov Region website.

"The situation in these territories today is starting to resemble news from the remote parts of Russia itself. That is, from depressed regions of Russia, where without certain state support, [residents] are simply beginning to leave," Orlov told News of the Azov Region.

Unemployment and delayed wages

Residents struggle to survive, since most of their savings have simply run out and there just is no money -- after all, finding a job is no small feat, said Sobolevsky.

"As for benefit payments, there are always some delays or they have problems of some sort," said Sobolevsky.

Only agro-businesses are operating, and in significantly smaller volumes than before the invasion, he said.

"The public sector is also working -- collaborators or those who went to work at some utilities, where they receive wages."

However, even those who are employed started earning less after the so-called presidential elections in Russia in March.

"I observe that payroll costs in the occupied territories decreased sharply. If occupation schools and other government-funded institutions previously paid two to three times more than [in Russia proper], then after the so-called presidential elections, these expenses shrank to Russia's national level and now [workers] get completely different wages," Sergei Danilov, deputy director of the Center for Middle East Studies, told Kontur.

Furthermore, workers often complain that payment of wages can be delayed two months or longer without reason, according to the Center for National Resistance, a website created by Ukrainian special forces to support and coordinate all who are fighting for the liberation of occupied Ukrainian lands.

For example, activists with Ukraine's Cyber Resistance have received evidence of widespread unpaid wages for employees working for occupation agencies.

"Thanks to official documents of the so-called administration of Antratsyt district of the 'LPR' ['Luhansk People's Republic'], which are in Cyber Resistance's possession, more than 2,500 employees of schools, kindergartens, lyceums [middle schools], museums, cultural centers and utility companies" are owed "more than 19 million occupation RUB [$205,960] since 2022," said the Center for National Resistance in an April article.

Those arrears amount to an average of $82 per worker. Last year, the average monthly income in Russia was $756.

Corruption

Locals now must compete with Russian companies that regularly rely on migrant workers, especially for construction jobs.

"They [roads] are important to them [occupation authorities] from a military logistics perspective, so they invest money there," Danilov said.

However, local residents cannot earn money because only Russian companies perform all the construction in the occupied territories.

"Even those inclined to collaborate don't understand how it works because they [local entrepreneurs] aren't part of these 'food chains' that bribes get passed through, and they find themselves helpless, and they cannot compete," said Danilov.

"Attracting migrant workers does not at all contribute to the well-being of the local population," Dmitry Bashtovoy, a Mykolaiv analyst for Civil Network OPORA, an NGO, told Kontur.

Currently, only those "feeding at the trough" can make good money under the occupation, said Bashtovoy.

This effect is compounded by the "free trade zone" that Russia created in the occupied territories, he said.

The policy is officially aimed at increasing investment and growth, "but we see that this free economic zone most often includes enterprises that were either created by Russians, or were seized by Russians, or one way or another are in the orbit of the occupation authorities."

"According to our sources, under the guise of these economic reforms, money is being claimed, flows [of cash] are being controlled and [personal] enrichment is happening, in reality, both for the occupation authorities and for the top leadership of Russia," said Bashtovoy.

"Because of the war, Russia has rolled back the development of Ukrainian regions by several years," he added.

'The Crimean scenario'

What is happening in the Ukrainian territories that Russia has occupied since 2022 is reminiscent of the Crimean scenario, said Danilov, referring to the illegal Russian annexation of Crimea in 2014.

"At first, the [residents] were bribed, but later they realized that in reality everything looks completely different from what they were promised. These are exactly the words my sources are saying," said Danilov.

"What's more, there are instances when doctors traveled from Crimea to the newly occupied territories to treat patients. They warned the locals that this would happen. Some self-assured collaborators did not believe them, but life has proven that the situation is the same."

Indeed, residents living under occupation initially struggled to believe the gloomy "Crimean textbook" scenario would come to pass, said Sobolevsky.

"At the very beginning of the occupation, they [occupation authorities] gave anybody 200,000 RUB [$2,168] simply based on an application without having to explain your need for that money," said Sobolevsky.

"Later, to drive our children into the educational institutions that had been switched to the Russian curriculum, they ... gave out one-time grants for each child who went to study. All this money was allocated precisely to gain the loyalty of the population, but now all these payments no longer exist."

With the bribes now gone, "the narrative that the Russian world arrived and everything became good has stopped working," he said.