Developments in “DNR“ and “LNR“: 17 October – 7. November 2018 (Newsletter 47)

Written by Nikolaus von Twickel


In the run-up to the November 11 elections, “DNR” leader Pushilin apparently surrendered his say over economic policy to a little-known industrialist linked to the secretive Vneshtorgservis holding, whom he appointed “Prime Minister”. The run-up to the November 11 elections was characterized by carrots and sticks – cheap fuel for voters and arrest for critics.

Donetsk gets a phantom „prime minister“

Interim separatist leader Denis Pushilin on October 18 appointed Alexander Ananchenko as the “DNR” Prime Minister with the official job title “chairman of the cabinet of ministers”. Ananchenko, who served as one of three deputy prime ministers since September 7, is the first person to hold this job without being leader of the “People’s Republic”. Before the appointment, Pushilin held both positions, just as Alexander Zakharchenko had done until his assassination on August 31.

The division of the two offices is significant because it signals that Pushilin might have considerably less authority vis-a-vis Moscow than Zakharchenko did – especially with regard to running the local economy. Alexander Khodakovsky, the former separatist commander and critical blogger, wrote in a November 6 social media post that Russia had taken away control over the economy from Pushilin: “Denis is in the most unfortunate situation (..): his leadership has been castrated but everybody tasks him to do everything.”

Little is known about Ananchenko’s biography, and official separatist media published no photos of him, even leaving a blank space on the official government website. According to the DNR Live portal, he previously served as an advisor to the CEO of Vneshtorgservis, the secretive holding company that has taken control of some of the biggest local industrial assets.

Vneshtorgservis CEO Vladimir Pashkov, a Russian citizen and former vice-governor of the Irkutsk region, appeared together with Ananchenko, whose face is only partially visible, in a rare photo on October 24, when his company and the “DNR” government signed an agreement in which the holding promises to pay 150 million roubles (2 million euros) per year into a social fund. According to Khodakovsky, Ananchenko used to work for a large Russian company before coming to Donetsk before 2014, where he headed a holding for local manufacturers. “He is an economist with a rich experience,” he wrote in a October 24 blog post.

Will Vneshtorgservis expand?

Vneshtorgservis first appeared in the spring of 2017, when the separatists seized all previously Ukrainian-run local industry. However, during the de-facto nationalization, only nine out of 43 industrial assets were handed over to Vneshtorgservis. Control of the remaining 34 was given to eleven separatist “ministries”.

In September, a Radio Liberty report quoted an unnamed source in the “DNR” government as saying that all state-run enterprises should be put under Vneshtorgservis’ control. The report, which has not been confirmed so far, also linked the secretive company to Serhiy Kurchenko, a shady businessman from Donetsk who became influential under former Ukrainian President Vyktor Yanukovych and is believed to be exiled in Russia.

Vneshtorgservis is believed to be based in South Ossetia. The small Russian-backed separatist region in Georgia is the only entity worldwide that has recognized the “People’s Republics”. This opens the possibility for Russia, which recognizes South Ossetia as an independent state, to trade with Donetsk and Luhansk without having to recognize them or risking Western sanctions (see Newsletter 22).

South Ossetia is also the home of the first foreign bank that was allowed to operate inside the Donetsk “People’s Republic”. The separatist Central Bank said on October 26v that it had licensed the Mezhdunarodny Rashchyotny Bank (MRBank) to open a branch in Donetsk. The bank, registered in the South Ossetian capital Tskhinvali, serves as the official correspondent bank for both the Luhansk and the Donetsk “people’s republics”, according to statements by the respective “state banks”. Ukraine’s Security Service SBU said in February 2017 that Pashkov was using this bank to secretly funnel money from the Russian budget to the Luhansk “People’s Republic”.

Gifts and arrests prior to the elections

Meanwhile, official media in both “People’s Republics” continued to back the candidacies of the incumbent leaders Denis Pushilin and Leonid Pasechnik by publishing positive stories about them and their backers on a daily basis. Moreover, the separatists in both Donetsk and Luhansk announced significant reductions in fuel prices from November 1. In Luhansk, the local separatist-run mobile operator “Lugakom” promised to give 100-rouble top-up vouchers to the first 300,000 voters on election day.

Pushilin and Pasechnik are expected to win the November 11 elections by wide margins, not least because both are running solely against “technical candidates” with little prominence even locally. In Donetsk, credible opponents including ex-commander Alexander Khodakovsky and onetime separatist leader Pavel Gubarev were barred from running.

The elections were not only condemned by Ukraine and the West as a violation of the Minsk agreement, which does not mention “People’s Republics” and stipulates holding local elections under Ukrainian law, but also criticized by local activists. Roman Manekin, a well-known journalist and analyst was apparently arrested on November 1. Also arrested was Alexander Smekalin, a leftist activist who reportedly planned to hold a public protest against the elections in Donetsk on November 3.

Manekin had campaigned against the elections and accused Pushilin of usurping power in the “DNR”. He launched an online petition in which he lambasted the planned vote as „unconstitutional“ and saying that they only legalize the “putsch” after Zakharchenko’s death.

Manekin reappeared on November 5, when he started posting again on his Facebook and vkontakte pages. He did not explain his disappearance, saying merely that he would write about it after November 11. The journalist had already disappeared one year ago – in September 2017 he was apparently briefly arrested after criticizing the then separatist leadership on social media (see Newsletter 24).

Ukrainian activists accused the separatists of forcing public sector and factory workers, as well as students to vote for the “right” candidate. In the “LNR”, authorities threatened workers and students to investigate how people voted and to impose sanctions against those who did not vote for Pasechnik, according to Irina Nikulnikova from the Lysychansk-based Eastern Human Rights Group.

Foreign observers start coming in

As was the case in 2014, the separatists made efforts to present the elections as internationally recognized by presenting foreign observers. The Donetsk Election Commission said on November 7 that 48 observers from 14 countries had been accredited – among them Germany, France and Turkey. The Luhansk Commission said a day earlier that it was expecting 45 observers from 11 countries, including the United States, Brazil and Syria.

Naturally, none of these “observers” come from international election observation institutions. Practically all of them are supporters of the separatists on private visits. One of them, Dutchman Pascal Hillebrand, has actually served as a volunteer fighter for the “DNR”.