Moscow tightens economic grip on southern Ukraine

• The owner of a foundry in Berdyansk, Ukraine’s southernmost city, speaks to AFP.
• Alexei Andrusenko is happy to have kept all his employees after Moscow gained control of the city.
• Concerns over depleting stocks of raw materials that come from neighbouring Mariupol.

Little appears to have changed for Alexei Andrusenko, the owner of a foundry in Berdyansk, southern Ukraine city, who is content to have kept all of his employees after Moscow gained control of the city.

Every morning, Andrusenko and his 50 or so employees arrive at the grey building on the outskirts of the port city on the banks of the Sea of Azov.

But now the factory’s produce — once sold to Ukrainian or international steel groups — will likely be bound for Russia and Kremlin ally Belarus.

Since Russia sent troops into Ukraine on February 24 and captured territories in the south of the pro-Western country, Moscow has sought to strengthen their economic ties.

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“We have no other supply chain,” Andrusenko told AFP during a press trip organised by the Russian army.

He also raised concerns about the depleting stocks of their raw materials that previously came from neighbouring Mariupol, another key Ukrainian city on the shores of the Sea of Azov.

Andrusenko says they are “interested” in working with the Alchevsk steelworks, a large factory with over 10,000 employees that since 2014 has been under the control of pro-Russian separatists of eastern Ukraine’s Lugansk region.

Before Russia sent troops to Ukraine, these deals would never have been possible.

“The most important thing is to build the right supply chain and to be able to work,” Andrusenko said.

Port ‘100 percent ready’

The southern Ukrainian regions of Kherson and Zaporizhzhia have been largely under Russia’s control since the first weeks of Moscow’s military campaign, and are now being forcefully integrated into Russia’s economy.

The main economic asset of Berdyansk is its port, which has remained mostly intact unlike that of Mariupol, the scene of a devastating siege.

In late March, an attack attributed to Ukrainian forces reportedly sank a Russian warship in Berdyansk waters, but today the port is “almost 100 percent ready” to ship grain, says Alexander Saulenko, the Moscow-installed head of Berdyansk.

Ukraine has accused Russia and its allies of stealing its wheat, contributing to a global food shortage caused by grain exports blocked in Ukrainian ports.

According to Saulenko, the grain will soon be shipped out from the port, since silos will need to be freed up for the new harvest.

“We have prospects for contracts with Turkey. Russia is an agricultural country, it has enough grain of its own so it would be more profitable to trade elsewhere,” Saulenko said.

But the most tangible influence of Moscow on the local economy is the introduction of Russia’s national currency last month.

“Now you can buy everything in both rubles and hryvni,” Ukraine’s currency, the pro-Russian official added.

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According to him, Berdyansk received some 90 million rubles ($1.7 million) from Russia, but state employees are still paid in hryvna and it is impossible to withdraw cash rubles from ATMs.

Ties with Russia resuming

Neighbouring Melitopol, about 100 kilometres (60 miles) west of Berdyansk came under Russian control on March 1, and also uses the Russian ruble that is delivered from Crimea, the Black Sea peninsula Moscow annexed from Ukraine in 2014.

“It’s a two-currency zone… The ruble is delivered thanks to the open road to Crimea. Commercial ties with Russia, interrupted after 2014, are resuming,” says Melitopol’s pro-Russian mayor, Galina Danilchenko.

“People are happy to accept the ruble… I don’t see any problems,” she added, but for reporters on the press trip it was difficult to speak freely with the city’s residents.

Sergey Grigoryev, a 41-year-old worker at the Berdyansk foundry, says he just wants to get paid.

“In cash, not to my card, because you can’t withdraw from it. In hryvnas or in rubles — I don’t care”.