COVID-19 epidemic and the quarantine restrictions associated with it caused the most painful blow to small and medium-sized business in the "DNR"-"LNR".
This in turn curtailed the already modest ability of the Donetsk and Luhansk puppet regimes to maintain their existence at the expense of local resources.
Thus, coronavirus further increased the dependence of CADLO on Russian transfers from the budget.
Ahead of the planet…
The leadership of separatist enclaves was not ready for epidemic challenges. As far as is known, the emergency preparedness regime was declared in the "DNR"-"LNR" from March 14.
It provided for the closure of demarcation line with the areas of Donetsk and Luhansk oblasts, controlled by official Kyiv and border with the Russian Federation in a section controlled by the militants.
As a result, about 300 thousand old people only in the Donetsk oblast lost the opportunity to receive their legal pension on Ukrainian territory.
In addition, the departure of labor migrants to work in Moscow, Rostov, Krasnodar, Taganrog, etc. stopped. It also hit the income of the remaining small population.
As a result, the already low purchasing power in the "republics" falls to the level at which the implosion of the economy begins.
An indirect confirmation of the fall in business activity can be a comment of an employee of one of the Donetsk advertising agencies for the media. He reported in mid-May that he earned… 2600 rubles ($36.5) in 2 weeks.
Moreover, "head of the DNR" Denis Pushilin earlier stated that quarantine would not be introduced in the "republic" not to ruin the economy.
However, despite the absence of official prohibitions, a number of large industrial enterprises was still forced to completely stop at the end of March – including the Yenakiieve and Makiivka metallurgical plants.
The reason was lack of the demand for metal on the part of industry in the EU countries, paralyzed by strict quarantine.
Classes in schools continued and mass propaganda events were held in CADLO as if nothing had happened. For example, Russian Language Day was celebrated on June 6 with great pathos and on a large scale.
In a word, propaganda is clearly put at the forefront, but not the interests of the economy or human health.
Therefore, the presence of the first case of coronavirus in the "DNR" was recognized only on March 31, in the "LNR" – on March 30. As a result, the time for a quick response was lost.
The "DNR" strengthened the high-alert mode since April 2 and introduced mandatory self-isolation for citizens over 65 years of age.
The work of sports centers, cafes, etc. on weekends was allowed until 15.00. The restrictions did not apply on weekdays, the markets worked all the time according to the usual schedule.
The ban on work in the shopping centers touched only entertainment venues: bowling clubs, billiards, etc. Shops continued to work.
Thus, compared with the practice of most countries, the measures introduced could be considered "semi-quarantine". And it did not really help: the incidence was growing.
In an interview with Russian media on April 8, the "head of the DNR" indirectly acknowledged the presence of problems in the medical field: lack of tests for coronavirus, deficiency of medical masks and other protective equipment, as well as a catastrophic lack of medical staff.
"Thanks to the help of Rospotrebnadzor of the Russian Federation, which twice handed the tests over to us, we were able to make and confirm the diagnoses", - D.Pushilin stated.
There is no need to talk about successful response to the epidemic under such conditions.
It is not surprising that even according to official data of the "DNR Ministry of Health", mortality from coronavirus in the "republic" is higher than in Ukraine and the world on average.
As of June 26, the "DNR" recognized the presence of 1094 patients with COVID-19 and 68 deaths, i.e. the death rate was 6.22%.
There were 44998 patients and 1173 fatal cases in Ukraine as of July 1, the death rate was 2.6%. In the USA as of June 28 – 2596537 and 128152, respectively, 4.94%. Worldwide average showings as of June 28: 10082618 and 501309, 4.97%.
However, on June 19, the "DNR" lifted quarantine restrictions for celebrating school leaving parties for one day, and on June 24, "military parades" were held in the "republics" with a large crowd of people…
Having faced with the disruptive influence of epidemic on economic life, the leadership of the "republics" could not offer sane measures to support small and medium-sized businesses, their main tax base.
Among the decisions taken, cancellation of the rent for the quarantine period and the payment of benefits in connection with the loss of work due to quarantine can be highlighted.
However, only those registered in the temporary disability insurance fund can claim for such benefits according to the "decree" of D.Pushilin of March 15.
That is, the officially employed. It is clear that such people in the "republics" can be counted on fingers: the vast majority of entrepreneurs are forced to work in the "shadow".
So, neither they themselves nor their workers can claim even the meager payments offered by the self-proclaimed "authorities" in Donetsk and Luhansk.
For comparison: the Cabinet of Ministers of Ukraine increased the minimum allowance for the unemployed from 650 to 1000 UAH (from $24 to $37) per month for the period of quarantine – it can be received, including by those who had no official employment.
The opportunity to receive benefits was also given to self-employed individuals (single tax payers of groups 1 and 2) who lost their source of income due to quarantine: UAH 1779 ($66) and 2218 ($82), respectively.
In addition, on the proposal of the Verkhovna Rada, the Cabinet of Ministers passed the law prohibiting banks from fining companies and enterprises for delay in payments on previously taken loans.
And finally, one-time extra payments to pensioners in the amount of 1 thousand UAH ($37) could somehow support the consumer demand during the period of strict quarantine.
As noted, the Donetsk and Luhansk entrepreneurs and pensioners did not see any of the above measures. The exemption from rent was also a fake.
Instead of a direct ban on its collection during quarantine, D.Pushilin and his colleagues proposed a more complex mechanism: reducing tax liabilities on the amount of rent.
That is, the entrepreneurs found themselves in a situation where they still need to pay rent, despite quarantine of the business.
So that later, the "DNR Tax Office" will reduce the payments. It is clear that the entrepreneur loses the working capital necessary to maintain the business in this case. And will be forced to scale down the work.
It remains to add that payments to medical personnel in the "DNR" were approved only in the first half of June, when the first wave of the epidemic in the world was already over.
The amount of payments was approved in the amount of 20-100% of the salary. Whereas in Ukraine, the doctors involved in the treatment of COVID-19 receive a 300% surcharge.
Quarantine in the service of the regime
The coronavirus crisis has its positive points for the ruling regimes in Donetsk and Luhansk.
Firstly, there was a reason to ask (and get) increased funding from Moscow – under the pretext of the need to fight the epidemic.
It is obvious that in the best case scenario, only a small part of the additionally allocated money will reach the CADLO hospitals in the form of medical masks, gowns, glasses and overalls. The rest will be safely "acquired" by the "republican" leaders and their immediate circle.
Secondly, the self-proclaimed "authorities" were given the opportunity to "press" the local business in, allegedly as part of efforts to comply with quarantine restrictions.
The first messages of raids of the "DNR police" with checks and multi-million fines for entrepreneurs appeared on social networks already in early April.
According to the official data of the "DNR MIA", 327 stores were inspected and 16 fines of 1.44 million rubles were issued only during April 2-6.
This brings the separatists nothing good in the long run – the business reacts to pressure by closure. But no one among the Donetsk and Luhansk ruling elites thinks about the future within more than 1-3 months.
Thirdly, the leadership of the occupation administrations now has an effective scenario for suppressing mass protests of the population, driven to despair by the plundering policy.
This scenario was successfully "run-in" in early June during the suppression of mining protests in Antratsyt and the nearby village of Dubivskyi. Quarantine was urgently announced in the city and the village, it was blocked by the illegal armed formations.
City and suburban transport was also stopped, mobile communication was shut off and wired Internet was disconnected.
Of course, this had the desired psychological effect on the protesters, forcing them to complete the protest in a week.
It is clear that a similar reaction from the "authorities" should be expected in the future in the case of new protests – for which there are always good reasons in the realities CADLO.
Vitaliy Krymov, OstroV