Published On: Tue, May 5th, 2015

Ruble Takes Over Eastern Ukraine

Russian Separatist

A pro-russian separatist blocks a government building in Donetsk.

Forget about gunfire exchange and face to face combat, a new trend is taking over eastern Ukraine, the Ruble. Many markets, gas stations, bus lines, etc in Donetsk, the main city affected by conflict has started using only Russian currency instead of the Ukrainian hryvnia. Rebels in camouflage uniforms are using Russian money, so shop owners all over the city decided to make them feel more comfortable.

The new “monetary system” in this region only shows how difficult the situation is and how the eastern part is getting more and more distant from its country. Even with a ceasefire and peace agreement signed by Germany, Russia and France there is no clear picture as to when the war struck country will return back to normal. With separatists remaining silent and without any clear plan what they will do if new issues arise, chances of more pro-Russian activities of this kind in the ex-Soviet region seem more likely to happen.

Cliff Kupchan, Eurasia Group chairman warned “The increasing use of the ruble is yet another sign Russia’s going to keep de facto sovereignty over the territory it and the separatists control.”

This scenario has been already seen in some other Russian backed rebels. For instance, both Georgia’s Abkhazia and South Ossetia regions and Moldova’s rebel Transnistria had the same outcome after rising against its own government. The ruble was taken as the official currency which after some time turned in separation.

Even with the ruble plunging against the dollar people had no other choice. With their own currency being one of the weakest in the world the ruble took power without opposition.

When Russia annexed Crimea, the Black Sea peninsula last March they immediately introduced their own currency to the people of Crimea.

Even if people of Donetsk want to use Ukrainian money it’s impossible. Their region has been under siege for too long and there are no more hryvnia available, not even in ATMs of banks. So people have to travel to other cities however taking a trip at this point is not a very smart decision.

The Ukrainian government is causing a problem as well, declining to send money to the eastern areas. Their decision came as a great excuse for rebel leaders to conduct the ruble with ease. Andrei Purgin, the Donetsk People’s Republic leader said they had to do something and make a new currency policy. In his words this new system will also increase the need for Russian goods in Donetsk, which is a great thing for him as a pro-Russian.

For now the ruble is just taking its hold in Donetsk, but as pensions have also started cashing out in Russian currency it’s highly possible it will become the official currency of the DPR.

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