Putin Builds 'New Russia' in Occupied Ukraine: How He Integrated the Annexed Territories into the Russian Economy
Russia has embarked on a sweeping transformation of the occupied territories in eastern and southern Ukraine, investing billions in infrastructure projects and resource exploitation, indicating a strategy of long-term integration, not temporary control, the Kyiv Post reports.
Mariupol, four years after the Russian invasion PHOTO EPA-EFE
Massive investments in roads, railways, ports and natural resources tie these regions ever closer to Russia's economy and supply chains, while supporting Moscow's military operations by facilitating the movement of troops and supplies. According to a Reuters report, the scale and sustainability of these efforts suggest that the Kremlin has no intention of returning the territories as part of a possible peace deal.
A new infrastructure in the occupied Ukrainian regions
The investments are intended for the occupied areas of Donetsk, Luhansk, Zaporozhye and Kherson regions, as well as neighboring Russian territories. Based on satellite images, official documents and interviews with Ukrainian officials and former residents, Reuters found that more than 2,500 kilometers of transport infrastructure – railways, highways and roads – were built, repaired or upgraded between 2022 and 2025.
One of the main projects is the so-called “Novorossia” railway network, including a planned 525-kilometer line launched in 2023 to connect the occupied territories. Satellite images have identified a new 60-kilometer section between Novoselivka and Koloski in the Donetsk region, north of the city of Mariupol.
In parallel, the “Novorossia” highway is part of a larger project of 1,400 kilometers, the “Azov Ring”, designed to connect southern Russia with the occupied Ukrainian regions and annexed Crimea. Russian officials said the route would be completed by 2030.
Ukrainian intelligence officials emphasize the military role of these projects. Vadim Skibitski, deputy head of the HUR military intelligence agency, explained that “the critical consideration for the Russians is infrastructure, namely transport infrastructure.”
Expenses indicate long-term projects
On a financial level, Russia's commitment is significant. Moscow has allocated about $11.8 billion in federal funds to the four occupied regions between 2024 and 2026 under priority development programs — nearly three times more than the total allocated to about 20 other Russian regions under similar programs.
Russian President Vladimir Putin presented these territories as “Novorossia” (“New Russia”), a term with historical imperial roots and embraced by nationalists today. Marking the anniversary of what Moscow calls the “reunification” of the regions, he described the program as a revival of “our ancestral Russian historical lands”.
Kremlin spokesman Dmitry Peskov told Reuters that these territories were “subjects of Russia” and “an integral part of the Russian Federation”, adding that this was “enscribed in the country's constitution”.
For Ukraine and its Western allies, these statements are a clear signal of the intention to permanence the occupation. Karolina Hird, of the Institute for the Study of War, made the same assessment.
“The way Russia invests heavily in the industry and economy in occupied Ukraine, in order to profit from the occupation, also implies a financial entanglement of Ukraine with Russia.”
The ports are back in business
Russia also acted to relaunch the occupied ports on the Sea of Azov. Mariupol and Berdiansk were included in the list of ports open to international ships in August, a decision condemned by Kiev.
Vladimir Putin has war plans until 2026, revealed Bild FOTO
Dredging and channel deepening projects are underway to allow access for larger ships, with contracts worth more than $13 million announced from 2023. Satellite images of Mariupol show new port facilities and coal stockpiles ready for export.
Two dock workers described an increase in activity, citing ships carrying grain and coal, although traffic remains below prewar levels.
Ship tracking data shows that between July and November last year, 18 cargo ships operated by Russian and foreign companies left these ports, most of them bound for Turkey. In 2024, however, no naval movement was recorded.
Customs data also indicates that between March 2022 and March 2025, at least 508,500 tonnes of coal and related products, worth $13.2 million, were exported. Buyers include companies from Turkey, the United Arab Emirates, India, Indonesia, Egypt and Algeria.
Natural resources, a source of profit
In addition to infrastructure and trade, Moscow uses state tenders to transfer control of Ukraine's natural resources to Russian companies. Documents reviewed by Reuters show the sale of mines, quarries and farmland.
An important case is the Bobrikivske gold deposit in the Luhansk region; the mining rights were sold for $9.7 million. The deposit contains approximately 1.64 tons of gold, valued at nearly $260 million.
Hird pointed out that while the occupation is costly, exploiting the resources could change the economic balance: “This can tip the balance to the point where the occupation actually becomes profitable for Russia.”
A model inspired by Crimea, but accelerated
Ukrainian officials explain that the strategy follows the pattern that emerged after the annexation of Crimea in 2014, only at a much faster pace. Olha Kurishko, the representative of the Ukrainian president for Crimea, explained that Russia has achieved in the occupied territories as much as in 10 years in Crimea: “They did everything very quickly, spent much more money and took things to another level compared to what they did in Crimea. Crimea was their training ground.”
Russia exported more than two million tons of Ukrainian grain from the occupied territories in 2025
Ukrainian President Volodymyr Zelensky dismissed the idea of genuine development, describing the situation to Reuters as militarization in disguise: “It doesn't look like a modern resort. Everything is militarized.”
A challenge to a possible peace agreement
Infrastructure projects in the occupied territories are underway as international efforts to end the war continue. However, the physical and economic transformation of the occupied regions complicates the prospects for an agreement.
The new transport routes reduce Russia's dependence on the Crimean Bridge, frequently targeted by Ukrainian attacks, and facilitate the movement of troops and goods.
For Ukrainian officials and analysts, the bottom line is clear: Russia is not just occupying territories, it is reshaping them for long-term integration into the Russian state and war effort. The longer this process continues, the more difficult it will be to reverse, Kyiv Post writes.
