Russian Occupation Update, July 3, 2025

Author: Karolina Hird

Data cut-off: 12 pm ET, July 2

ISW's Russian Occupation Update tracks the activities that occur in the Russian-occupied areas of Ukraine. The Occupation Updates examine Russian efforts to consolidate administrative control of annexed areas and forcibly integrate Ukrainian citizens into Russian sociocultural, economic, military, and governance systems. This product line replaces the section of the daily Russian Offensive Campaign Assessment covering activities in Russian-occupied areas of Ukraine.

To read ISW’s assessment of how Russian activities in occupied areas of Ukraine are part of a coerced Russification and ethnic cleansing campaign, click here.

Key Takeaways:

• Russia is training Ukrainian children to become drone operators for future service in the Russian military or employment in the Russian defense industrial base (DIB).
• Russian occupation officials are using the threat of disconnecting residents of occupied Ukraine from mobile communications networks in order to coerce passportization.
• The Kremlin is introducing a “war risks” insurance program to encourage Russian construction and development in occupied Ukraine. Russian development projects are a core part of Russia’s efforts to permanently and irreversibly subsume Ukraine and complicate any future Ukrainian reintegration efforts.
• Russia continues efforts to steal Ukraine’s agricultural output for its own profit.

Russia is training Ukrainian children to become drone operators for future service in the Russian military or employment in the Russian defense industrial base (DIB). Occupied Luhansk Oblast-based media reported on June 30 that 20 children from occupied Luhansk Oblast took part in the regional stage of the “Pilots of the Future-2025” drone operation competition.[1] The Russian “Movement of the First” youth activism organization, the Russian Drone Racing Federation, and the Luhansk People’s Republic (LNR) Sports Ministry organized the “Pilots of the Future-2025” competition.[2] Participants of the competition, who range from seven to 18 years old, learn how to assemble, program, and control drones and compete against each other in drone obstacle races.[3] Competition winners will take part in the “Pilot of the Future-2025” final in Sochi, Krasnodar Krai, in the coming month.[4]

Russia has been gradually increasing the integration of Ukrainian children into its wider drone development, production, and operation ecosystem.[5] The Ukrainian Eastern Human Rights Group (EHRG) and Institute for Strategic Research and Security (ISRS) released a report in April 2025 that found that Russia has instituted drone training curricula for over 10,000 teenagers in schools throughout occupied Ukraine.[6] The report noted that Russia is trying to incentivize youth participation in drone operator training programs by “gamifying” the process and holding drone racing competitions—an effort which “Pilots of the Future-2025” clearly supports.[7] Drone operation has become a critical part of Russia’s military concept of operations in Ukraine, and Russian officials clearly understand that drone warfare will only grow in importance in future conflicts. Russia’s training of Ukrainian children to become drone developers and operators will prepare these children for future service in the Russian military and augment the Russian DIB’s drone production capabilities.

Russian occupation officials are using the threat of disconnecting residents of occupied Ukraine from mobile communications networks in order to coerce passportization. Kherson Oblast occupation head Vladimir Saldo announced on July 2 that the deadline for re-registering Ukrainian subscriber identity module (SIM) cards to Russian SIM cards has been extended to November 1, after which Russian mobile communications operators will gradually begin disconnecting the service of those who still have Ukrainian SIMs.[8] Saldo previously set the deadline for re-registration as July 1, but his administration has clearly failed to meet this timeline.[9] Russian law requires that all SIM cards be registered with a passport, and Russian occupation officials are now using this law in occupied Ukraine to force residents to receive Russian passports or risk losing access to mobile communications.[10] The occupied Donetsk Oblast-based “Phoenix” mobile communications operator announced on June 30 that it is beginning the process of confirming the personal data (citizenship) of its subscribers, meaning that only individuals who have registered SIM cards with Russian passports will be able to confirm their personal information and continue using “Phoenix” for mobile communications.[11] “Phoenix” is one of the few mobile operators active in occupied Donetsk Oblast, so residents are highly reliant on it for connectivity. The Ukrainian Resistance Center reported on July 1 that “Phoenix” installed over 70 stations in occupied Donetsk Oblast in May 2025 alone, spreading its influence and its ability to collect personal data while encouraging passportization.[12] SIM card registration is another sophisticated tool of Russian passportization efforts, as ISW has previously assessed.[13] Russia frequently withholds basic necessities from those who do not hold Russian passports, and the threat of losing connectivity is likely a powerful incentive for people to receive Russian documentation.[14]

The Kremlin is introducing a “war risks” insurance program to encourage Russian construction and development in occupied Ukraine. Russian Deputy Prime Minister Marat Khusnullin, who ISW previously assessed is closely involved with implementing Russia’s development policy in occupied Ukraine, announced during a meeting with Russian President Vladimir Putin on June 30 that Russia has launched a “program of insuring war risks for housing construction projects” in occupied Ukraine.[15] Khusnullin noted that the insurance program is intended to increase urban development projects in occupied areas and reported that Russia is also using “preferential mortgage” programs to increase demand for housing. Khusnullin’s statements confirm ISW’s recent assessments on Russian efforts to draw investment and encourage repopulation of occupied Ukraine.[16] The Kremlin ironically recognizes that Ukraine is an active combat zone due to the Russian invasion, but is reliant on Russian investment to build up occupied areas in order to incentivize Russian citizens to relocate to Ukraine. The Kremlin likely hopes that the war risk insurance program will assuage concerns from Russian businesses in investing in occupied Ukraine, which will lead to better urban development projects that seem more attractive to Russian emigres. Russian construction programs continue to be very active throughout occupied Ukraine—the Russian Institute for Unified Spatial Planning (EIPP), for example, announced plans on July 1 to build housing for nearly 7,000 people in occupied Novoazovsk Raion, Donetsk Oblast.[17] Russian development projects are a core part of Russia’s efforts to permanently and irreversibly subsume Ukraine and complicate any future Ukrainian reintegration efforts.

Russia continues efforts to steal Ukraine’s agricultural output for its own profit. A joint investigation by Slidstvo Info, KibOrg, and the Belarusian Investigative Center published on July 1 detailed illegal Russian grain exports from occupied Ukraine.[18] The investigation found that the Russian “Florence” company, which has links to Kremlin-affiliated former Ukrainian Verkhovna Rada Deputy Viktor Medvedchuk, has been involved in transporting grain harvested in occupied Zaporizhia Oblast to occupied Crimea for eventual export to Istanbul.[19] Slidstvo Info reported that the Russian Ministry of Agriculture oversees the logistical planning for grain export, and that Russian railway enterprises and companies such as “Florence” facilitate grain transfer throughout occupied Ukraine. A US intelligence report found that Russia stole 6 million tons of grain from occupied Ukraine by the end of 2022, and the Wall Street Journal reported that as of September 2024, Russia has sold nearly $1 billion in stolen Ukrainian grain to international markets.[20] ISW has recently reported on the Russian theft of Ukrainian grain and has assessed that Russian officials are taking steps to consolidate control over the agricultural output of occupied areas by effectively nationalizing agricultural assets.[21] Crimea occupation head Sergei Aksyonov reported on July 1, for example, that his administration is currently working on registering over 44,000 hectares of land for agricultural use.[22] Russia’s ability to extract resources from occupied Ukraine remains paramount to the Kremlin’s ability to generate a profit off the occupation.

[1] https://news-lnr dot ru/sport/2025/06/30/63570.html; https://lug-info dot ru/news/porjadka-20-junyh-pilotov-dronov-iz-lnr-uchastvovali-vo-vserossijskom-chempionate/

[2] https://lug-info dot ru/news/porjadka-20-junyh-pilotov-dronov-iz-lnr-uchastvovali-vo-vserossijskom-chempionate/

[3] https://fgdr dot ru/tpost/b3yxkd3jk1-vtoroi-sezon-pilotov-buduschego-startova; https://t.me/sprotyv_official/7243

[4] https://t.me/sprotyv_official/7243

[5] https://understandingwar.org/backgrounder/russian-occupation-update-april-14-2025

[6] https://drive.google.com/file/d/1WvNKzUm8WJIyRb2HgdMojLjzlNL2E2il/view; http://www.vpg.net.ua/fullread/737; https://understandingwar.org/backgrounder/russian-occupation-update-april-14-2025

[7] https://understandingwar.org/backgrounder/russian-occupation-update-april-14-2025

[8] https://www.herson.kp dot ru/online/news/6451662/

[9] https://t.me/SALDO_VGA/6580

[10] https://bratsk-raion dot ru/верхнее-меню/news/vedomstva_info/сообщения_прокуратуры/сим-карты-в-чем-опасность/#:~:text=продали%20сим-карту.-,Кодекс%20РФ%20об%20административных%20правонарушениях%20(КоАП%20РФ)%20предусматривает%20ответственность%20за,от%202000%20до%205000%20руб.; https://epp.genproc dot gov.ru/ru/web/proc_64/activity/legal-education/explain?item=59120181; https://www.understandingwar.org/backgrounder/russian-occupation-update-april-3-2025

[11] https://phoenix-dnr dot ru/news-full.php?number=936

[12] https://t.me/sprotyv_official/7239

[13] https://www.understandingwar.org/backgrounder/russian-occupation-update-april-3-2025

[14] https://www.understandingwar.org/sites/default/files/24-210-01%20ISW%20Occupation%20playbook.pdf; https://www.understandingwar.org/backgrounder/russian-offensive-campaign-assessment-december-29-2023; https://www.understandingwar.org/backgrounder/russian-occupation-update-april-3-2025

[15] https://tass dot ru/nedvizhimost/24393143 

[16] https://isw.pub/OccupationUpdate063025; https://isw.pub/OccupationUpdate060425; https://understandingwar.org/backgrounder/russian-occupation-update-april-8-2025

[17] https://eipp dot ru/news/2025/%D0%B2-%D0%BD%D0%BE%D0%B2%D0%BE%D0%B0%D0%B7%D0%BE%D0%B2%D1%81%D0%BA%D0%BE%D0%BC-%D0%BC%D1%83%D0%BD%D0%B8%D1%86%D0%B8%D0%BF%D0%B0%D0%BB%D1%8C%D0%BD%D0%BE%D0%BC-%D0%BE%D0%BA%D1%80%D1%83%D0%B3%D0%B5-%D0%BF%D0%BB%D0%B0%D0%BD%D0%B8%D1%80%D1%83%D1%8E%D1%82-%D0%BF%D0%BE%D1%81%D1%82%D1%80%D0%BE%D0%B8%D1%82%D1%8C-%D0%BD%D0%BE%D0%B2%D0%BE%D0%B5-%D0%B6%D0%B8%D0%BB%D1%8C%D0%B5.html 

[18] https://www.slidstvo dot info/articles/pereviznyk-yak-pov-iazana-z-viktorom-medvedchukom-kompaniia-dopomahala-vyvozyty-zaporizke-zerno-i-krymskyy-tytan/; https://kiborg dot news/2025/07/01/vedmezhi-poslugy-medvedchuka-yak-pov%ca%bcyazana-z-oligarhom-kompaniya-stala-lankoyu-u-vykradenni-zerna-j-metalu-z-okupacziyi/; https://investigatebel dot org/by/news/okupirovanaya-ukraina-belarus-postavki

[19] https://www.slidstvo dot info/articles/pereviznyk-yak-pov-iazana-z-viktorom-medvedchukom-kompaniia-dopomahala-vyvozyty-zaporizke-zerno-i-krymskyy-tytan/

[20] https://www.unian dot ua/economics/agro/kradizhka-ukrajinskogo-zerna-okupanti-vivezli-shist-milyoniv-tonn-zerna-12377274.html; https://www.wsj.com/world/how-russia-profits-from-ukraine-invasion-by-selling-stolen-grain-on-a-global-black-market-60cca0a4

[21] https://isw.pub/OccupationUpdate061225; https://understandingwar.org/backgrounder/russian-occupation-update-april-24-2025

[22] https://t.me/Aksenov82/7662