The age of ma­raud­ers

The eco­nomic cri­sis in oc­cu­pied Don­bas is get­ting worse. Ma­raud­ing seems to be the rule of the day

The Ukrainian Week - - CONTENTS - Denys Kazan­skiy

On the eco­nomic cri­sis in oc­cu­pied Don­bas

Even as ORDiLO’s fur­ther fate is be­ing dis­cussed in Paris and Minsk, the eco­nomic sit­u­a­tion in the oc­cu­pied ter­ri­to­ries is in­ex­orably grow­ing worse. Ac­cord­ing to those liv­ing in the two un­rec­og­nized “re­publics,” slip­page has been turn­ing into a dive. Where in 2015-2016, there was even a slight im­prove­ment in the eco­nomic sit­u­a­tion, in 2017, it en­tered a steep decline that has only grown worse since the com­ing to power of Denys Pushylin, head­ing one-time mem­bers of the MMM group.

Not that there’s any­thing sen­sa­tional in this. Ukrainian politi­cians, an­a­lysts and jour­nal­ists have been warn­ing about this for quite some time. An econ­omy that is al­most en­tirely in the shad­ows is sim­ply not vi­able. In­dus­try can­not op­er­ate prop­erly on a ter­ri­tory whose le­gal sta­tus is un­cer­tain, which has made eco­nomic col­lapse com­pletely in­evitable. Aid from Rus­sia has not been com­ing in the vol­umes ex­pected, and mostly amounts to hand­outs, like the “hu­man­i­tar­ian” con­voys or new am­bu­lances. Th­ese are all just tem­po­rary salves, are un­pre­dictable, and can ease peo­ple’s lives only in very lim­ited as­pects. It’s clearly not ca­pa­ble of re­sus­ci­tat­ing ORDiLO’s econ­omy. Against a back­ground of wide­spread un­em­ploy­ment and grow­ing

pay­roll ar­rears, or­di­nary peo­ple hardly feel their im­pact at all.

At the end of 2019, the coal in­dus­try was clearly in a ma­jor cri­sis, not just for in­ter­nal rea­sons but also driven by out­side fac­tors: coal prices have col­lapsed, Eu­rope is mov­ing away from this kind of fuel al­to­gether, and pro­duc­ers can’t sell their com­mod­ity. Even Rus­sian min­ing com­pa­nies are hav­ing prob­lems. Mines are clos­ing down in the Kuzbas where it’s far eas­ier to ex­tract coal — and much cheaper — than in the Don­bas. ORDiLO with its un­of­fi­cial ex­trac­tion was the first to be hit by the cri­sis.

The first sign was when min­ers found their wages held up in the fall. A slew of mines were put on idle and drained, while the work­ers were all went on un­paid leave. The sit­u­a­tion has grown so much worse that women in ORDiLO have be­gun or­ga­niz­ing and set­ting up Min­ers’ Wives Com­mit­tees to fight for their bread­win­ners. This is not a new sit­u­a­tion. In the 1990s, when Don­bas min­ers were afraid to strike and de­mand back wages, their wives also or­ga­nized and de­manded the money from man­age­ment. This phe­nom­e­non was even crudely called “pussy ri­ots.” By 2000, it seemed like such re­bel­lions had dis­ap­peared into the an­nals of his­tory, but nearly 20 years on, they’re back again.

At the end of Novem­ber, the min­ers’ wives sent a let­ter to Rus­sian Pres­i­dent Vladimir Putin ask­ing him to in­ter­vene in the sit­u­a­tion and help re­solve the is­sue of back wages. Sig­nif­i­cantly, they knew ex­actly who to turn to and clearly don’t take the Rus­sian mantra “we aren’t there” se­ri­ously at all. Fairy tales about “in­de­pen­dent re­publics” can be re­cited all day long — just not to the peo­ple who ac­tu­ally live there.

In the let­ter, the women blamed Ser­hiy Kurchenko, boss of Vnesh­torgservis and the Yanukovych clan’s bag­man, for their trou­bles and the com­pany for the grow­ing debt: “All of DNR’s coal and other wealth is be­ing shipped out by ma­raud­ers like ZAO Vnesh­torgservis. In re­sponse to our de­mand to clear up wage ar­rears of sev­eral months, rep­re­sen­ta­tives of the ma­raud­ers’ in­ter­ests from Vnesh­torgservis — top gun Pushylin, coal “min­is­ter” Dubovskiy and other of­fi­cials — keep telling our men fairy tales about the dif­fi­cul­ties of the state of war, while them­selves grow­ing fat­ter and richer with ev­ery pass­ing day.”

Ear­lier, the women had pub­lished an ap­peal to Pushylin in the so­cial nets, as well as Dubovskiy, but got no an­swer. Nor did Putin re­spond. The let­ter was sent to the of­fi­cial Krem­lin ad­dress in the net­work and reg­is­tered. Need­less to say, the back wages re­main un­paid.

The fact that Kurchenko’s Vnesh­torgservis pays noth­ing for its coal and is driv­ing all the ac­tive com­pa­nies in ORDiLO into bank­ruptcy has been re­ported for some time. But it’s not clear what can be done, un­der the cir­cum­stances. Ob­vi­ously, the decline in coal and metal prices has ul­ti­mately made VTS un­prof­itable. The only op­tion Kurchenko and his han­dlers have is to sim­ply ig­nore bills for the raw ma­te­ri­als and stop pay­ing wages.

In Novem­ber, RBK, a Rus­sian source, re­ported that Kurchenko’s com­pany had been given a two-year grace pe­riod to pay its debt to other com­pa­nies and the LNR/DNR mines — more­over, no in­ter­est would be payable on th­ese debts. In short, Kurchenko was given carte blanche to rob the ter­ri­tory of the Don­bas un­der Rus­sia’s con­trol. How long this kind of eco­nomic free-for-all can last is hard to say, but the sit­u­a­tion is very se­ri­ous.

The im­pres­sion is that the Rus­sians are sim­ply try­ing to squeeze ev­ery last bit out of ORDiLO. VTS’s debt with the mines, ac­cord­ing to the RBK site, is nearly RUB 8 bil­lion or over UAH 3bn, of which more than RUB 5bn is owed to the

Kom­so­mo­lets Don­basa mine alone. More than RUB 700mn is owed to MakiyivVuh­illia, RUB 500mn to Torezantra­t­syt, and RUB 300mn to Zasi­adka. Al­to­gether, Kurchenko’s com­pany now owes nearly RUB 25bn, more than UAH 9.5bn to “repub­li­can” bud­gets and “state” com­pa­nies. In ad­di­tion to the coal in­dus­try, VTS owes for elec­tric­ity, rail trans­port, raw ma­te­rial sup­plies, and ser­vices.

The eco­nomic trou­bles fac­ing the oc­cu­pied ter­ri­to­ries are not so much a re­sult of their un­cer­tain le­gal sta­tus but the re­sult of de­lib­er­ate harm be­ing caused by the Rus­sian side. In­stead of the as­sis­tance to their “fra­ter­nal peo­ple” that fans of Rus­sia in Donetsk and Luhansk had placed so much hope in, the lo­cal pop­u­la­tion has been kicked in the back. Tak­ing ad­van­tage of the sit­u­a­tion in the re­gion, the Rus­sians be­gan to openly rob the coun­ties that had been “lib­er­ated from the fas­cists,” putting down any dis­sat­is­fac­tion and declar­ing every­one who ob­jected in the least fash­ion a sup­porter of the ban­derites, mean­ing Ukrainian na­tion­al­ists.

What’s more, it’s not just the coal in­dus­try that’s in trou­ble. All in­dus­trial pro­duc­tion is in col­lapse. The mil­i­tants weren’t even able to re­launch the Stirol chem­i­cal plant in Hor­livka, whose work­ers are sit­ting at home with­out money and writ­ing let­ters to Pushylin. The “deputy DNR head of gov­ern­ment” Vladimir Pashkov had only this to say in re­sponse: “Fi­nanc­ing for DP Stirol has been sus­pended for now. Our min­istry of in­dus­try and trade and Stirol man­age­ment are work­ing on ways to re­solve the is­sue of wage ar­rears.” Given that this is­sue has been “worked on” since 2014, it’s pretty clear that no pos­i­tive changes should be ex­pected.

The Donetsk High Volt­age Tower Plant (DZVO) has also gone out of busi­ness, hav­ing tossed its em­ploy­ees out on the street just be­fore New Year’s. The de­cree to shut it down noted that this was done in re­sponse to “lower out­put lev­els and the ter­mi­na­tion of com­mer­cial op­er­a­tions.” In re­al­ity, most busi­nesses in ORDiLO have long ago ter­mi­nated their com­mer­cial ac­tiv­i­ties, and the prospects for a re­cov­ery are so far not to be seen.

Given all th­ese cir­cum­stances, it’s no sur­prise that Rus­sia is now try­ing to push ne­go­ti­a­tions over oc­cu­pied Don­bas. It looks like Moscow de­cided to com­pletely strip ORDiLO and then quickly press Volodymyr Ze­len­skiy to talks in the Nor­mandy for­mat and merge this trou­bled, ruined ter­ri­tory with the rest of Ukraine on its terms. How­ever, the last meet­ing showed that the new pres­i­dent was in no hurry to go for Rus­sia’s terms. Ze­len­skiy was un­yield­ing and this un­der­stand­ably left Moscow just a touch frus­trated. With the enor­mous eco­nomic prob­lems fac­ing ORDiLO, time is on Ukraine’s side right now. It will only get harder and harder for the nom­i­nal lead­ers of the mil­i­tants to ex­plain to lo­cals why their stan­dard of liv­ing keeps get­ting worse. Sooner or later, the ter­ri­to­ries will go into com­plete col­lapse whose con­se­quences Rus­sia will have to clean up if it doesn’t off­load oc­cu­pied Don­bas fairly soon.

VTS's debt with the mines, ac­cord­ing to the RBK site, is nearly

RUB 8 bil­lion or over UAH 3bn, of which more than RUB 5bn is owed to the Kom­so­mo­lets Don­basa mine alone. More than RUB 700mn is owed to MakiyivVuh­illia, RUB 500mn to Torezantra­t­syt, and RUB 300mn to Zasi­adka. Al­to­gether, Kurchenko's com­pany now owes nearly RUB 25bn

Deep de­pres­sion. The econ­omy is de­clin­ing in ORDiLO close to lev­els that make it im­pos­si­ble to imag­ine any kind of in­dus­trial re­vival

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