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.
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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.
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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.
Translated by Lidia Wolanskyj
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