Myths and realities about the economy of the occupied part of the Donbass and blockade. Is the blockade profitable for Ukraine, and what might be the consequences for the "DPR-LPR"? This is in the information analytic video overview of Public Radio of Donbass.
Anchorman: The blockade of trade with the occupied part of the Donbass by the veterans of ATO raised many questions that were topical during the war in the East, but we preferred not to ask them. That was easier. Tired of war, all of us, both in the occupied and free territories, tried to escape from the uncomfortable reality to the illusion of peace and gradual reconciliation. However, Avdiivka has showed – this is only an illusion. We forgot a simple truth: if you hide head in the sand for the psychological comfort, - your back leaves unprotected. That is why we allowed using ourselves those who have the motive, means and opportunity to tell us what we want to hear both in the free and occupied territory. Here are some myths, there - other. We were told about the "complex questions that have no easy answers". But in fact, simple answers were just not profitable for them, so simple questions were called complex. The reality is simple. It is only needed to force you to see it.
Let us try to analyze the facts, not fears. Moreover, through the eyes of the other side.
For example, they scare us with a collapse of energy and power emergency state. And it turns out that the emergency state is introduced every year since 2014… And the blockade has already been, just not from our side, but from the other. Here is a fragment of the interview of Alexander Zakharchenko, which he gave in June 2016.
Video. Zakharchenko: – Ukrainian Railways government agency stopped the payment of wages to employees since February. A meeting of trade unions was after that and our people came to the rails, banned all the shipments that were in the direction of Ukraine. The panic is in Ukraine at the moment, because all the coal which they take to their stations, they have taken from us.
Anchorman: The words of Zakharchenko were recently confirmed by the Minister of Energy of Ukraine, Ihor Nasalyk:
Video. Nasalyk: - But I want to remind that the supply of anthracite coal was stopped for 45 days in May at the position of 9 nuclear units. It was not supplied from ATO zone. What do you think, who stopped the supply of coal? – it was stopped directly from the uncontrolled zone.
Anchorman: So it is not very smart to maintain the economic dependence on the people who are fighting with you. Especially, if they see just your weakness.
Video. Zakharchenko: - We hold Ukraine now by the fact that we can give them coal in winter, or cannot give. If our economy develops well, we can slow down the sale of coal to Ukraine. We trade with Ukraine. They pay us for it. What insulation?! In other words, this is all for someone out there, for the village… They come to us asking to give them more coal or let them buy electricity. This exists.
As we can see, Zakharchenko openly mocks Ukraine which buys coal produced in the territory controlled by the "DPR". The leaders of the so-called "republics" have decided last week that they are 80 level trolls and announced the beginning of humanitarian aid program for Ukrainian territories who will suffer as a result of the blockade.
Video. Plotnitsky: – But this blockade hits our people who are on the other side. That is why today we want to announce those events which we decide after having a quick word that we can solve together. These are the issues of the most difficult – social block. Yes, we invite all our residents. We say: we did not forget about you. You do not have a holiday on February 23, you do not have a holiday on May 9. Come to us. You will be able to celebrate with us those ancient celebrations that historically formed in our territory, our land, in the Russian world, which you celebrated for your whole life together with us. We also reserve the simplest thing in the social block. We give you the possibility for health services. We give you the possibility to educate your children, and, in fact, our children, because we focus on youth.
Anchorman: So their town-forming enterprises where, according to them, 150 thousand people work are closing, and they humorize…
Video. Plotnitsky: – If someone is afraid, then you know that law and order are provided in the territory of the LPR and DPR and no one from the other side has ever been prejudiced… People come to us from Kyiv. People learn here from the Lviv and Ternopil oblasts. People come to us from different oblasts, and we have never closed our borders for our people, in contrast with Ukraine. On the contrary, we talk openly today about the fact that if someone is in need, and we have it often for free, and in some cases much cheaper than it costs in Ukraine, - please, come.
They humorize, but it turns out that they have starvation…
Video. Khodakovsky: - A man with the nickname "Granite BZT" asks: Where does humanitarian aid go, why do people starve? – people starve because there is a war and because it is bad… this humanitarian aid is just not enough. It was not prescribed for every soul in need and does not be delivered in the required amount. They give as much as they can give.
Anchorman: Nevertheless, maybe it is not humor, maybe Russia is really ready to take everyone on the free medical care and education, because even the leaders of militants do not hide that the republics are not able to provide themselves without Ukraine, and exist only at the expense of Russian inflows.
Video. Khodakovsky: – If not the help from Russia, our economy simply does not cope with the solution of those problems which are now hung on it by circumstances and destiny. These are social payments, assistance, wages to the state employees. Russia helps us to close a significant percentage of these needs by some means or other.
Anchorman: But Russia is unlikely to increase the Donbass expenses, otherwise it would not reduce them, as it was the whole last year.
Video. Khodakovsky: The most urgent problem that our government faces – pumping up the budget, because there are certain difficulties in terms of assistance from the Russian side, respectively, there is a strong topicality – you see, here are delays in the various budgetary organizations, payment of wages, first of all it indicates that the budget is filled not in full and frantic attempts are undertaken now to deal with this problem.
Anchorman: The leader of the LPR Igor Plotnitsky announced the nationalization of Ukrainian enterprises which will not be registered until March 31 in the tax authorities of the "LPR" on February 10 in response to the blockade. The owner of Alchevsk Iron & Steel Works – the ISD Corporation, co-owned by the Ukrainian deputy Serhiy Taruta, accepted it seriously and responded with a statement which has warned that if, I quote, "the enterprises will be "nationalized" by force by the entities that do not have any recognized legal status, unique industrial enterprises become just a set of buildings and structures in fact, which will not be able to carry out any effective economic production, financial and commercial activity. This will lead to accelerated loss of productive assets of its economic value and further social explosion in the city and the region" – unquote.
It is interesting that, unlike Plotnitsky, people in Alchevsk understand this perfectly. Here is a fragment of an interview with the head of administration of the LPR in Alchevsk Natalia Piatkova. I also note that the interview given to the Luhansk state-owned TV and radio company a year ago has disappeared from YouTube after our publications. But manuscripts do not burn – we still have the sound.
Audio. Piatkova: – It is a huge fortune that our plant works today. It is just two furnaces, but this is a great progress for us. It is the smoke of hope, the smoke of our confidence that we have tomorrow. 14 thousand people work in the plant and all 14 thousand receive wages. Because people got wages, came to the shop, social tension falls, the economy moves, taxes are paid…
Anchorman: So the question of nationalization will rise, of course, if Ukrainian enterprises will stop paying tribute to the leaders of the "DPR-LPR", but will this nationalization make anything easier for the employees? I have serious doubts.
Video. Khodakovsky: - It is possible to nationalize everything for the sake of populist statements and then not know what to do with this mess.
Anchorman: By the way, last summer Donetsk’s People Council also passed a law on nationalization, but the process did not go well. And that is why:
Video. Zakharchenko: - Metal production and rolled metal products distribution is falling for one reason - we are an unrecognized republic and cannot sell the metal officially...
... And most importantly, the plants that are on our territory… if we run them, we need to distribute their production. That is, they cannot... They're on such capacities that can provide all the former Donetsk and Luhansk oblasts for a week, but where will we distribute another three weeks?
Anchorman: So maybe Russia can import coal and metal from the occupied Donbass? – It can and it will. But then it will have to press on the markets of its own businesses. And if so decided, it will be purely political, economically disadvantageous to Russians. And yet, the Russian Federation on the contrary, protects its markets from the Donbass products.
Video. Khodakovsky: - For example, we started to supply uncontrolled coal volumes to Russia – they introduced quotas against us, because there is coal mining in Rostov oblast and we undermine the economy of the Southern Federal District. Therefore, we have not solved the problem with the nationalization of, for example, Rinat Akhmetov’s plants. Because if we seize the assets, where will we supply these products? If we are able to produce anything at all. Because there is need to immediately determine where we will take the ore and coke, because Akhmetov himself supplied the plants with his own businesses. And who will buy the finished product if the Russian market is oversaturated with offerings of Russian smelting companies?
Video. Kozenko, Krasnodon: There are problems in the enterprises that work. First of all – this is of course the sale of products to the Russian Federation. In any case, it is accompanied by customs clearance. Customs clearance imposes additional material and financial resources. In principle, it turns out, we are entering the Russian market on a not very competitive position.
Anchorman: In general, no matter how Zakharchenko and Plotnitsky strut on the camera, but the stop of the Ukrainian enterprises in the occupied territories wreaks havoc on the "LPR-DPR" in the first place because there are no other businesses. They are responsible for the socio-economic situation on the territories. And the meaning of their bravado with humanitarian aid program for Ukraine, which they presented on February 17, is reduced to one goal - to force the West to respond to the blockade, because it fears escalation of the conflict in Ukraine and more refugees. This discourse is clearly read in the words of A.Zakharchenko.
Video: - Today is our briefing. And this program, which was voiced - probably for the first time on the present political scene, we have stated our rights on the territory and we are ready to prove with our deeds that we do not forget about it. I think that the world leaders and Europe will think about this stuff. And I think that in the next few hours there will very hard mental work, which will allow us to solve this issue in four days or so.
Anchorman: What can Europe and world leaders do? Send NATO troops to deblock the railway?... - No, of course they will put pressure on the leadership of Ukraine. But not to the point to trigger another revolution with unpredictable consequences. Especially that everyone understands: the is no logic in financing a war against yourself. Even if there are contributions to its budget from enterprises operating there. Because in addition to Ukrainian taxes they pay taxes to those who are called terrorists.
Video. Timofeev: - Are there companies that operate on the territory of the Donetsk People's Republic, but pay taxes to Ukraine? - There are. But I want to say - they got in a very difficult situation, they got under double taxation. They pay taxes here and there. I met with them and said: “It is your personal profit, you can spend it as you wish”. They answered: ”If we do not pay, they will not let us work...” And we also understand that if we take some major plant that is tied to the Ukrainian consumer and if tomorrow Ukrainian consumer abandons this product... That, in fact, is also bad for us.
Anchorman: By the way, let us return to the question of the possible nationalization. It turns out, the LPR had already announced it back in June 2014...
Video. Russia-24: - The government of the proclaimed LPR is going to nationalize Ukrainian enterprises in the region. This was stated by Prime Minister of the Republic Vasiliy Nikitin... From today the nationalization of enterprises and property of Ukrainian oligarchs begins. If they “do not want to take militants’ side”.
Anchorman: "If they do not want to take militants’ side”... So maybe they took their side if the nationalization did not happen?
Video. Khodakovsky - Taruta ended in a fiasco. He did not fulfill the task set by Kyiv. And now he is pestering. I know that he comes around several offices in Moscow and has a joint business with Russia's major owners. In particular, he is the owner of Alchevsk Iron & Steel Works. He is on the equity participation together with the Russians. So maybe he is regarded as one of the politicians of tomorrow's wave. They are talking about Mykola Azarov for a reason too.
Anchorman: To make matters worse, the owners of the enterprises working in the occupied Donbass became in fact agents of influence of puppet republics in Kyiv. Because pressing on their business there, separatist leaders have the opportunity to influence the government of Ukraine in Kyiv.
Video. Danega: - There are rumors they want to do the same with electricity as well?
- Well, it's the purest declaration. Technically, they cannot do it without serious damage to those entities under Ukrainian jurisdiction, which continue to work on our territory... Owners of these enterprises are located in Ukraine. And they have no problem to respond appropriately to the destruction of their property in the area. Destruction is done by those who are going to turn off the switch.
Anchorman: Summarizing all that was heard and seen, I want to say that the basis of any geopolitical conflict is always money. That is, someone makes advantage of the war that weakens Ukraine, first of all, economically.
Video. Zakharchenko: - One of the stratagems which was used by all the warring countries is the economic devastation of the enemy. For example, by getting double pensions we weaken the economy of Ukraine. Come on, get double payments everyone!
Anchorman: On the other hand, the fact is that there was no other economy except the Ukrainian on the occupied territory for all these three years. That is, they claimed our factories to be the economy of the so-called "republics".
Video. Pushilin: - We need to improve the economic component of our republic. Almost everything depends on this. If enterprises work - there will be jobs. If there are jobs - the taxes will be paid. If the taxes are paid - the republic will be able to exist.
Anchorman: So do we want "republics" that are killing us to exist? The answer to this question is obvious. And it is impossible to ignore it infinitely. This is recognized even on the other side of the demarcation line.
Video. Khodakovsky: Now comes a turning point when we have to wait for a certain breakthrough. And this painful circumstance of aggravation of the past few weeks, perhaps, is a confirmation. Something is coming to the final phase of implementation.
Anchorman: The logic of the blockade supporters comes down to one thing - you cannot economically strengthen those who are at war with you. In other words, the question "Are you for or against the blockade?" should really be: do you want to finance a war against yourself?
OstroV, Public Radio of Donbass