The lack of legal status of the separatist "DNR"-"LNR" enclaves prevents the economic recovery in this territory. The attempts to establish cooperation with a similar formation in the North Caucasus and annexed Crimea do not bring the desired result as well – because, as it is known from the student course of arithmetic, the sum of zeros eventually gives all the same zero.
South Ossetian "mirror"
The "independence" of South Ossetia, obtained in 2008 through the Russian military invasion of Georgia, was recognized only by Nicaragua, Venezuela, Syria and tiny Pacific island states of Nauru and Tuvalu, except for the Russian Federation itself.
After 10 years, the economic results of the South Ossetian separatists are as follows: the share of own revenues in the "republican" budget is 10%, the rest are subsidies from the Russian Federation.
And this is presented by local "authorities" as an achievement: it used to be even less. Far leaner are the successes in agriculture: 22 thousand out of 24 thousand hectares of croplands are in a deplorable state.
South Ossetian apple orchards that once had the all-Union glory are abandoned and partially cut down. Vegetables and fruits in the region are mainly imported from Russia.
The livestock of pigs is completely destroyed by the epidemic of African plague – due to the complete absence of veterinary medicine in the enclave.
A printing plant and forest combine, which, according to separatists, went to the pre-war volume of output in 2011, are more or less "breathing".
A garment factory started its operation in Tskhinvali, the administrative center of South Ossetia, in 2017. Now 635 people are involved there. Their number in the Soviet time was 1200.
It follows that the load of the enterprise is not higher than 50% of the project. The Alukton brewery is also "moving": in truth, with interruptions. Asphalt and crushed stone plants are working.
But the largest industrial enterprises Vibromashyna and Emalprovod still stand idle. Railway and air transport is not functioning, there is only bus and car service.
Herewith in 2015-2017 $138.6 million were allocated from the federal budget of the Russian Federation on the programs of socio-economic development of South Ossetia. The spending of money was controlled by the Accounts Chamber of the Russian Federation, but, obviously, this did not help to spend money for its intended purpose.
For understanding: the entire annual budget of South Ossetia in 2017 amounted to $123.4 million. This year they have to tighten their belts: the budget was approved with $117.3 million.
Russian investments are planned in the amount of $44.2 million, while in general for 2018-2019 – only $62.5 million. Significantly less than the previous investment program.
One of the main problems of the "republic" is demographic: a decrease in the population from 83 thousand in 2008 to 53.5 thousand according to the 2015 census.
At the same time, there are 837 people of unemployable age per 1000 residents of working age. That is, the pension payments are also fully subsidized from the federal budget of the Russian Federation.
It is obvious that in this situation, South Ossetia cannot help the few surviving enterprises in CDDLO with the sales of their production. But its current position, as if in a mirror, reflects the situation in the "DNR"-"LNR" in several years.
Coal industry and metallurgy were basis of the economy of Donetsk and Luhansk oblasts in the prewar period. Accordingly, coal and steel are what local separatists can offer their Crimean colleagues.
Since in Russia, contrary to the statements of representatives of the self-proclaimed authorities and individual "experts", nobody needs Donetsk and Luhansk coal.
One might remind them how even shortly before the war, in 2012-2013, governor of the Rostov oblast Vasily Golubev officially appealed to the government of the Russian Federation with a proposal to ban the import of coal from Ukraine – and thus protect the local coal miners from "dumping".
Then they managed to achieve a significant reduction in coal supplies from Ukraine to Novocherkassk regional power station, which is part of OGK-2. This decision was lobbied by the South Coal Company, Acropolis group of companies and a number of other miners.
They put particular emphasis on the supply of coal from the Donetsk and Luhansk small illegal coalmines – which exist up to now, after 5 years.
"The deadliest scourge for us is illegal mining in Ukraine, there are also illegal beneficiation plants", – managing director of the Acropolis group Alexey Koshman stated at that time.
The Rostov Governor, in his turn, spoke about the risks of increasing unemployment in the region and reducing tax revenues in the event of closure of local mines – in case OGK-2 preferred deliveries from Ukraine.
It is unlikely that over the past years, the situation has somehow radically changed in the border region of Russia which was the main consumer of Ukrainian coal. But is the annexed peninsula able to pull this output on itself?
"Crimea needs our coal and metal. The Republics of Donbass need food products and wines produced in the Crimea. The Crimea and Donbas have a common fate", - the then head of the "DNR" Alexander Zakharchenko stated in March 2017.
But is coal needed on the peninsula? There are several wind and solar power stations, as well as Crimean CHPP in Simferopol, Sakskaya CHPP and Kamysh-Burunskaya CHPP.
They run on natural gas. Besides, they are low-powered: all of the listed assets provide 21% of the peninsula's electricity needs.
The rest of the output was previously supplied from the Kherson oblast, after the annexation – from the Rostov NPP via the Kerch power bridge. Thus, the Donetsk and Luhansk coal is not in demand in the Crimea.
It remains a puzzle where the Crimeans were going to use 3.5 million tons of coal from CDLO, reported in March 2017 by the then head of the "LNR" Igor Plotnitsky.
"Yes, we began to supply coal to Russia and Crimea. We have a contract, it is valid. The volume is about 3.5 million tons. The contract is for 2 years", - he maintained.
In any case, it is necessary to take into account that coal mining in the Luhansk oblast was 26.3 million tons in the pre-war 2013 and only 6.4 million tons in 2017 even according to official data of the separatists.
Hence, the shipment to the Crimea of 1.75 million tons of coal does not solve the problem of sales for Luhansk, except that removes its acuteness.
And these volumes, if they are really being supplied, most likely, do not linger on the peninsula, but transit further on, to Turkey.
This is confirmed by the statement of leader of the Crimean separatists Sergey Aksyonov, made in Simferopol on September 25 of this year at the meeting with representatives of the "DNR".
"We clearly understand that the industrial potential of the DNR can be applied today… on the issues related to supplies, including the supply of those goods that the DNR produces. Herewith, the Crimean capacities will be used as transit", - the self-proclaimed head of "the Republic of Crimea" said.
Indeed, against the background of sharp deterioration in Ankara's relations with Washington and simultaneous development of ties with the Russian Federation (the construction of the Turkish Stream-2 gas pipeline and Akkuyu Nuclear Power Plant), Turkish market is quite capable of absorbing Donetsk and Luhansk coal.
And steel. But only in the form of semi-finished products: iron and steel feed for its rolling mills. Since Turkey itself is a major manufacturer and exporter of rolled metal products.
And industrial consumption of rolled steel in the Crimea is minimal due to the underdevelopment of this industry itself. Given the unique natural properties, it was originally considered as an all-union health resort.
Therefore, there are not many plants here, just to ensure the employment of local population. Then, after the collapse of the "great and mighty", most of these enterprises were successfully shut down and cut into scrap metal. They are not subject to recovery.
The largest representative of the industry today is the Crimean Titan association in Armyansk, which produces titanium dioxide, mineral fertilizers and sulfuric acid.
The ilmenite concentrate required for this is being imported into Armyansk mainly from mining and processing plants in the Zhytomyr oblast – contrary to the decisions of the Cabinet of Ministers of Ukraine on the termination of economic relations with the peninsula after its annexation.
There are no deposits of titanium-containing sands in the Donbass, from which ilmenite is being obtained.
The second place in the Crimean industry is shipbuilding. These are the Kerch Zaliv plant, Feodosia More and Sevastopol shipyard.
Today, Zaliv has the worst situation: the enterprise does not work. More and Sevastopol Shipyard have better situation thanks to Russian orders, especially in Sevastopol.
In particular, the multimission high-speed vessel Sleming-2-M is being built in Feodosia from 2017, the term of delivery is 2019. In truth, this is quite a small project with a displacement of 20 tons. It can rather be called a big boat.
Sevastopol Shipyard can count upon larger orders from the Black Sea Fleet of the Russian Federation, the enterprise is preparing to become part of the state United Shipbuilding Corporation of the Russian Federation.
But now, as noted by the Sevastopol media, these orders are few. The reason is the lack of necessary Russian licenses and certificates by the Sevastopol Shipyard. And this is 4 years after the annexation.
It is planned to complete the process only in 2019 when the company will be able to fully earn.
In any case, Sevastopol and Feodosia need ship steel – plate iron. Zaporizhstal industrial complex produces it in Ukraine. The Yenakiieve and Makiyivka metallurgical plants, as well as Donetskstal, which are at the disposal of the "DNR" separatists, specialize in long products.
Its main field of application is construction, but the objects must be truly large-scale. There are no such in the Crimea. Glut on the part of housing is not observed as well.
As noted in August of this year by the then "vice-premier" of Crimea Vitaliy Nakhlupin, the region lags behind the average Russian indicators in terms of construction rates and at least 15 more years are needed to reach them.
Only the Kerch Metallurgical Plant remained out of the industrial enterprises. It works and produces steel enameled ware and pointwork on a small scale – 400-500 tons per month. That is, the products of the metallurgical plants of Donetsk, Yenakiieve and Makiyivka are not in demand either.
However, it was recently promised to find it a use… in Syria. The corresponding statement was made in Donetsk on October 24 by Andrey Kozenko, State Duma deputy, coordinator of the so-called "Russia-Donbass Integration Committee".
According to him, a "transparent logistics network for supplying products to Syria" is currently being worked out, using the Crimean port – probably, Kerch.
Indeed, given the scale of the destruction in Syria and amount of the construction that is needed for restoration – the potential for sales of long products is quite good.
But no one will restore anything in Syria now – the war is still going on there. And no one is going to predict how long it will last.
In fact, deliveries from Kerch of pointwork for the Donetsk railway have a prospect – due to the huge scale of destruction during active hostilities in 2014-2015.
But the self-proclaimed authorities in Simferopol, Donetsk and Luhansk do not mention this option for some reason. Heedless of the fact that "Acting Minister of Transport of the DNR" Igor Andriyenko stated in February of this year that the priority for 2018 is to restore the railway infrastructure.
Following the results of the first half of the year, separatist media reported on the restoration of 50 destroyed objects on the Donetsk railway. However, 29 of them are buildings, signal towers, etc. That is, the amount of reconstruction of the track facilities is minimal.
That is why the economic cooperation between CDDLO and Crimea, which has been repeatedly declared, remains only on paper and in public speeches of the separatists' leaders.
For example, on June 16, 2017, an agreement was signed between the "DNR" and Crimean industrial and commercial chamber.
"The main objective of signing this agreement is to increase the social standard of living of citizens of the DNR and Crimea through improving of economic indicators. Thanks to this agreement, we will be able to sell in the DNR territory products manufactured in Crimea and vice versa. I believe that the level of the DNR economy could significantly increase thanks to such document", – Artyom Maltsev, head of the Crimean industrial and commercial chamber stated.
1.5 years have passed since: how much has the standard of living of the residents of CDDLO increased over this time? And the level of the economy? That, in fact, is all that should be known about the notorious "economic cooperation" of the "brothers in misfortune".
The only real result at that time was a $7.6 million contract for the supply of steel wire and mesh of the Khartsyzsk Silur plant to the Crimea.
However, it is too insignificant, if you take the production of Silur in physical volumes at current prices. If we compare the resulting volume with the design capacity of the enterprise, then it is less than 10%.
That is, the "fraternal assistance" from the Crimea in this case is nothing more than a sop.
The thesis is confirmed by the fact that the buyer of Silur products under the contract was not specific consumers of metal goods, for example, some large construction company or steel production plant, but a certain Center for Economic Interaction of the Republics state-owned enterprise.
This is quite similar to the situation when, seeing an old bow-backed grandmother with a bunch of greenery in her hands, you buy from her this bunch of dill 2-3 times more expensive despite the fact that you do not need it at all.
As for the products manufactured in Crimea, yes, it could be sold in CDDLO. These are primarily fruits and berries, since the agrarian districts of Donetsk and Luhansk oblasts are under the control of Ukrainian authorities.
But again, everything comes up against the absence of effective demand from the population, who was taken hostage by the separatists. It is no accident that in March 2017, "Minister of Agriculture and Food of the LNR" Ruslan Sorokovenko announced an agreement with separatist authorities of the Crimea to supply wine to CDLO at a "special" price.
On the other hand, how interested are the Crimean producers in such deliveries – so to speak, at half price? For example, the same Massandra association is trying to organize the sale of its products primarily in China and Kazakhstan in the conditions of the current sanctions.
The relevant agreements were reached in September 2016 during the Eastern Economic Forum in Vladivostok.
Therefore, the supplies at a "special" price in the "LNR"-"DNR" are not much different from the usual humanitarian distribution of food – so it is limited in volumes.
It should be said separately that neither strawberries with cherries, nor even wine are included in the list of socially significant products that ensure food security.
Vitaliy Krymov, OstroV