The future of the Donbass

From our correspondent in Donetsk

At the moment of truth in Ukraine’s “Revolution of Dignity” in February 2014, when President Yanukovich hastily left Ukraine and the power was taken by the those who had guided the protests for three months, the Donbass stood up against what they had come to see as an illegal coup d’etat. They demanded a decentralization of power and the right to determine the political and economic development of their region, only to get a harsh rebuttal from Kiev. By April 2014 the protests had escalated to an armed conflict: the Donbass used to be a relatively highly developed industrial region, which brought a large contribution into the government budget and the new government in Kiev did not show any intention of losing it.

The region is at the centre of important trade routs from Europe to Asia, from Northern Europe to the South and it continues having a strong transit potential. The Donbass is rich particularly in fossil natural resources, which were the foundation of the region’s rapid growth in industrial production at the end of the XIX century, when the Donbass played a crucial role in the modernization of the Russian Empire. In this period the large majority of the industries operating in the Donbass belonged to foreign investors from Paris, London, Brussel and Berlin, they controlled more than 50% of coal production and of 12 metallurgical factories only one was in Russian hands. The foreign capitalists did not use foreign capitals for their investments, but were only reusing part of the profits generated, taking a lot of the earnings abroad. After the overthrow of the Tsarist regime in 1917, the Temporary government worked the newly formed Kiev Rada, but this ended up controlling only Western and Central Ukraine: the most developed regions of contemporary Ukraine were excluded from the jurisdiction of the new Ukrainian proto-State, mainly because of the mixed nature of the ethnic composition of Ukraine’s Eastern regions.

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It is difficult to predict the future of the Donbass: even in the event of a long term cessation of the hostilities, probably it will take a long time to restore the region to what it was before the war and the damage that came with it. The uncertainty around the legal status of the People’s Republic of Donetsk and Luhansk will depend on how the conflict ends and other foreign policy factors. The Donbass is a unitary complex and for it to work as an autonomous area, the whole network, which was build over many years, will be necessary. In case of a permanent ceasefire and the enlargement of the whole area of the People’s Republics to the Donbass Oblast and the Luhansk Oblast, for which they were fighting, they might enjoy a prosperous future. The economy of the Donbass is oriented towards the market of the Eurasian Union, but the production of the coal industry requires secure transport routes, which at the moment are interrupted by the blockade. The coal extracted in the Donbass is used in power stations and factories all over Ukraine and at the moment they have been used only at 50-70% of their potential maximum.

In the People’s Republic there are already all signs of a sovereign nation: a People’s Council or Parliament, a Cabinet of Ministers, a High Court, there is even an own banking system for the development of the economy and a fiscal apparatus, whose revenue is used to pay for civil servants, pensions and social aid for the needy. After most entrepreneurs left the region in 2014, their place has been taken for new investors. This became possible thanks to a set of laws passed by the People’s Council designed to stimulate small and middle-size business; without the necessary investment it would be impossible to restore the economy. If a permanent ceasefire is put in place it is likely to expect investment in the industrial sector, which would help in restoring and modernization the region vast, but sometimes outdated, industrial potential. Investors are likely to help rebuild the airport and other infrastructural objects that were severely damaged. At the moment houses are been repaired by the local authorities. Several educational institutions left the region in 2014 and a new educational system was built up from scratch, from elementary schools to institutions of secondary education. Those who successfully complete the schools receive a Russian attestation from Russian educational institution, which has allowed for the diplomas to be recognized in Russia and Belarus.

In case the Ukrainian government will be able to retake control of the Donbass, the region might end up becoming yet another a scheme, through which billions of hryvnias and dollars are laundered, considering how seriously corruption is affecting Ukraine, in spite of the apparent “lustration” of the previous political elite. Some resources will be used for the restoration of the region, while a large part of the money may just end up into somebody’s pocket. At the moment this would not be something that Ukraine needs, her priority is to maintain a normal living standard in the parts of countries under the control of the central government.

There is of course also the possibility that the conflict in the Donbass becomes a frozen one, in which case the Donbass would turn into a second Transdnistria. Sharing a long border with Russia would allow for open trade flows between Russia and Transdnistria. According to the Minsk agreement the border should be under the control of the Ukrainian authorities, but this cannot happen until Kiev grants the two rebel areas of the DNR and the LNR a special status, a process hindered by the lack of agreement over this problem in the parliamentary coalition and subsequent possibly destabilization threats. For the West the main priority is that the peril of a wider war is avoided, with the risk of refugees on the borders with the European and of a humanitarian catastrophe reduced to a minimum.
The reintegration of the Donbass into Ukraine at the moment would be impossible. It is a process which will take many years, possibly several decades. If Ukraine tries to retake the Donbass by the means of force, without external help, it could a be a risky experiment ending with a bitter loss. After the tragedy of thousands of victims on both sides, the end of war actions on the battlefield would bring about a new stage of the war – in the minds of the people this time. Certainly not many would welcome the Ukrainian army as a liberating army. The Ukrainian security services would perform widespread prosecutions and interrogations. The West is interested in the implementation of the Minsk agreements and tries to put pressure on Ukraine to act accordingly. This would allow to lift the sanctions on Russia, which also hurt the European economy. But with Ukraine de facto agreeing on the formation of two autonomous republics within her own territory, Kiev would have to pay for their restoration, while the republics would continue to look at Moscow. Hence Ukraine is at a crossroad: either let the rebellious territories go, with a termination of all social-economic ties, or a civil coexistence, which would imply a serious socio-economic relationship. Both scenarios are problematic enough for Ukraine. The idea of a compromise between the Donbass and the central government is not popular at all among the “party of Maidan” and other Ukrainian patriots. Russia’s proposal of a federalization of Ukraine would look like a surrender to the people who have fought so hard for Ukraine’s “Revolution of Dignity”.

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