In Ukraine

News compilation on New Cold, March 1, 2017  (four news articles enclosed)

Zakharchenko: About 40 Ukrainian enterprises now under ‘external management’

Donetsk News Agency, March 1, 2017

DONETSK – About 40 enterprises have been placed in receivership in the Donetesk People’s Republic, DPR Head Alexander Zakharchenko has announced.

Donetsk People’s Council votes on Feb 28, 2017 to place Ukrainian enterprises under state control (photo by Alexander Ermochenko, EPA)

“About 40 enterprises are now under external administration, ” he said. Zakharchenko noted that none of the Ukrainian owners had contacted DPR authorities.

Earlier in the day, the DPR head announced that Ukraine had failed to meet the ultimatum on lifting the blockade of Donbass and all enterprises operating under Ukrainian jurisdiction would be placed under external management. The process is expected to be completed by the evening.

On February 27, Zakharchenko and the head of the Lugansk People’s Republic, Igor Plotnitskiy, warned Kyiv that the two republics would put Ukrainian companies under receivership and halt coal supplies to Ukraine if the transport blockade was not lifted by March 1. On the same day, the Donetsk People’s Council passed a law requiring non-resident companies to register with DPR tax authorities.

Radicals’ blockade of Donbass leads to nationalization of Ukrainian enterprises

Sputnik News, March 1, 2017

Steel works in Yenakiyevo (Yenakiieve), Donetsk, near Russian border, owned by Rinat Akhmetov’s Metinvest Group (photo on Wikipedia)

On March 1, officials from the Donetsk and Lugansk People’s Republics nationalized major Ukrainian-administered enterprises operating in the breakaway territories. Republican authorities made the decision in response to the continued blockade of freight transport begun in late January by Ukrainian nationalist activists on the border between Ukraine and the breakaway republics.

Earlier this week, the officials warned Kyiv that they would officially halt all deliveries of coal to Ukraine and put Ukrainian enterprises under their administration if the blockade wasn’t lifted by 12 am local time on March 1.

In their joint statement on March 1, DPR leader Alexander Zakharchenko and LPR head Igor Plotnitsky confirmed that they would be following through with their warning. They also confirmed the halt in fuel deliveries to Ukraine, explaining that the republics had neither the physical capacity nor a payment scheme for the deliveries to continue.

The nationalization includes the Donetsk-based Yenakiyevo Steel Plant, the Lugansk-based Krasnodonugol coal mine (both owned by Metinvest Group owner Rinat Akhmetov), and several dozen other industries, including about 40 in the DPR and an unspecified number in the LPR.

A special office has been established in each republic to manage the industries and to ensure that the enterprises, deprived of their Ukrainian customers by the blockade, can continue to operate and pay salaries to their employees. The offices won’t be charged with subsidizing enterprises, officials stressed, but will be charged with reorienting their production toward Russia and other markets.

The blockade’s organizers – radical nationalist activists, so-called volunteer battalion fighters and veterans of the civil war in the Donbass – responded to the breakaway officials almost immediately, saying that they will not end the blockade but, on the contrary, “expand its geography”.

Radicals, including some ultranationalist lawmakers, started their blockade of the Donbass in late January, blocking freight railroad links with territories under DPR and LPR control. The militants claimed that continuing trade with the self-proclaimed republics was illegal, since Kyiv is at war with the breakaways.

The blockade has led to a disruption in anthracite coal supplies, vital for Ukraine’s power plants, forcing Kyiv to introduce emergency measures to save energy and prevent rolling blackouts. However, Kyiv has resisted taking any firm action to lift the makeshift blockade. Observers believe the blockade has the support of influential politicians in Kyiv, including Interior Minister Arsen Avakov. Others say the nationalist volunteer fighters’ outsized influence in Ukrainian politics makes it dangerous for the government to challenge their activities, even if they are illegal.

Kyiv called Monday’s ultimatum an attempt to make the conflict in the Donbass permanent, and called the nationalizations a seizure of Ukrainian enterprises. Authorities have also said that the coal supplies produced in the breakaways belonged to Ukraine, and should not be subject to “blackmail.”

Moscow, which acts as a guarantor to the February 2015 Minsk Agreements, which are meant to resolve the conflict in eastern Ukraine, said that Ukrainian officials’ ‘seizure’ terminology was not applicable. “In principle, we are witnessing the fact that the regions left behind by the [Ukrainian] government are falling into an even more difficult situation, being in complete blockade by extremist elements. So, of course, to some extent, one can understand actions taken by the leadership of those regions which…were rejected by their state. We are talking about the lives of several million people, so of course, people need to survive,” Russian presidential spokesman Dmitry Peskov said Wednesday.

DPR and LPR officials, for their part, also insisted that the blockade forced their hand, and that their primary task is to resume the work of enterprises and to save jobs. The blockade has already forced several major enterprises to halt their operations altogether, with company officials citing the inability to import raw materials or to export finished products, or even to pay taxes into the Ukrainian budget.

DPR head Zakharchenko calculated that it will take about two months for the enterprises to restart work, and to reorient to other markets. “The main goal is to ensure the smooth operation of enterprises, the payment of wages and the provision of jobs for the workers at these enterprises,” he stressed.

Republican trade officials have also stressed that they have no doubts about these enterprises’ ability to successfully reorient toward Russia and other markets. Furthermore, they believe that the nationalizations will only expand foreign trade, given the current moribund status of the Ukrainian economy.

DPR Acting Minister of Industry and Trade Alexei Granovsky told reporters that while a great deal of work remains to be done to complete the overhaul, “we already have an established mechanism of interaction to address such issues.”

Granovsky also pointed out that “despite the difficulties associated with political recognition, our enterprises have been quite successful in their cooperation with other countries…In fact, our manufacturers had begun the process of withdrawal from Ukrainian markets in favor of other countries over two years ago. Both the government and the business community has some experience in this.”

The acting minister noted that the DPR already exports products in over 50 categories, including light industry, food, chemicals, pharmaceuticals, metallurgy and coal.

Kyiv launched a military operation in Donbass in April 2014. Locals began a fight for autonomy and independence after a coup rocked Kyiv in February 2014. According to the most recent UN figures, over 10,000 people have been killed in the civil war, with thousands more injured and millions internally or externally displaced.

In late 2014, the Ukrainian government cut off pensions as well as funding for hospitals, nursing homes, schools, prisons and orphanages to rebel-controlled areas. Russia has sent dozens of aid convoys, both state-funded and independently organized, to help deal with the difficult humanitarian situation in the region.

Firms seized in rebel-held east Ukraine as blockade tension mounts

Reuters, Wednesday, March 1, 2017

A leading telecoms firm and a humanitarian group owned by Ukraine’s richest man said on Wednesday they had been forced to stop operating in territory controlled by Russia-backed separatists [sic] as their offices had been seized by armed men. On Monday, separatist [sic] leaders warned they would take control of Ukraine-run businesses in rebel-held areas if the government in Kiev did not end a blockade by a group of Ukrainian lawmakers and veterans on rail traffic from separatist territory.

“Our company’s office in (rebel-held) Donetsk and equipment have been seized,” Ukrtelecom’s director, Mikhail Shuranov, said in a post on Facebook. “The company has cut off the Donetsk sector from the national network,” he said. “Around 200,000 of our citizens have lost a means of communication.”

Separatist [sic] leader Alexander Zakharchenko said rebels were following through on its ultimatum because Ukraine had not lifted the blockade. “Today since midnight companies have been being taken under external control,” separatist [sic] website Donetsk News Agency quoted him as saying.

Ukrtelecom is part of a financial and industrial group owned by Ukraine’s richest businessman Rinat Akhmetov, whose power-generating and steelmaking businesses on both sides of the eastern front line have already been hit by the blockade’s squeeze on coal supplies. The blockade is a new phase in the three-year stand-off between Ukraine and the pro-Russian rebels that has highlighted the abiding economic ties between the two sides despite a simmering conflict that has killed more than 10,000.

Both the Ukrainian authorities and separatist [sic] officials have warned of economic fallout from blocking coal supplies. Separatists [sic] say local industrial firms are suffering, while Ukraine says the country could suffer rolling blackouts and lost foreign export income of up to $2 billion (1.63 billion pounds).

Russia said the rebels’ move to take control of the companies on its territory was partly understandable because the blockade had put the separatists in “an even more difficult situation”.

“The steps made by the administrations of these regions… can be understood to a degree,” Kremlin spokesman Dmitry Peskov told journalists.

A humanitarian group funded by Akhmetov that has been a major supplier of aid to conflict-hit areas also said on Wednesday it had been forced to halt operations in rebel-held areas after distribution points were blocked by armed men. In rebel-held Donetsk, a Reuters witness saw one police car parked near the fund’s distribution centre at a football arena. Signs on the building’s doors said the centre was not operating and the entrances had been sealed with papers carrying official-looking stamps, but there was no armed presence.

Ukraine’s largest private power and coal producer, DTEK, which is also part of Akhmetov’s business empire, said the management of its operations in separatist [sic]-held territory had not been taken over.

It was not immediately clear if or how other Ukraine-registered businesses operating in separatist [sic] territory had been affected.

Contact Group on Ukraine agrees on disengagement of forces near Stanitsa Luganskaya

TASS, March 1, 2017

MINSK, Belarus – Members of the Contact Group on Ukraine have reached an agreement on the disengagement of manpower and materiel in the area close to Stanitsa Luganskaya, Viktoria Talakina, a spokesperson for envoy of the self-proclaimed Donetsk People’s Republic (DPR), Denis Pushilin, said on Wednesday.

Map of Donbass region, orange marker is Stanitsa Luganskaya, border line is historic Ukraine-Russia border

“The negotiators have been able to reach a number of agreements concerning the disengagement of manpower and materiel near Stanitsa Luganskaya and the situation with the Donetsk water purification station. DPR representatives expressed the hope that the agreements that have been reached will be implemented in the immediate future,” she wrote on Facebook.

Talakina added that DPR envoy Denis Pushilin insisted during the Contact Group meeting on the need to withdraw heavy equipment from the line of disengagement. “It is the presence of heavy weapons that led to the exacerbation of the conflict, which means that returning the equipment to storage areas will help reduce tensions along the line of engagement, protect the lives of our citizens and our cities from merciless shelling by the Ukrainian army,” he noted.

Boris Gryzlov, Russia’s envoy to the Contact Group on the settlement in eastern Ukraine, said the disengagement of manpower and materiel near Stanitsa Luganskaya is scheduled for March 7.

He noted that the participants in the meeting “discussed steps regarding the withdrawal of equipment from the line of engagement to storage areas.” “The disengagement of manpower and materiel in Stanitsa Luganskaya is scheduled for March 7,” Gryzlov said.

He added that measures to ensure safety at the Donetsk water purification station had been discussed as well.

Earlier on Wednesday, the Contact Group’s four working subgroups – security, political, economic and humanitarian ones – held talks in Minsk.

The next meeting is scheduled for March 15.


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