Monday, June 01, 2015

DNR and LNR in terminal decline

"Financial Times's" Roman Olearchyk, writing from Donetsk, describes how "Fighting in Ukraine leaves economy shattered and factories idle".

'' provides a run-down of the current economic state industrial enterprises in DNR and LNR, giving figures that reveal the massive drop in output.

Because DNR and LNR are not economically viable the two pseudo-statelets are now running huge fiscal deficits and are incapable of paying state employers, pensionsers, and recipients of welfare payments while at the same time trying to maintain tens of thousands of armed men equipped with hundreds of pieces of military hardware.

Russia has contributed  - some payments are now even being made in rubles, but it is becoming clear leaders in the Kremlin will not financially support the occupied territories in the long term. The cost of subsidising recently annexed Crimea is huge already - the Russian economy simply cannot withstand subsidising a large portion of Donbas too.

Much industry there is dependent on Ukraine proper for supplies. The steel mills of east Ukraine are primarily supplied by iron ore from Kryviy Rih in the Dnipropetrovsk oblast. The biggest plant producing blast furnace coke for is in Ukraine-controlled Avdiivka. Huge steel works in Mariupol are not so badly affected, but even if the city and its vast steel mills were to fall to separatists the problems do not go away - rather they become even more intractable. Serious difficulties will remain with supply and export of produce to and from factories in the east to traditional markets. And output from Donbas factories and mills is just not required by Russia which produces much analogous produce..

Many have commentated that some kind of end game between the masters of the universe in the USA and Europe, and the Kremlin, is in progress. Western leaders have gone quiet on Crimea...perhaps offering tacit acceptance of its Russian-held status in exchange for withdrawal of Russian forces and the end of Russian support for separatists in the east of Ukraine. The wishes of Ukraine's population seems to be a side show in all of this.

But any compromise between Kyiv and and disparate separatist groups that include irregular militia, Russian regular troops working under cover, Russian mercenaries , and fanatical crackpots is totally unrealistic.

Jerry Toms, in a RadioSvoboda piece explains why. It is dawning on the separatists that not only has the Novorossiya project  been scuppered but that they are also incapable of getting a grip of the declining economy in the areas they control. However, they are definitely not prepared to give up the power they hold whilst the build-up of arms from Russia continues.

Toms compares the separatists to the trapped bungling 'Dog Day Afternoon' bank robbers... list the names of the more radical field commanders who have been eliminated or arrested in recent times in an attempt by DNR commanders, led by Aleksander Zakharchenko, to try to centralise control. And it seems 'Party of Regions' people are seeping back into positions of authority there, trying to rescue the vestiges of their 'empires of dirt'?

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