Restoring Donbas: main events during the 6-12 April

11:22 / 13 Apr. 2015 / 740

Last week became another week of ceasefire in Donbas. Therefore, significant part of the news related to the social and economic support of the Donetsk and Lugansk regions. A statement about the actual humanitarian catastrophe in uncontrolled territories, which was claimed by the OSCE, provoked considerable resonance. Other international institution (UN) stated that it is necessary to restore the payment of pensions and other social benefits in territories beyond the control of Ukraine.

Pass-entry system in ATO area

The economic blockade of Donbas proceeds. Last week, the Ukrainian border guards detained 17 vehicles with products. It was sent to the uncontrolled territory and tried to go round the checkpoints.

State border guard service of Ukraine stated: “17 vehicles with loads of food were detained during the day along the demarcation line. It was transporting goods without proper documentation and tried go round the checkpoints, which were on their way”.

The pass-entry system is still a problem for citizen’s movement.

For instance, Lugansk residents, who were crossing the line of demarcation, dig the trench on the road so the bus could pass and they could go home. However, passengers had no passes. Therefore, Ukrainian border guards did not allowed them to get to the uncontrolled territory. Residents of DNR did not manage to get a pass, even though, they applied for a pass, but received no response.

Citizens, who reside in DNR and LNR, stated that they cannot get a pass due to the postponement of the electronic system for months. Lawyers believe that it is possible to sue the Security Service of Ukraine due to the delay of passe’s granting. Rostislav Kravets, the lawyer, stated: “The person should prove his rightness in court. I have heard about cases, where cargo owners, who could not get a pass, were planning to apply to the court. Individuals can do the same. In my opinion, it is quite real to win such case. In particular, it is possible to claim compensation for material damage. For instance, due to absence of pass, a person is not able to sign any contract, submit documents to the tax, etc.”.

This week the Donetsk Regional State Administration has promised to cancel the pass-entry system for those citizens, who live between demarcation line and Ukrainian territory. Nowadays, in order to cross the border of ATO zone, it is enough to have a passport with the local registration. Previously, it was necessary to get a pass for Ukrainians, who live between demarcation line and Ukrainian checkpoints.

Furthermore, it was promised to simplify the pass-entry system during memorial days. It was reported by Mariupol city council on its website. According to the website: “Command of M sector decided to simplify passage during the Memorial Day. Thus, driving directions of one of the checkpoints will be changed, and full directions will be available in media in the near future “.

The situation in the territories of Donbas under Ukrainian control

This week, temporary restrictions for citizens were implemented in Luhansk and Donetsk regions. In particular, any operations of light aircraft, hunting without prior informing in the regions are prohibited. Captains of sea and river vessels, owners of small vessels, aircraft commanders, chiefs of trains and cars conductors, drivers of vehicles are prohibited to bring in/out people without documents through the boundary area.

In addition, staying in the Sea of Azov, within the Donetsk region, is permitted for small boats only at presence of the pass, which is issued by the division of State Border Guard of the appropriate area.

Pyrotechnic units of State Emergency Service of Ukraine cleared more than 1.7 thousand hectares and destroyed more than 34 thousand of explosive objects. In general, during the conflict pyrotechnics of rescue Service disarmed 574 units of specially installed munitions, including explosive objects with remote control, ammunition extensions able anti-handling devices, high-power bombs prepared for action antitank and antipersonnel mines. In 2015, according to the demining plan of Donetsk and Lugansk regions (under the Ukrainian control), the number of seized ammunition will be approximately 70-75 million units.

Outflow of businessmen and entrepreneurs from uncontrolled territories still proceeds. According to Sergey Morgunov, acting as Vinnytsia mayor, thirty entrepreneurs-displaced persons have moved their business to Vinnytsia from Lugansk and Donetsk regions. Business of the Eastern Ukraine is looking for capabilities to restart in the region. Thus, one of the Luhansk companies appealed to the Regional State Administration with a request for a large plot of land with all communications to accommodate its own production facilities. It is a question of about 40 million euro investment and the creation of 400 workplaces.

This week, Donetsk Research Institute of Traumatology and Orthopedics, which left DNR, resumed its activity. Donetsk Traumatology started to operate in Krasniy Liman. The Institute will work on the basis of the railway hospital.

Despite the partial outflow of skilled professionals and entrepreneurs, Donbas continues to play a significant role in forming of Ukrainian budget. According to the press service of the Main Department of the State Fiscal Service in Lugansk region, since the beginning of the year Luhansk region transferred 1 billion 215 million UAH of tax payments to the consolidated budget of Ukraine. In particular, since the beginning of the year, taxpayers of Lugansk region paid more than 304 million UAH to the state budget, 447 million UAH – to the budgets of territorial communities of the region, 463 million UAH – a common social contribution.

However, there is still a high level of unemployment in the region. According to the Donetsk regional employment center, is currently in the region more than 70 thousand registered unemployed. However, of these, only 4.6 thousand applied to employment centers. At the moment, officially employ, according to the Employment Center, managed only 380 people. This statistic shows, first of all, the high level of informal employment.

The situation in Slavyansk, which is controlled by Ukraine, is still tense. Currently, there are more people of retirement age than working population. Nowadays, among 118 thousand local population (statistics of 2012), there are more than 70 thousand pensioners in the city. This number is increasing day-to-day. This is connected to the desire of people, who reside in DNR and LNR territories, to save their social benefits. More than 3,000 people submitted documents for pension formalization during the March. According to estimates of the Slavyansk department of the pension fund of Ukraine, more than 130 million UAH is required to pay pensions in April.

Events on the territory of the unrecognized republics

Due to the blockade of the region and implemented pass-entry system, firms engaged in paperwork (a pass for the ATO area, pensions, regression and banking services) became the most popular on intermediary services market.

Thus, to apply through this firm in order to get a pass costs 300-400 UAH. Paperwork for the repayment of pensions and regression will cost 400-800 UAH.

The economic situation in the region remains controversial. Reducing the intensity of the combat operations allowed the economy to revive, but in general, crisis events prevail.

Thus, the information about the default of Ukraine’s largest metallurgical holding “Metinvest” became a resonant news. Significant part of its assets located in DNR and LNR areas. Iron and Steel Group has announced a state of default in the audited consolidated financial results for 2014 to IFRS (International Financial Reporting Standards).

Meanwhile, last week Donetsk Metallurgical Plant resumed its operation in DNR. Previously, Donetsk Metallurgical Plant terminated the production of cast iron due to the active hostilities in ATO area, shortages of raw materials and the destruction of transport communications. According to “Metallurgprom”, other asset of “Donetskstal” group – Yasinovka coke and chemical plant – is in the “hot conservation.” Third company of the holding – “Makeevkoks” – is operating and even supply the product for Donetsk Metallurgical Combine named Dzerzhinsky, which belongs to the “Industrial Union of Donbas”. “Alchevskkoks” is also in the “hot-preservation”.

There is a tense between the Ukrainian authorities and uncontrolled territories in the context of energy sector. Unrecognized republics are trying to build energy schemes, which bring them maximal independence, while Ukraine continues to claim increasing debt of Donbas for energy. Thus, it was reported about a cessation of all payments for electricity from the wholesale market of Ukraine by DNR last week. Now generating enterprises will pay to coal suppliers. New payment scheme will prevent the withdrawal of money that previously went “beyond the” republic “, or distributed among the uncontrolled state directions. “Republican Energy Regulatory Commission” will be an industry regulator. One of its function is to control the price of electricity.

The Ukrainian side, in its turn, claimed about the increased debt Donbas for the supplied gas. About 1.5 billion cubic meters of gas were supplied to ATO zone from September 2014 to March 2015. 6 thousand UAH per thousand cubic meters of gas has not yet been paid. It was stated by Volodymyr Demchishin, Minister of Energy and Coal Industry of Ukraine, during an hour of questions to the government in the Verkhovna Rada of Ukraine.

The statement of the company «GNS Cargo» about the reopening of its office in Donetsk became a positive news for the region’s infrastructure. On April 1, representation of the company was opened. It takes the load with the restriction – 1 place up to 20 kilo. Delivery terms are from 10 to 24 days.

Meanwhile, leadership of LNR promised to launch the movement of trolley buses in the city. Trolleybus system was terminated 8 months ago, during intensive shelling of Lugansk.

According to Igor Lordkipanidze, the head of the transport enterprise, as soon as power was given, it was started the work related to the switching on the electrical substations, which energize trolley line. “4 substations have been switched on, another three are about to turn on. In addition, we check the serviceability of trolleybuses, “- he said.

International reaction to the events in the Donbas

This week, the OSCE published a report on the situation in the Donetsk and Lugansk regions. According to members of the monitoring mission, patients are literally on the verge of death in hospitals, because there are no medicines for the aid. The situation is similar in some child care centers and orphanages, where children are on the verge of death due to lack of medical supplies. Michael Botsyurkiv, the head of the press service of the special monitoring mission of the OSCE in Ukraine, noted that it is possible to affirm that there is humanitarian catastrophe in plethora areas of Donbas.

He also said that the OSCE representatives were shocked by what they saw at Donetsk airport.
“Describing the situation in the Donetsk airport … you can imagine, I was in different places around the world, but the area of Donetsk airport is similar to the moon. There is almost no trace of life. And it makes a very strong impression. When you cannot find a single tree or house, which were not damaged by
by explosions or shrapnel, “- said Botsyurkiv.

In addition, Ilkka Kanerva, the president of the OSCE Parliamentary Assembly, demands the cessation of pressure and intimidation of observers of the OSCE mission in Eastern Ukraine by militants. According to his words, the threats and shooting toward the mission cannot be endured any longer. OSCE supports forwarding of the peacekeeping mission in Donbas.

Poland is also ready to support the peacekeeping operation in Donbas. It was stated by Bronislaw Komorowski, the Polish President, at a press briefing after the meeting with Petro Poroshenko, the President of Ukraine, in Kiev on Wednesday, April 8.

Meanwhile, the UN made a statement in which it called on the Ukrainian government to resume the payment of pensions in these regions.

Barbara Manzi, the head of the UN Office for the Coordination of Humanitarian Affairs in Ukraine, said: “The decision –is payments must be returned. This is the only solution”. “For us it is not a political issue. If civilians need something, they must get what they need. We are not a political organization, we are out of politics, because we call on all parties to solve this problem, “- said Manzi.

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