The five-week blockade by Ukrainian activists of trade with Russian-occupied areas of the eastern Donbas is ratcheting up political tensions and may be contributing to an escalation of the war.
The blockade could end in Ukraine ceasing economic ties with the Russian-occupied territories. Other possibilities include the Kremlin stepping up its war or recognizing its Donbas proxies as sovereign entities.
On the domestic front, the blockade may trigger a political crisis if the authorities decide to crack down on the activists. Another option is that Ukrainian President Petro Poroshenko will reach a compromise on restricting trade with separatist-held areas.
Blockade
Ukrainian activists spearheaded by Samopomich Party lawmaker Semen Semenchenko are blocking railways and roads connecting Ukrainian-held and Russian-occupied areas and preventing the supplies of some products, including coal deliveries to Ukraine.
The activists include war veterans who demand that the government halt all trade with the occupied areas and pass a law that would formalize the status of these areas as “occupied territories.”
They also demand that Russian-separatist forces release Ukrainian prisoners of war.
Separatist response
Kremlin-backed forces on March 1 said they had started seizing Ukrainian companies, including those of billionaire oligarch Rinat Akhmetov, in response to the blockade. The separatists said only companies registered in the Russian-puppet entities would be allowed to function.
But Akhmetov’s System Capital Management said on March 2 that it would never register in separatist-controlled areas, calling the demands “unacceptable.”
The SCM Group claims it has paid over Hr 100 billion in taxes to the Ukrainian national budget since Russia’s war started, of which 10 percent are attributable to its assets in Russian-held areas. The group has also said that if separatists took control of mills or mines in separatist-held areas, it would be forced to halt production.
Ukrtelecom fiasco
Monopoly fixed-phone operator Ukrtelecom, owned by Akhmetov, switched off part of its network in Donetsk Oblast after Russian-backed forces seized control of the company’s 900-employee Donetsk office on March 1. Some 200,000 people remain affected.
On Feb. 28, Russian-separatist forces also took over Akhmetov’s Donbas Arena soccer stadium in Donetsk, a distribution point for Akhmetov’s humanitarian aid.
Sergey Palkin, the director of Shakhtar Football Club, also owned by Akhmetov, says nobody from Akhmetov’s side is going to negotiate with Kremlin-backed separatists.
“We won’t talk with them, and there’s no point in laying down conditions to us,” Palkin told the Kyiv Post. “Other bodies exist to carry on talking.”
Economic impact
The blockade is already harming the economy on both sides of the war front by disrupting energy supplies and tax payments. Supporters of the blockade argue, however, that Ukraine should reduce its economic dependence on Russia and re-orient its trade elsewhere.
Meanwhile, Kremlin-backed separatists in the Donbas want tighter links to Russia, although analysts say that there is little demand for their coal and metal products there. Luhansk-based separatists made the ruble their sole official currency starting from March 1, while Donetsk-based separatists had already done so in 2015.
Escalation
Political analyst Volodymyr Fesenko said Russian military escalation or formal recognition of the Donbas separatists may lie ahead. On Feb. 18, Russia recognized the sham passports issued by its proxies in the Donbas.
Fesenko said that the blockade could also disrupt negotiations to carry out the Feb. 11, 2015, Minsk peace agreement.
The blockade has been backed by opposition politicians, including Samopomich Party lawmakers, ex-Georgian President Mikheil Saakashvili, and Poroshenko Bloc lawmakers Mustafa Nayyem and Sergii Leshchenko. They have criticized smuggling across the front line and alleged rent-seeking schemes in the Donbas run by Akhmetov and allies of Poroshenko, who deny them.
Oleksandr Onyshchenko, a fugitive lawmaker charged with theft, claimed in December that Poroshenko’s top ally and lawmaker Ihor Kononenko had been getting $20 per ton on coal supplies from Russian-occupied Donbas, which Kononenko denies.
“Political tensions have risen because of the blockade,” Fesenko said. “This shows how fragile the political situation in the country is.”
Vitaly Bala, head of the Situation Modeling Agency, said that Poroshenko should try to reach a compromise with the activists.
