On December 26, 2016, former participants of ATO in Donbass, including Supreme Rada members (Semen Semenchenko and Volodymyr Parasyuk) announced blockade of the territories of Donbass not controlled by Kiev.
These “activists” shifted to practical steps a year ago, on January 25, 2017, by blocking Lugansk-Lisichansk-Popasnaya railway near Gorniy-Zolotoye village.
Here is how the trade blockade of Donbass started. It aimed to stop “bloody trade” in coal and other goods with the territories not controlled by Ukraine. Those involved in the blockade had fortified their redoubts in Lisichansk, Pokrovsk and Bakhmut for three months, regularly clashing with the law-enforcement. It is worth mentioning that every time the police showed too much insistence, they were called back, which just encouraged “the patriots” to expand.
Eventually, on February 2, 2017, they blocked the railway crossing near Bakhmut town in Donetsk region, and on February 26 they blocked another direction – Mariupol, opening a new redoubt near Novotroitskoe village.
In April 2017, Semechenko announced a “second stage of Donbass blockade.” On May 25, the blockaders set a new ultimatum to the government i.e. to ban purchase of Russian coal as well as to start “nationalization of Russian business in the territory of Ukraine.” The sieged regions have developed new schemes to trade in the same anthracite coal in Donbass passing off as imported coal (“Rotterdam+” scheme).
Everyone was happy with the situation, except the poor consumers of that coal. Coal mines in the insurgent Donbass continued to operate, shadow dealers kept earning extra incomes, and the blockader “patriots” got a reason for new actions. On August 30, 2017, they announced a shift to the second phase of the blockade, this time to put an end to those new scheme of coal supplies.
Noteworthy that at first the president and prime minister criticized the blockade organizers blaming them for causing tangible damage to the country’s economy. Anyway, they did nothing to stop it. Later, the government even legalized the blockade. On March 15, 2017, the National Security and Defense Council of Ukraine approved the idea of imposing a full freight transportation blockade on the territories not controlled by Kiev until the enterprises in Donbass are transferred under jurisdiction of Ukraine.
Kiev decided to get back the enterprises as it lost them due to actions of the blockade organizers. Donetsk and Lugansk authorities refused to remain silent in such situation and announced “nationalization” of 43 industrial enterprises of Ukrainian jurisdiction in Donbass on March 1.
A year has passed since the beginning of the blockade, and it is time “to draw the balance.” To avoid “pro-Russian propaganda” allegations, it’s better taking information from Ukraine or at least Europe.
The EU has admitted that the trade blockade of Donbass by Kiev has weakened Ukraine’s economy.
"It is perfectly clear that the Ukrainian economy has weakened with the occupation of parts of Donetsk and Luhansk regions especially in industrial production," said Head of the European Union Delegation to Ukraine Hugh Mingarelli.
Ukraine’s Prime Minister Volodymyr Groysman also accepted that in 2017, Ukraine lost at least 1% of GDP due to Donbass blockade.
According to the National Bank, Ukraine’s trade balance shrank for $1.8 billion in 2017 due to the blockade of Donbass. Suspension of trade and tax revenues to the Pension Fund was another dramatic loss. All the enterprises registered in Ukraine and located in the territories beyond Kiev’s control paid almost 31.7 billion UAH to the Ukrainian budget in 2016 and 20 billion UAH in 2015.
Ukraine’s energy sector was affected as well. Metallurgical production and export fell dramatically. Most of metal and coke producing enterprises are located in the territory of Donbass. This sector gave jobs to nearly one million of Ukrainians.
And finally, the most important – blockade has improved positions of the “aggressor-country” in the international anthracite market, as Ukraine has left it voluntarily and “gave” its segment to Russia. The blockade of Donbass appeared beneficial for Russia’s coal-mining industry making it the key supplier of anthracite to Ukraine by the same “bypassing” schemes.
Andrey Sedov