Donbass Blockade After the LDPR Ultimatum Expired

Translated by Ollie Richardson & Angelina Siard


Several dozens of enterprises under Ukrainian jurisdiction have been transferred under the external management of the authorities of the self-proclaimed Donetsk People’s Republic, stated the head of DPR Aleksandr Zakharchenko to journalists. A similar situation happened in the Lugansk Republic.

“External management entered in about 40 enterprises almost everywhere, with a small number of exceptions. In some of them the seizure of documents is ongoing,” said Zakharchenko. He added that the form of ownership of some enterprises didn’t change after transition under external management.

External management is the appointment of state representatives in quality of an administration for those establishments that are under Ukrainian jurisdiction. In fact, the external management will allow the Russian companies that came under sanctions to deal with the Ukrainian enterprises through an intermediary. To put it more formally – the enterprises will be nationalized unilaterally, but legally this procedure can be contested quite easily. But enterprises in the LDPR won’t be stopped, and people won’t lose their workplaces.

The main difficulty is in the fact that the Republics aren’t recognized by anybody and can trade only with Russia. So at the moment the expansion of geography of deliveries is only a dream. The same things concern the certification of production, which complicates the export process even more.

However, those means that will be received as a result of trade operations between former Ukrainian companies and the Russian Federation will go to the budget of the LDPR, including taxes to fill up their treasury.

On the other hand, it is very simple to bypass the situation concerning affiliation of the Republics – the foreign companies that earlier signed contracts with the enterprises of Donbass can continue to work according to previous documents – but this concerns only those organizations that don’t change their form of ownership.

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But, of course, from a legal point of view, especially from a European legal point of view, these actions happen without the consent of the actual owners, so they can be interpreted as raider capture (if to speak about those enterprises where documents are forcibly withdrawn and the form of ownership is changed).

Supplementary information:

On February 10th, the People’s Councils of the Republics voted for the amendments to the rules on taxation in their territory, in which businessmen that continue to fill up the Ukrainian budget were offered to become residents of the DPR or LPR before March 31st. In the event of non-fulfillment of this demand they risked the introduction of temporary administrations on the enterprises.

The target audience of the new rules, first of all, are the wealthiest Ukrainian businessmen Rinat Akhmetov, Sergey Taruta, Viktor Pinchuk, Igor Kolomoysky, and others. In their personal or collective property there are such flagships of the Ukrainian industry working on the territory of the Republics as: Enakiyevo and Makeevka iron and steel works, Makeevka and Enakiyevo coke-chemical combine, Khartsyzsk pipe plant, Dokuchaevsk flux-dolomite combine, the Komsomolskoye mining company uniting more than a hundred enterprises, mine company “Krasnodonvugillya”, Zuyvska thermal power plant, Donetsk metal works, Makeevka and Yasinovataya coke-chemical combines, Alchevsky metallurgical and coke-chemical combines, and ferroalloy and car-building plants in Stakhanov. In two years – from July 2014 to July 2016 – these and other enterprises paid to the budget of Ukraine 37 billion hryvnias (about two billion dollars, taking into account the change of course of the Ukrainian currency).

The Ukrainian oligarchs found themselves in a difficult situation. Now they can’t influence the political trend any more and lose considerable profits. In addition, Donbass stops to finance the war against itself – the industry of the region is one of the few that continued to steadily satisfy the Ukrainian budget.

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The situation worsens with each passing day: Reinforcements arrive for the blockaders, and Ukrainian volunteers switched from supporting the army to aiding the blockade – moral support to them is provided by leaders of public opinion in the media. Moreover, the Interior Minister Avakov in an interview made it clear that he won’t give the order to disperse “veterans of the anti-terrorist operation”.

Poroshenko had a few years in order to start fulfilling the Minsk Agreements. He also had two days before the beginning of March, during which it was possible to urgently make decisions. Those days came to an end, and Minsk is still unfulfilled. It turned out that all were punished who aren’t able and don’t want to negotiate. Moreover, they punished themselves.

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