Ukraine may implement economic blockade of Donbas

The Ukrainian government will implement an economic blockade of the Donbas region, said on June 4 Yuriy Lutsenko, the head of the Petro Poroshenko Bloc parliamentary faction. “Until the terrorists don’t return our prisoners and don’t stop shooting, they won’t be getting food from our side,” he told 24 television network. The Russian-backed fighters “have all the Ukrainian goods – drinks, canned goods, meat and other items,” he said. “Of course, the prices are higher. But Ukrainian citizens are transporting them goods, which corrupts our checkpoints, which in turn corrupt that Kyiv government, because permission is given not by the local service, but by Kyiv.” In turn, large industrial enterprises registered in Ukraine can continue to transfer their cargo and pay taxes, he said. The border between Ukraine and the occupied territory will be eliminated once the fighters surrender their arms, return the hostages, Russia removes its soldiers and hardware and Ukraine restores control over its border, he said.

A bill imposing a blockade on occupied Donbas will be oriented towards prohibiting contraband, said on June 8 Andriy Parubiy, the first deputy head of parliament, as reported by the Ukrinform news agency. “Any official can decide what cargo to allow through,” he said. “Enormous corruption emerges from that. Until there’s a law that determines this, rather than officials, the situation won’t get better,” he said, adding that the law is not targeted at civilians but those intermediaries from buying off officials.

Poroshenko told the June 5 press conference that he will never hold a referendum allowing the occupied territory of Donbas to separate itself from Ukraine, an issue he deemed a provocation. Instead, he said referendum could be held to determine to regime of local governance.

Finance Minister Natalie Jaresko said she doubts the government will be able to adjust wages and pensions to inflation rates by the year end. “We don’t have the costs for that,” she told the dt.ua news site in an interview published on June 7. “I will be ready to review social payments if I see some increase in revenue from removing the shadow economy, elimination of tax loopholes, and elimination of contraband or other unforeseen sources,” she said.

Zenon Zawda: Putin’s plan of using the occupied Donbas territory as a drain on the Ukrainian economy is having its effect. In her interview, Jaresko acknowledged that defense financing is a greater priority for her than increasing social payments. This type of situation is aimed by Kremlin at making the Ukrainian public less willing to bear the consrequences of the war and be willing to capitulate to Russian demands in exchange for an improvement of quality of life to what it was before the war began.

The plan of Poroshenko’s team was for the makeshift government of the occupied Donbas territory to collapse from exhaustion and an inability to maintain economic life. Yet that was dependent on an economic stranglehold and can’t work if trade is freely flowing across the separation line, as it also is with Crimea (part of the reason why the Russians have abandoned the idea for a land corridor). So the blockade is necessary for the occupied territory to return under the Kyiv government’s jurisdiction.

The government faces an enormously difficult task in trying to return the Donbas territory under its fold, while at the same time waging a war against its rebels and Russian forces without permanently antagonizing the territory’s residents. While this is happening, the government is also supposed to conduct measures to integrate Ukraine with the EU. To keep all these balls juggling in the air would be hard to ask of any leader and we can’t rule out that trying to keep Donbas becomes too overwhelming for Ukraine’s EU integration efforts. At the same time, that doesn’t mean that Ukraine will have to become dominated by Russian interests.