AFP, Donetsk :
With major enterprises closed for the past month, coal production down, and the transportation system in disarray, the economic future of eastern Ukraine’s separatist territories looks bleak.
“The consequences of the conflict for the local economy have been disastrous. We’re looking at a 30 percent decline in output from last year,” said Yuriy Makogon, an economist at the University of Donetsk.
The areas of Donetsk and Lugansk, in the middle of the coal-producing Donbas region, declared independence last month and cut ties with the central government in Kiev. Since then, the region of six million people, Ukraine’s industrial heartland accounting for one fifth of the country’s total gross domestic product, has slipped into lawlessness.
The two largest companies, chemical heavyweights Stirol and Severodonetsk Azot, halted their operations in early May, citing the ongoing hostilities between pro-Russian rebels and Ukrainian forces.
One of the nation’s largest shale gas projects, with an investment of over $10 billion (7.3 billion euro), has stalled.
The project’s operator, Anglo-Dutch corporation Shell, insists that it is still on track, but Ukrainian Prime Minister Arseniy Yatsenyuk has acknowledged it is in trouble. The reason: A crucial portion of the deposits are located in Slavyansk, a rebel stronghold surrounded by Ukrainian forces and the scene of daily combat.
Several mines have also been forced to close down, causing a year-on-year drop in coal production of 10 percent in recent weeks.
“That’s 7,000 to 10,000 tonnes of coal that we miss out on every day,” said Ukraine’s deputy coal minister Yuriy Zyukov.
“Many companies in Donetsk have closed the gates and sent their staff home on unpaid leave,” said Gennadiy Tkachenko, the deputy mayor of Donetsk, a city of one million inhabitants.
