Separatists in eastern Ukraine have threatened to take control of Ukraine-run businesses in rebel-held areas if the Kiev government does not end a rail blockade that had halted coal supplies.
The ultimatum came on Monday, a month since a group of Ukrainian legislators and army veterans started blocking some rail traffic in eastern regions.
The blockade is opposed by the Ukrainian government, as it prevents coal produced in the rebel-held territory from reaching power plants and the steel industry in the rest of the country, whose exports are a keystone of Ukraine’s economy.
In a joint statement, leaders of the so-called Donetsk and Luhansk People’s Republics (DNR and LNR) said on Monday the blockade had caused many businesses to suffer in rebel-held areas and that it went against the spirit of the 2015 Minsk peace agreement.
Alexander Zakharchenko, of the DNR, and the LNR’s Igor Plotnitsky said: “We are forced to announce that if, by midnight on Wednesday, the blockade is not taken down, we will introduce a system of external management on all companies registered in Ukraine’s jurisdiction that operate in the DNR and LNR.”
They also said they would stop selling coal to Ukraine and send future coal supplies to Russia or elsewhere.
Heorhiy Tuka, Ukraine’s deputy minister for issues relating to rebel territories, dismissed the separatists’ threat to seize the companies.
“It’s an attempt to scare us,” he said in a statement published by website InfoResist, saying the separatists did not have the ability to manage the large industrial companies.
Low coal stocks
In government-controlled areas, the economic effect of the blockade is already being felt.
The government has warned that low coal stocks in power plants could lead to rolling blackouts, while the central bank has said it could take emergency measures if the supply squeeze hits steelmakers’ export revenue.
Ukraine stands to lose up to $2bn in foreign currency revenue if the blockade continues, according to President Petro Poroshenko.
Metinvest, Ukraine’s largest steel producer, is one of the biggest employers in eastern regions on both sides of the front line. The blockade has already forced it to halt production temporarily at one of its mills and several coal mines.
Metinvest said it would be “unacceptable” for separatist officials to take control of its businesses in rebel-held areas, saying this would force it to halt the affected operations.
“In those specific businesses alone, almost 20,000 people would face redundancy. This would inevitably be followed by the dismissal of people at related businesses … and contractors, which would lead to social upheaval,” Metinvest said in emailed comments.
Trading with the enemy
Authorities in Kiev remains reluctant to use force against strikers, who accuse officials of trading with their foes, as well as allowing contraband to reach the east from Ukraine.
Trade with the rebel regions has gone on even as Kiev and the separatists are locked in a 34-month conflict that has claimed more than 10,000 lives.
In order to continue trading with the rest of Ukraine, the firms have been registered legally in government-controlled areas, but pay taxes to both the rebels and the central government.
As the dispute over the blockade heats up, there are reports of more deadly clashes between the rival sides along their volatile front line.
Ukraine’s army said two of its soldiers were killed and another four wounded despite a supposed truce coming into force last week.
On Sunday, the United States called on Russia to “immediately” observe the ceasefire in Ukraine, accusing combined Russian and separatist forces of targeting international monitors.
“We condemn Friday’s targeting of OSCE Special Monitoring Mission (SMM) monitors and the seizure of an SMM unmanned aerial vehicle by combined-Russian separatist forces,” said Mark Toner, the US state department spokesperson, referring to the civilian observers with the Organisation for Security and Co-operation in Europe.