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The Temptations of State-Owned Enterprises

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The Temptations of State-Owned Enterprises #3 (109) March 2017 The impact of trade blockade with The development and new The conservative revolution the occupied parts of Donbas sources of the Russian Spring of Pavlo Skoropadskiy THE TEMPTATIONS OF STATE-OWNED ENTERPRISES WWW.UKRAINIANWEEK.COM Featuring selected content from The Economist FOR FREE DISTRIBUTION CONTENTS | 3 BRIEFING NEIGHBOURS 4 The other side of the blockade: How 31 Twitter harvest: Why Europeans the industrial landscape are less eager consumers of online of the occupied Donbas is changing ranting than Americans POLITICS 32 Jan Pieklo: 7 Dear Mr. Oligarch: Where the claims “We are interested in helping in favor of continuing coal trade with reform the EU” the occupied parts of Donbas are Poland’s Ambassador to Ukraine misleading on his country and the EU, role in its neighbourhood, 10 War or imitation of war: A legal relations between Poles and view Russia’s aggression against Ukrainians Ukraine analyzed in the context of international law 35 Jonathan Holslag: “Ukraine should not expect 14 Alexander Hug: “We have not yet all too much from the EU” been given a comprehensive list of An analyst of international politics on weapons to be withdrawn” the rise of Asia, the policy of the EU Deputy Chief Monitor of the OSCE and options for Ukraine Special Monitoring Mission to Ukraine on disengagement, priorities amidst 38 An inward choice: Philippe de Lara on escalation in the East the French presidential election 40 Dick Pels: “Patriotism FOCUS can be a progressive phenomenon 16 The big manger: Why public sector is if filled with progressive ideas” the main source of corrupt wealth Dutch sociologist on European 20 Will and skill, not rocket science: populism and nationalism, a new What’s missing for the management cultural policy as a way to preserve of state enterprises to be properly the integrity of the EU reformed? HISTORY SOCIETY 44 The conservative revolution of Pavlo 24 Time for a strong middle-class party: Skoropadskiy: How the last Hetman What Ukraine needs to have a political of Ukraine came to power in 1918 and force that is not linked to oligarchs what he achieved 26 A vengeful spring? What might cause CULTURE & ARTS the “Russian Spring” to make a 49 Jerzy Onukh on the film Bitter Harvest comeback in Ukraine, and where? and the theme of the Holodomor 28 Why the Russian Spring froze up: in art What prevented Kremlin curators from 50 Video art, flower shows and ceramic realising the "Crimean scenario" in crafts: The Ukrainian Week offers a most of south-eastern Ukraine selection of events to attend in March E-mail [email protected] www.ukrainianweek.com Tel. (044) 351-13-00 The Ukrainian Week #3 (109) March 2017 Editors address 37 Mashynobudivna str., Kyiv, 03067, Ukraine Founder ECEM Media GmbH. Publisher ECEM Media GmbH Print run 15 000. Free distribution Address Austria, Am Gestade,1, 1010 Vienna Our partner State registration certificate КВ № 19823-9623ПР 19.03.2013 Chief Editor Dmytro Krapyvenko Editors Anna Korbut, Lidia Wolanskyj #3 (109) March 2017 | THE UKRAINIAN WEEK 4 | BRIEFING THE UKRAINIAN WEEK | #3 (109) March 2017 BRIEFING | 5 BRIEFING The other side of the blockade Denys Kazanskiy fter a long period of uncertainty and stagnation, the situation in Donbas is stirring up again. In the past weeks, the headlines announced that the militants have taken over “temporary administra- tion” of a slew of factories and mines in ORDiLO, the occupied territory of Donbas. And although Aboth DNR and LNR denied that they were not yet nationalizing them and that the owners were nominally still in charge of their assets, in fact, what happened was what they call “otzhim” or “extraction” in Donetsk—a hostile takeover—an activity that began in spring of 2014 and continues to this day. The reason given for instituting “temporary administration” was the blockade of ORDiLO by Ukrainian activ- ists, which began a month ago. Still, the decision to “extract” was made long before the blockade began, and it wasn’t made in Donbas but in Moscow. The blockade of railway lines was just a handy excuse to actually do it.This story was preceded by another one, however: Moscow’s recognition of DNR and LNR passports. Many Russians see this step as moving towards recognition of the two puppet republics. The Ukrainian side called this walking away from the Minsk talks. Few in Ukraine paid much attention to a January 17 interview with Dmitry Riemizov, a Russian politi- cal analyst and advisor to Dmitry Rogozin, which came out two weeks prior to a sudden heating up of the UNIAN PHOTO: conflict around Avdiivka and the start of the blockade. It was published under the heading, “Time to take #3 (109) March 2017 | THE UKRAINIAN WEEK 6 | BRIEFING steps to recognize DNR and LNR.” In the lengthy interview, Time and again, various regions of Russia come across Riemizov insisted that the idea of “Crimea in exchange for the news of yet another manufacturer closing down, Donbas,” which had often been mentioned by a number of yet more cutbacks in the workforces of companies, and experts as an option for ending the Russo-Ukrainian con- growing delays with paying out wages. Traditionally, the flict, was not possible for a number of reasons. Meaning, oil industry has done fairly well, but other industries it’s time for Russia to take, not only Crimea but also the that are dominated by outdated soviet facilities are in a occupied counties of Donetsk and Luhansk Oblasts. permanent state of crisis. In Rostov Oblast, for instance, “If Abkhazia and Transnistria were prepared psycho- nearly all the coal mining enterprises are closed and in logically to continue for a long period as unrecognized ruins today because the coal industry had no future in states, the population of DNR and LNR, as before, consid- this region. ers joining Russia the only acceptable outcome for them to Secondly, whatever happens next, the territory covered continue to exist,” Riemizov noted. “Not to do so threatens by ORDiLO will remain controversial for many years to a hard-to-predict shift in local opinion, to put it mildly... come. That means that no serious business or investor will the option of a frozen conflict in Donbas is neither par- be prepared to risk putting serious capital in the region. In ticularly realistic nor particularly desirable from Russia’s terms of international law, the Ukrainian plants that have point of view. been taken over are stolen goods. The suspect, toxic assets “At the beginning of 2017, it was already obvious that of the Yenakievo Metallurgical Plant (YMZ), the Alchevsk a long-term frozen conflict in Donbas is inconvenient for Metallurgical Complex (AMK), the Khartsyzk Piping Plant Russia and creates more problems than a decisive resolu- (KTZ), Stirol, a chemicals plant, and other captured enter- tion, one way or the other,” Riemizov went on. “Another prises will see all their remaining resources milked to the factor that is pushing the Russian Federation to resolve very last drop, and it’s unlikely that anyone will risk invest- the conflict quickly is that DNR and LNR are not strong ing in their development. enough in their current form.” Obviously, these plants have enough capacity to re- When asked what might be the roadmap to recogniz- main viable for some time and will continue to operate with ing the pseudo-republics, he answered that the first step the help of customs schemes organized by handlers from had to be “ensuring the civil legal status of the residents of Russia. But the long-term prospects of any businesses in Donbas.” Exactly one month later, Moscow recognized the ORDiLO are doomed: most of them were already consid- passports issued by DNR and LNR. ered highly depreciated even before this war began. All told, what is going on in Donbas today is the result of the degradation of the region, which began many years THE DECISION TO SEIZE INDUSTRIAL ago. The Donbas oligarchs who took control of all the local FACILITIES IN ORDiLO WAS MADE IN MOSCOW industries in the 1990s and on are themselves at fault that they are losing their assets today. These men never prop- LONG BEFORE THE BLOCKADE BEGAN. erly appreciated the value of the soviet enterprises that they THE BLOCKADE OF RAILWAY LINES WAS JUST took over for pennies using a variety of fraudulent schemes. A HANDY EXCUSE TO ACTUALLY DO IT Having earned millions and even billions on them, mem- bers of the Donetsk and Luhansk clans never managed to become a truly Ukrainian elite. They never developed Another Russian expert, Aleksandr Morozov, analyzed Donbas, took care of its social problems, or invested in new the Riemizov interview and other comments by Kremlin industries. politicians that were made recently and concluded that the The Donetsk clans were able to grab power in the coun- Russian Federation was preparing to gradually absorb the try but were unable to offer either Donbas or Ukraine any territories of Donetsk and Luhansk Oblast that were un- meaningful development strategies. Their political activi- der its control. He is of the opinion that the situation in the ties lay in cultivating nostalgia for a soviet past and building international arena is fairly accommodating right now. De an alternative, anti-Ukrainian Ukraine—a Ukraine without facto, the world has already recognized Russia’s culpabil- the Ukrainian language, Ukrainian history or Ukrainian ity for military action in Donbas, and Russia failed to get identity. In the end, the outcome of this kind of policy was its actions dismissed as merely a “civil war” in Ukraine. No inevitable. one is about to lift sanctions against Russia any time soon, Scared by stories about bloodthirsty banderites, taught so Moscow has little to lose.
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