A year without Ukraine. Real results of the "DNR’s" economy
Those, who follow the events in the occupied territories of Donbass, could not help but notice how local tsars like to celebrate all anniversaries and dates. Therefore, the fact that the so-called anniversary of the "nationalization", which was celebrated on March 1, remained almost unnoticed by "republican" propagandists, attracts attention itself.
Let me remind you that on February 27, 2017, the leaders of the so-called “LDNR” stated that as of March 1, all Ukrainian enterprises in the territories under their control should be re-registered under the jurisdiction of the "People's Republics", otherwise they will be nationalized. More precisely, external control will be introduced.
"The situation is changing radically and now Ukraine is in our blockade, let them now think how to negotiate with us".
Then, Donetsk dictator-general Zakharchenko predicted a disaster for Ukraine, and stated that it would exist only for 60 days:
"Can you imagine how many billions of dollars the budget of Ukraine will not get? Where would they buy coal? Russia won’t sell them coal as well. Do you understand what I'm talking about?".
At the same time, Zakharchenko was strangely optimistic about his "nationalized" economy. Although he understood that the stolen enterprises received raw materials from Ukraine and sent their products to Ukraine. The breakdown of these links makes their production capacities meaningless. He himself had spoken of this a year before "seizing" the enterprises from their owners.
"And most importantly, the factories that are on our territory, if we launch them, then we need to sell the produced goods. They are so powerful that, roughly speaking, they can provide the entire LNDR in a week. But where we would sell the products, manufactured for another three weeks?".
That is, declaring nationalization, Zakharchenko could not fail to understand the stupidity of such a step, but nevertheless, he was happy that the industry of the so-called “DNR” would be free. He hoped, of course, for Russia’s help.
"All the necessary conditions will be created and our products will go to the territory of the Russian Federation".
It was assumed that with the help of Russia, the reorientation of the Donetsk-Luhansk economy to the Russian markets will take place in one or two months.
"You know, now it's hard to name the exact terms, but according to our estimates, from a month to two. I think we will even be able to cope faster with the help of the Russian Federation".
A year has passed! And now, in his January interview, Boris Gryzlov, the head of the Russian delegation to the Minsk tripartite contact group, suddenly declares that one of his main tasks in 2018 is the lifting of the blockade of Donbass, i.e. the return of the economy of Donbass to pre-blockade status quo.
Gryzlov: the problems of the region cannot be solved without Kyiv's cancellation of the blockade of the Donbass.
Let me remind you, that Ukraine imposed an official blockade of the occupied territories only two weeks after Zakharchenko did it. And it was declared only until the conditions for returning the enterprises to their rightful owners were fulfilled. That is, Kyiv can remove it only if this condition is fulfilled.
It is curious that Gryzlov's words sounded against the backdrop of constant victorious reports of the leaders of the occupied territories about the growth of the economy and the welfare of the citizens, which were achieved just after the blockade.
"Indeed, over the past year, an economic breakthrough has been made in the republic, and many enterprises have been launched. More than 10 new lavas have been discovered... And I can tell you that the economy is developing and growing. The DNR has very good prospects".
So how can this be explained? The same "ministry of economic development of the DNR" monthly reports about 50%, and even 70% growth in sales volumes, the “deputy prime minister” Tashkent declares "an economic breakthrough" and the head of the Russian delegation in Minsk demands to return the former model of the Donbass economy? Strange logic. If they are all right, then why return the model, which was supposedly worse?
And here it is time to figure out whether it is really all right.
It is not difficult to do: it is enough to compare the statistics of the same "DNR" for the pre-2014 and for the blockade 2017.
But if the 2016 report of the so-called "Ministry" was published, the one for 2017 was hidden from prying eyes.
In general, the problem was not easy, but, nevertheless, solvable. The fact is that the "ministers" and their "deputies" are apparently supposed to tell the people about the improvement of their life, therefore they always refer to their "successes" in speeches or publications. But they don’t compare them to the pre-blockade figures. So we will do that for them.
On February 27, the so-called "Minister of Industry and Trade of the DNR", Alexey Granovskiy wrote on the website of his "ministry" that “The Republic's industrial complex is constantly increasing production volumes. We finished 2017 with good economic indicators... The production of the main types of products in 2017 amounted to: pig iron - 1.53 million tons, steel - 1.1 million tons, finished rolled products - 0.87 million tons, coke - 1.2 million tons, steel wire - 6.7 million tons".
Well, now let us compare these victorious figures with the 2016 report, that is, the period when Ukrainian enterprises were not yet "nationalized".
And what do we see?
In 2016, according to the “Ministry of Industry and Trade of the DNR”, 2.1 million tons of steel, 2.7 million tons of pig iron, 2.4 million tons of coke, 1.2 million tons of finished rolled products were smelted.
The indicators of 2017 decreased almost twice in comparison to 2016!
It is noted that the share of metallurgy in the republic's industry is 46%. That is, half of the entire industry in the occupied areas of the Donetsk oblast began to work in full capacity according to the "official" statistics.
By the way, this statistics is also confirmed by the conclusions of the same Russian economists. They calculated that the $156 million that the Russian government allocated to Rosrezerv in May 2017 for the purchase of "raw materials and materials for the metallurgical industry" for the "DNR-LNR" are equivalent to 2 million tons of iron ore. It will ensure the production of approximately 1.5 million tons of steel.
For comparison: in 2016, only Yenakiieve Iron and Steel Works (while being under the management of the Ukrainian group Metinvest), smelted 1.954 million tons of steel.
That is, after "nationalization" Russia indeed gave raw materials to the metallurgists of the occupied Donbass. But it was enough to provide half of their pre-block load. And these were direct costs of the Russian federal budget. Economic mechanisms of reorientation of the nationalized economy of Donbass to Russia have not started to work.
"The situation with exports is very difficult. The products that we have stopped selling to Ukraine, did not go to any other market (for example, Russian). The production volumes are shrinking... At first, our entrepreneurs tried to supply to Russia at least some coal products. But we were hinted quite clearly that this does not fit into the nowadays policy of the Russian Federation and we will not be provided with a free market there".
Now let us analyze another budget-forming industry of the so-called "republics", which is coal.
According to this publication on the website of the "DNR Ministry of Coal and Energy", in 2016 "coal mining enterprises of the Republic of all forms of ownership produced 12 million 5 thousand 154 tons of fuel".
And now let us listen to Alexander Zakharchenko, who shared the plans of the coal industry of the "DNR" for 2018 the other day:
"About 8 million tons are planned as for the volume of coal production. If conditions are favorable, this figure can increase. If the hostilities begin again, this will be subject to some adjustment, but we plan about 8 -8.100 million tons".
They mined 12.5 million tons, and now plan to produce only 8 million tons! But, at the same time, they still talk about the growth of the economy. The indicators decreased by almost one third!
Even ex-minister of state security Alexander Khodakovsky was forced to state the inconsistency of real life and picture that the "DNR" propagandists draw to people.
"They have generated a kind of cognitive dissonance to the population. All sources of broadcasting tell them that everything is under construction, prosperous, new trams and new buses are being set up, production is being resurrected, and people have an illusory impression of the standard of our living… In fact, we live quite badly. And this fact has reasons and explanations".
About the reasons and explanations later, but let us delve into the figures of the so-called statistics once again. The self-proclaimed "Minister" Granovskiy stated that at the last year end, the volume of sales of industrial products by enterprises of the metallurgical complex amounted to about $865.5 million.
And now let us look at the report of the same ministry for 2016.
It is strange but in it, the volume of metallurgical products sold in 2016 is almost the same - $881.8 million. In 2017, when, as we can see, the volume of production fell twice - $865.5 million, and in 2016, when the volume of production was twice as large - almost the same amount. How can it be? The production was half as much, but it resulted in the same income, did not it? Or maybe its price went up twice for the Russian market? In general, it can be seen that more than likely, the minister just span this figure out of thin air.
However, this, apparently, is not the only "victorious" figure, spun by the "DNR" leaders out of thin air. So for example, the "DNR" deputy prime-minister aka "Tashkent" stated the growth of revenues to the republic's budget. Yes, such growth would be possible if industry really grew, but we just realized that there was no growth in industry. Moreover, metallurgy, which, as we remember, accounts for 46% of the entire industry of the DNR, was virtually exempted from paying taxes to the so-called "republic" in 2017 because all 9 enterprises of the metallurgical complex were transferred under the so-called "external management" of ZAO Vneshtorgservis. And on April 11, 2017, "generalissimo" Zakharchenko exempted ZAO Vneshtorgservis from paying taxes other than income tax, unified social tax and customs payments by his decree.
It is interesting that until now, the public of Donetsk and Luhansk does not know who is included in this ZAO and, accordingly, receives income from it. The same "deputy prime-minister" of the "DNR" "Tashkent", answering this question, stated that ZAO Vneshtorgservis does not need publicity.
ZAO Vneshtorgservis enterprise does not need publicity and there are a number of reasons for this. This was reported to DNR LIVE by deputy prime-minister of the People's Council of the DNR Alexander Timofieyev.
How can it be, the people in the "people's republic" do not know who owns half of the "republican" industry?!
Probably, this mysterious ZAO includes Zakharchenko and "Tashkent" themselves, so they assure everyone that the budget is growing, although in fact, it is decreasing. And this was also publicly stated by creator of the Vostok Battalion Khodakovsky.
"Now we have a very serious, acute budget deficit. From this month, an increase in the budget deficit is expected to be somewhere around $5.2 million a month – it is a huge hole. That is a lot of money. From what sources will the losses be covered… Since the launch of the blockade, many sources of replenishment of our budget simply failed. All what we sold to Ukraine in the form of coal and energy carriers stopped bringing income. As of today, the budget survives at the expense of extremely tight revenues. Yes, we are dependent. I will not detalize this phrase, while we somehow pull off, but the more often, the more difficult".
In general, despite the brave statements of occupational propaganda, the situation in economy of the so-called "republics" has worsened at least twice in the year after "nationalization". Enterprises of the republics operate more in the mode of receiving humanitarian aid, that is, packages with gifts from the so-called "Headquarters to control the transfer of Ukrainian enterprises under the jurisdiction of external management of the DNR", than in the mode of obtaining an economic result.
People are not given jobs, but they do not fire them throwing a bone from time to time. Furthermore, in order to give something to someone, the militants take what people really earned away from someone. For example, on February 13, the heads of Donetskstandartmetrologiya and Donetskkoks state-owned enterprises signed an Agreement on cooperation, which is in point of fact expressed in the keeping of the second by the first. "Minister" Granovskiy told about it for camera.
"There are 3.5 months arrears in wages. We applied to the liquid state-owned enterprises of the Republic with a request to help Donetskkoks. Donetskstandartmetrologiya state-owned enterprise responded. After signing of the agreement, they will transfer money to Donetskkoks state-owned enterprise in order to pay wages. Today, employees of Donetskkoks receive a salary for the month. There are about 70 people at the moment".
It is good that people help each other. But the kindness of people cannot replace the work of economy, and the economy operates under specific laws, which even Zakharchenko cannot command. And Russia also has its own economic interests, which it will not sacrifice for the sake of the "people of Donbass". The same Khodakovsky was forced to admit this.
"No one has canceled economic laws. If there is no market, if we have a very narrow sales sector, then it is at least naively to expect that we will prosper economically. In any case, if we talk about the future, the normal operation of our market is possible only after we resume trade relations with Ukraine. It is possible to work in Russia's direction with pain and misery because, first of all, Russia will never officially support trade relations with us since this is a sanction case and we are working according to the scheme of South Ossetia. We create such a document flow which shows that everything is tied to South Ossetia, but in fact, all our supplies are set a quota. In any case, Russia will not be interested in giving a green light to our entrepreneurs in the infringement of its interests. This will not happen".
Now even Iryna Herashchenko with Iryna Lutsenko, who screams about the harm of ending economic relations with CDDLO, should understand why Gryzlov sees lifting of the blockade of the occupied territories his main task in Minsk because they cannot sustain themselves, and it becomes expensive for Russia to sustain them. They want the warring against Ukraine republics to be sustained by Ukraine itself. No one was hiding it.
"Enterprises that transfer the tax to the territory of Ukraine are those enterprises that work with Ukraine. That is, they sell their products to Ukraine for one reason or another, but these enterprises also pay all kinds of fees and taxes to the Donetsk People's Republic".
Unlike some Ukrainian politicians, head of the "People's Council of the DNR" Pushilin understands that it is the economy that determines the existence of these quasi-republics.
"We need to improve the economic component of our republic. Almost everything depends on it. The enterprises will work – workspaces will be. The workspaces will be – taxes will be paid, the taxes will be paid – there will be an opportunity for the republic to exist".
But the most important thing is that, as heard from the operational record of the talks of Nadiya Savchenko by the SBU, preparing a coup in Ukraine by the order of Zakharchenko and Tashkent, that is, Moscow…
"They understand that Russia will still give them back to Ukraine. That is, it does not geopolitically fall into place that they will remain practically independent or under Russia…
They are not afraid of dying, they feel themselves good there, that is, - there is no choice. He says: I do not want like Plotia, that is, "we will not disgrace the Donbass". So they stay there. Zakhar has 5 cars. One with jammers follows him everywhere. That is, everything is armored. Tashkent has the same. That is, there is a good security.
They understand that they will still be given back to Ukraine, so their task now is not to establish an efficient economy – what for? – but to have time to steal. You do not have to tell it the former "Minister" of state security.
"Many of you are connected with business, many of you have a lot of acquaintances who were driven beyond Mozhaysk in terms of opportunities. Now the budget deficit in the quarter is an extra $16 million. Extra from this month. What sources will we cover it from? Will someone refuse from corruption or theft? No! No one will say, I have lived corruptly for three years, but when a hole in the budget was formed, - I will stop stealing. Never. As in the anecdote. Dad became less paid, so will dad drink less? – No, children, you will eat less. They will additionally burden these unfortunate entrepreneurs who themselves are trying to survive. They will cut something somewhere, they will even more severely manipulate people who are sitting on budgetary salaries".
So everyone has his own economy. Zakharchenko and Tashkent have a breakthrough in the economy. And the people…
"Our people do not need the economy, we can live without it, without economy…".
Serhiy Harmash, OstroV