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The Interpreter
Russian-to-English translation journal, with original analysis and commentary on Russia's foreign & domestic policy.
Ukraine Liveblog Day 221

Publication: Ukraine Liveblogs
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The Interpreter
Russian-to-English translation journal, with original analysis and commentary on Russia's foreign & domestic policy.
In Kiev Some Are Literally Throwing Politicians In The Trash

Kyiv Post has a feature describing a new trend in protests -- literally throwing corrupt politicians in the trash.

Covered in red paint and sitting in the middle of a pile of rubbish on a cold pavement in the darkness, Viktor Pylypyshyn endured insults instead of celebrating his registration as a candidate for parliamentary election as he intended on the night of Sept. 25.

“You have to stand on your knees all your life!” shouted one man as someone threw shreds of a newspaper to his face. “What are you staring at? Eyes down to the ground!”

The assault on Pylypyshyn took place as he tried to register as a parliamentary candidate. An angry mob attacked him close to the Central Election Commission and threw him in a trash bin.

According to Kyiv Post Pylypyshyn is the second MP to be thrown in the trash in the last ten days. Vitaliy Zhuravsky, a Party of Regions member, was thrown in the trash on September 16th. The politicians have been thrown in the trash for their support of a law passed on January 16th, the so-called "dictator laws," which made protests and libeling politicians a criminal act. That vote, some experts believe, directly led to the ousting of President Yanukovych in February as protesters broke the law, triggering a crackdown against the protesters in Maidan Square.
The Interpreter
Russian-to-English translation journal, with original analysis and commentary on Russia's foreign & domestic policy.
Analysts - Donbass Needs Ukraine For Economic Survival While Ukraine Can Survive Without The Occupied Territories.

Ukraine's Sirgis Inform argues in a lengthy article today that Ukraine would not suffer greatly, in economic terms at least, from the loss of the occupied areas of the Donetsk and Lugansk regions.

The article says that while the Russian backed separatists control the population centres of the regions, key economic hubs remain under government control.

For example, Mariupol accounts for 31-36% of the total industrial output of the Donetsk region. By comparison, the city of Donetsk produces half as much. Indeed Mariupol's two steelworks make up more than 70% of the region's steel production of which 62.6% was sold in exports in 2013.

Similarly, hydrocarbon resources are also distributed in the government's favour. The Yuzivska shale gas field (named after Donetsk founder John Hughes) lies, according to the article, in government-held territory. The article also states that more than 50% of the coal mined last year in the Donetsk region came from mines in government-controlled territory.

The situation in the Lugansk region is more complicated but still poor for the separatists with major chemical production areas and the largest power station in the region under government control in the north. That power station, the Luganskaya thermal power station, has, however, been shelled recently by Russian-backed forces, though it is reportedly still running.

German MP and member of the Bundestag Foreign Affairs Committee, Marieluise Beck, reported from Lugansk that Russian military engineers were laying power cables from the city to Russian territory, suggesting that Russia plans to provide the occupied city with independent power supplies.

According to the Sirgis Inform report, the region's sole iron and steel plant in separatist-held Alchevsk accounts for 46.5% of the Lugansk region's exports. However, according to the Lugansk Regional Administration, the plant was forced to cut production in the first half of July.

Destruction from the conflict has also forced the Stakhanov ferro-alloy plant and a number of other industrial plants in separatist-held areas to shut off production. According to the Regional Administration, the region's industrial production for 2014 will be only half of last year's, and, the report notes, this figure is largely due to the less affected output from the first half of this year.

Meanwhile, Sergei Kuznetsov writes in The Financial Times that the Donbass region cannot survive economically without staying in Ukraine.

He speaks to Aleksei Ryabchyn of the Ukraine Reforms Communications Taskforce, who says that the steel industry in the Donbass is largely dependent on the import of raw materials from other regions of Ukraine.

Kuznetsov writes:

The steel industry, for example, relies on raw materials from neighbouring regions in Ukraine. "In addition, it needs to import 10 to 15 per cent of its high-quality coal from the Rostov region [in Russia] to increase the quality of the metal," Ryabchyn says.

Most of the iron ore processed by plants in Donbas is supplied from the Kryviy Rih basin in the nearby Dnipropetrovsk region. According to a strategy note from Kiev-based Concorde Capital:

"the Donbas is self-sufficient in coking coal and coke, but has no in-house sources of iron ore. The integration of the Donbas region into Ukraine's iron ore-coke-steel chain is very deep."

The Donbas is also heavily dependent on exports - it sells about 70 per cent of its products abroad. Ryabchyn says it is losing its traditional export markets because clients don't want to deal with an unstable and unpredictable grey zone. He says most industrial enterprises in the Donbas have loans from western banks, while their competitiveness depends on western energy-saving technologies.

"I do not see any other reasonable way for the Donbas to exist, other than for it to remain under Ukrainian jurisdiction. Otherwise, this industrial region will die," Ryabchyn says.

Alexander Paraschiy, the head of research at Concorde Capital, does however note that separatist controlled areas produce more than 90% of Ukraine's anthracite, needed for power stations in other regions of Ukraine.

But according to Paraschiy, the separatist controlled territories are not self-sufficient "either in terms of the production cycle, or from the standpoint of budget revenues and expenses."

He argues that the Ukrainian government will not provide budgetary support to regions that remain under DNR and LNR control, citing a statement by President Poroshenko on Sunday, in which he said that financial assistance would only be provided to territories that raise the Ukrainian flag. 

Those areas would, he says, likely receive economic assistance from Western aid, creating a wider gulf between the separatist-held territories, cut off from their body economy, and the functional areas under Ukrainian control. 

The Interpreter
Russian-to-English translation journal, with original analysis and commentary on Russia's foreign & domestic policy.
Leaders of 'Donetsk People's Republic' Have Strong Connections to Yanukovych's Party Of Regions

The Insider published a story titled, "DPR Connections: The Lux Company and Yanukovych's 'Family'" in which they explain how two leaders of the Russian-backed self-declared "Donetsk People's Republic" (DPR) have obvious ties to the most wealthy oligarch in Ukraine and former president Viktor Yanukovych.

The DPR leadership changed from "Russian Orthodox" to "Donetsk" in connection with the talks on a ceasefire, a source in security agency told The Insider, as leaders with strong religious affiliations were replaced by those driven by different ideologies. Three days before the current DPR prime minister Aleksandr Zakharchenko was appointed, another less-visible appointment was made: Igor Kostenok was made minister of education and science. The article and an organizational chart trace their ties to Ukraine's industrial wealth.


All translations by The Interpreter:

Donetsk National University was seized by the separatists, and on September 19, the  militants broke up the history faculty. Kostenok announced that university would become a branch of the Russian State Humanitarian University. Kostenok also declared that the Ukrainian language would no longer be a compulsory subject in schools.

Kostenok has been an assistant professor of general and administrative management at Donetsk State University since 1994, and a member of the board of European Choice since 1996. Since 2007 he has been deputy director of a state-funded organization, East Regional Center for Innovative Development and has been acting president of the Uglemash technology park.

The Insider had a picture of Kostenok reading a lecture on strategic management in May 2013 along with Dmitry Chigrinsky, a player from the team Donetsk Shakhtyor.

Along with his role at Uglemash, Kostenok has shares in two companies, Donbass Youth International Center and Donbass Coal Group. In the third quarter of 2013, 80% of Uglemash's shares were owned by government institutions and enterprises, but two packets of 10% each were owned by Druzhkovsky Machine-Building Factory and Donetsk Energy Factory, both controlled by Rinat Akhmetov's Gornye Mashiny (Mining Machines).

Shares in the company MMTs Donbass are owned by Ivan Gvetadze, a deputy of the Donetsk City Council who is frequently in the "tender news." Gvetadze and his brother Teymuraz also own a company called City Construction which received a number of contracts to build the library and information center of the Donetsk National Technical University, which cost the government 79 million hrvynia [currently more than $6.1 million USD]

According to Nashi Groshi, the Gvetadze brothers are partners of Irina Safuillina (Triol-Auto), the wife of Ravil Safiullina, ex-minister of youth.

In May 2012, Forbes wrote that in the 1990s, Gvetadze, along with Aleksandr Shvedchenko, a businessman murdered in 1996, funded the Shakhtyor Soccer Club. They were the ones to propose to Akhat Bragin, known as "Alik the Greek" of the legendary Lux firm that he become the owner of the club. The vice president in 1994 was Safiullin; Bragin was murdered in 1995 in an explosion at the club. Rinat Akhmetov became president in 1996.


The Insider also mentions the relationship of Kostenok to the Donbass Coal Group. One of the co-founders of this company is Anna Bondarenko; Nina Bondarenko and Vadim Bondarenko are also founders of the civic organization For a Healthy Country. Nina also owns shares in a company called Rekkom, whose director in 2008 was none other than Pavel Gubarev, DPR's "people's governor." Meanwhile Vadim headed the management of Ministry of Revenue in Donetsk Region; his predecessor in this job was Aleksandr Klimenko, one of the top-managers of Yanukovych's "Family."

Vadim Bondarenko was made an advisor of Klimenko several days before the crackdown on Maidan which led to Yanukovych's flight. Back in 2004, Vadim was executive director of a branch of Sodruzhestvo, the Association of Social Support and Defense of former officers of the intelligence agencies.

Sodruzhestvo is led now by a former KGB and SBU agent in Lugansk, Sergei Sinchenko. He has also served four times as a deputy in the parliament, from the Communist Party and from Yuliya Tymoshenko's Bloc.

Vadim also leads Evropeyskiy Vybor (European Choice); Kostenok is on the board of this organization and also another Bondarenko family member, Eduard.

Eduard Bondarenko was made general director of Donbassenergo in May 2012 and remains head. In 2013, 60% of the shares of this former state energy company were sold to Igor Gumenyuk's Energoinvest Holding. Gumenyuk was director of ARS, a company related to Rinat Akhmetov's group. A popular joke says that ARS stands for "Alik, Rinat, Samson."

Party of Regions deputy Sergei Kiy, a close associate of Akhmetov's is the main share-holder of ARC. Kiy has a mediation relationship to the organizations in which Zakharchenko, DPR's prime minister, used to work.

But the most interesting is that Igor Gumenyuk's brother Aleksandr heads the state organizations Donetsk Regional Center for Investments and Development. And his deputy is none other than the "DPR Education Minister." Kostenok even is noted in the information bulletin of the State Agency for National Projects in May 2013.

Eduard Bondarenko, head of Donbassenergo, is a director of Ugoltrans, a production and transportation firm.

As Forbes has written, this company was created in 2002 by six entrepreneurs from Donetsk and Lugansk Regions. Among them was Vitaly Belyakov who in 2011 led the Donbass Accounting and Finance Center (DAFC).

DAFC controls five mining plants in Donbass which are connected to Aleksandr Yanukovych, the older son of the fugitive former Ukrainian president. DAFC delivers coal to Donbassenergo among others, getting state purchase orders in the billions of hryvnia. According to media reports, the infamous kopanki [mining shafts] which supposedly the "Family" controlled, were involved in this scheme.

For more information on the Russian business connections to the DPR found by The Insider, see our Russia This Week liveblog.

The Interpreter
Russian-to-English translation journal, with original analysis and commentary on Russia's foreign & domestic policy.
Mariupol Checkpoints Under Attack Again

Mariupol news site reports (translated by The Interpreter):

At 17:05 mass shelling of a checkpoint to the east with Grad MLRS began, report Mariupol residents.

"The booming from the explosions can be heard in the city centre and on the Left Bank.At 17:05 the shelling of the northern checkpoint started up again," report social media.

The city defence headquarters announced that Ukrainian troops had returned fire immediately and that there was no threat to civilians.

The Interpreter
Russian-to-English translation journal, with original analysis and commentary on Russia's foreign & domestic policy.
Russia Proposes Ukraine Pays $3.1 Billion From IMF Loan For Gas, Offers 6 Month Discount

Russia's state owned ITAR-TASS news agency reports that the Russian energy minister, Aleksandr Novak, has announced that Ukraine may receive a $100 per-1,000-cubic-metre discount on Russian gas for 6 months in exchange for paying off $3.1 billion of the debt using an IMF loan received today.

The resulting price would be $385 per 1,000 cubic metres.

The Ukrainian energy minister, Yuriy Prodan, said that Ukraine was willing to pay $3.1 billion if gas supplies were guaranteed.

ITAR-TASS reports:

“We should come to agreement on the volume of gas supplies to Ukraine. Then we will be ready to pay this amount,” he said. Prodan said the National Bank had guaranteed the disbursement of $3.1 billion to Naftogaz of Ukraine for this purpose.

Another Russian state-owned news agency, RIA Novosti, reports that The European Union proposed that in exchange for Ukraine paying $3.1 billion by the end of this year, Russia will provide 5 billion cubic metres of gas at the rate mentioned above for six months.

According to RIA Novosti, Novak said:

"The Russian side and the European Union have practically no disagreements on these packages. It can be said that our positions are similar."