Randy McDonald (rfmcdpei) wrote,
Randy McDonald

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[BLOG-LIKE POSTING] Why You Shouldn't Bet on the Ukrainian East

While Ukraine was having its Orange Revolution last November, I wrote a couple of posts examining Ukraine's potential for a west/east split and concluding that it was much exaggerated 1, 2). One point that was frequently raised by people with an investment in the idea of the industrial east breaking away--supporters of Yanukovich, Russian expansionists, and the like--was that the east, especially the Donetsk Basin, was Ukraine's major centre of heavy industry. If the Donetsk Basin ever broke away, so the argument went, Ukraine would be deprived of its heavy industry. How could it survive?

What these people didn't note was that a Ukraine minus the Donetsk Basin might well end up becoming a rather more prosperous Ukraine. On the 17th of last December, Transitions Online published Kerstin Zimmer's article "The Donetsk Factor". This article is now subscribers-only, which is a pity since it provided a very interesting overview of the 20th century history and identity of the Donetsk Basin. In the Tsarist and Soviet eras, the people of this region saw themselves as more dynamic than their counterparts elsewhere in Ukraine, and were, in fact, so.

The distinct position of the Donetsk region within Ukraine can to some extent be explained by historical factors. The city of Donetsk was founded in the 19th century under Russian rule and developed into an industrial center whose politics was dominated by the local captains of industry. For a long time, the surrounding region maintained its frontier character: it was not only in the vanguard of economic development but was also less tightly controlled by Moscow.

Later, Donetsk was for several decades the industrial hub of the Soviet Union, a fact that turned it into an important power base for the apparatchiks. The Soviet leadership celebrated the Donbas as the showcase of socialism, lauding the industrial achievements and hard work of its miners and working class. Continuous immigration during tsarist and Soviet times resulted in linguistic and cultural russification (though a form of Ukrainian known as surzhik is still widely spoken in the countryside). The older integrating structures of society and much of the surrounding rural population were destroyed in the famine and Stalinist purges of the 1930s. Big industrial companies turned into safe havens. The repeated violent devastation of the region was excluded from its official history, leaving industrialization and continuous economic expansion as the region’s dominant, publicly acknowledged historical experience.

But the region gradually lost its importance to the coalfields of the Soviet Far East. Economic decline set in as far back as the 1970s, though it only became publicly visible during perestroika. In 1989, spontaneous and widespread miners’ strikes erupted. By 1991, when the Soviet Union collapsed, a general feeling that the region had been disadvantaged in the Soviet system fostered support for Ukrainian independence even in this russophone region.

[. . .]

As portrayed by Donetsk elite, the city of Donetsk is the biggest industrial center of Ukraine and the miners’ capital. It is, in short, the heart of a region whose characteristic features are strength and power. The region itself is primus inter pares (which, as it happens, is also the title of an official publication about it). The notion that this industrialized and urbanized region is superior goes unchallenged. This feeling of superiority builds on Soviet notions of the primacy of the working class and taps into the population’s self-confidence, the locals’ view of themselves as heroes, and the Soviet system’s portrayal of them as part of an avant-garde. This superiority feeds into an intense attachment to the region. Different surveys show that no other Ukrainian region generates such a strong feeling of belonging among its inhabitants. In 2002, more than two-thirds of the region’s population expressed pride in living there.

Most inhabitants of Donetsk region are tutoshnye (from the Russian tut, meaning here): people who primarily identify with their locality and not with the state or the nation. This identity is mainly determined not by national, but by socioeconomic factors. Soviet rule created a strong identification with the place of residence on the one hand and with the Soviet Union on the other. As the Donbas was celebrated as the showcase of socialism, this tendency was especially pronounced. So while many key local figures would characterize their region as multiethnic, it would be more accurate to view it as nonethnic.

Zimmer argues that this economic identity fed a sense of ethnic separateness.

[The people of the Donetsk basin] implicitly distinguish themselves from "west Ukrainian" nationalists by emphasizing positive features, such as their tolerance and perceived traditions of multiculturalism. Sometimes, they equate western Ukraine with the "Old World"--Europe--and compare the Ukrainian east to America, evoking the region’s character as a frontier and a cultural melting pot. This also serves to emphasize other positive qualities, such as the entrepreneurial spirit, openness, and freedom that are inextricably linked with "life at the frontier."

Is eastern Ukraine richer than the rest of the country? Quite possibly, yes. James Bater's The Soviet Scene: A Geographical Perspective suggested that in the mid-1980s, per capita national income southern and eastern Ukraine was higher than the Soviet average, with populous western Ukraine bringing Ukrainian totals down. Then again, placing trust in the veracity of Soviet economic statistics isn't exactly wise. The question of current economic balances is irrelevant to the future anyway, since the coal mines which lie at the heart of the Donets Basin's industry no longer make economic sense outside of the context of the Soviet Union's protectionist economy, as the Washington Post observed back in 2002.

The industry is sinking under more than $2 billion of debt, more than it could pay off with an entire year's worth of coal production. The government pays about $500 million a year in subsidies to keep the mines working, according to the World Bank. The Fuel Ministry says that only seven of 176 mines operate without subsidies.

Those subsidies present the government with unpleasant choices. If it ends them, mass unemployment would likely result in southeastern Ukraine, which is already rocked by labor unrest. If it continues to pay them, the mines would just barely stay alive, blunting the urgency for restructuring, and scaring off investors who might buy and modernize some of the mines were it not for competition from other mines subsidized by the state. More than 10 years after Ukraine began privatizing its industries, only two coal mines are in private hands, according to the minister of fuel and energy, Vitaly Hayduk.

[. . .]

Ukraine's coal mines are deadly and in financial trouble for the same reasons that mines in England, Belgium and France were closed years ago: The exploitable coal seams are too far underground to mine profitably or safely.

Some seams are as deep as 4,500 feet, where methane is more plentiful and under far higher pressure. Unless it is detected and safely vented, the gas can shoot out in a poisonous cloud or explode in a fireball.

[. . .]

The tide began to turn in the last 20 years of Soviet rule, when the flow of funds from Moscow dried up. After communism's fall, the mines were exposed as the money-losers they are, at the same time that economic pressures devastated their customers. In a decade, the demand for Ukrainian coal dropped 45 percent.

Things haven't changed. Ukrainian coal mining remains horribly inefficient, with the average Ukrainian coal miner being only half as productive as this Russian counterpart and only a quarter as productive as his Polish counterpart. If, as economists apparently recommend, the Ukrainian government lets the coal-mining segment of the Donetsk Basin's economy go into freefall, that region will be in serious trouble. By extension, so will Russophilic political and cultural trends inside Ukraine.

I remain perplexed why observers saw the Donetsk Basin's industries as a strength instead of a weakness. Looking at the Baltic States, for instance, living standards are inversely proportional to the amount of Soviet-era heavy industry, with Latvia at the bottom of the region's economic rankings and Estonia at the top. In Estonia, the heavily industrialized northeastern quadrant has singularly failed to copy the successful transition made the remaining three-quarters of the country, filling something of the role of East Germany relative to the rest of Germany with the main difference being that East Germany doesn't have a galloping HIV/AIDS epidemic initiated by heroin and accelerated by sex. It's worth noting that northeastern Estonia is at least as ethnically distinct from the rest of Estonia as eastern Ukraine is from the rest of Ukraine, with Russophone-majority cities like Narva and Sillamae that once derived their prosperity from heavy industries no longer having any place in Estonia's new proto-Finlandic information economy, and local alienation from the Estonian national project only accelerating the region's marginalization. Judging by the Estonian example, the lack of archaic heavy industry in western and central Ukraine seems likely to count as a factor working in these regions' favour.

What will Ukraine look like in the early 21st century? It will have a significantly smaller population, with the mortality crisis and the birth dearth and the massive emigration combining to ensure a population closer to 40 than to 50 million. It will, in all probability, be a much richer country than it is now, though still behind even central European levels. It will almost certainly be democratic, and very likely closely integrated with the European Union. And it will be a country with a decrepit rust-bucket east that will be more of a drain on the wider Ukrainian economy than a boost. Unless, of course, the Donetsk Basin managed to join Russia, in which case Russia will suffer accordingly.
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