With major enterprises closed for the past month, coal production down, and the transportation system in disarray, the economic future of eastern Ukraine’s separatist territories looks bleak.
“The consequences of the conflict for the local economy have been disastrous. We’re looking at a 30 per cent decline in output from last year,” said Yuriy Makogon, an economist at the University of Donetsk.
The areas of Donetsk and Lugansk, in the middle of the coal-producing Donbas region, declared independence last month and cut ties with the central government in Kiev.
Since then, the region of six million people, Ukraine’s industrial heartland accounting for one fifth of the country’s total gross domestic product, has slipped into lawlessness.
The two largest companies, chemical heavyweights Stirol and Severodonetsk Azot, halted their operations in early May, citing the ongoing hostilities between pro-Russian rebels and Ukrainian forces.
One of the nation’s largest shale gas projects, with an investment of over $10 billion (7.3 billion euro), has stalled.
