- Repealed the special status for Donetsk and Lugansk it had passed three weeks prior
- Ceased all financial support to the rebel territories, which means it will stop paying pensions to Donbass retirees
- Is considering a gas-for-coal deal that would see money sent to the Novorussia government
This is an interesting article that forcefully conveys the fact that Kyiv continues to raise the alarm about existing or potential Russian or Novorossiyan bellicosity and to proclaim its readiness to fight a renewed full-scale war.
However, with Ukraine disowning retirees in Donbass and contemplating trade deals with the rebel leadership there are increasing signs that this combative attitude is really for internal consumption, and that Kyiv is actually beginning to gradually adjust to the reality of Novorossiya outside its sovereignty.
This article originally appeared in Business New Europe
With hopes fading following unauthorised elections on November 2 that Ukraine's eastern Donbass region could be reintegrated into Ukraine, fears are rising in Kyiv that it instead could serve as a bridgehead for further Russian and rebel incursions.
"We are capable of protecting our state," Ukraine's president Petro Poroshenko told the national security and defence council at an emergency session in the evening of November 4. The security council convened in response to elections staged by rebels controlling Ukraine's eastern Donbass region that many in Kyiv fear is another step in the rebel-held region's move to Moscow's orbit.
Losing Donbass may be the least of Kyiv's worries: together with a reported spike in Russian military activity near the border with and in Ukraine, the unrecognized elections prompted fears that Donbass could become a bridgehead for new Russia aggression against Ukraine.
Poroshenko gave orders to the military top brass to prepare for the worst. "Several new units have already been formed to repel possible attacks in directions of Mariupol-Berdyansk, Kharkiv, area to the north of Luhansk and Dnipropetrovsk region," Poroshenko said, adding that three lines of fortifications around Donbass were currently under construction. "Provision of modern weapons systems and reconnaissance systems, as well as missile targeting systems has been quite effective," Poroshenko said.
Then in the small hours of November 5, Poroshenko signed a presidential decree detailing sweeping measures to strengthen Ukraine's defensive capacities, ranging from reintroducing military training in secondary schools, and increasing the share of defence spending in Ukraine's budget to 3%, to obtaining international security guarantees, along with a number of secret measures.
Adding to fears that Donbass might be now used as a bridgehead for fresh aggression against Ukraine, newly appointed governor of Luhansk region, Hennady Moskal, reported on November 3 that an entire unit of Russia's feared FSB intelligence service had relocated to the rebel-held regional capital of Luhansk, from the Moldovan secessionist enclave of Transdnistrien.
"The events of the last week show how Russia is openly strengthening its military deployment in the occupied territory of Donbass," blogged former Ukrainian intelligence head and prime minister Evhen Marchuk, referring to reports from US and Nato sources. "The public needs to be informed about the military significance Donbass region is assuming," he wrote.
The security council backed President Petro Poroshenko in calling for a repeal of a law passed October 15 giving special status to the rebel-held districts. The law provided for self-rule in the districts within the framework of Ukrainian law, but the unrecognised elections of November 2 organised by the rebels for themselves signalled their lack of interest in re-integration into Ukraine.
Repealing the law on special status means effectively that Kyiv will now not provide any financial support to the rebel territories, as was stipulated in the special status laws, deputy security council head Lytvynenko said.
Poroshenko said however that Ukraine would not disown the Minsk peace accords signed on September 5 by representatives of Russia, Ukraine, the rebels and the Organisation for Security and Cooperation in Europe, of which the law on special status for Donbass was a key component. He said Ukraine was ready to pass a new law on special status providing the rebels implemented their side of the peace agreement, such as a sustainable ceasefire and withdrawal of all forces from, and clear demarcation of, a buffer zone between the rebel and Ukrainian forces, as well as cancellation of the elections of November 2.Energy Swap?
In Donetsk on November 4, after being declared winner of unrecognised, highly opaque and largely uncontested elections he himself organised, prime minister Aleksandr Zakharchenko - for the first time seen wearing a suit as opposed to military fatigues - was inaugurated amid some pomp as head of state of the self-proclaimed Donetsk People's Republic. In Lugansk - only a two hours drive away from Donetsk - Ihor Plotnisky became 'head of state' of the self-proclaimed Luhansk People's Republic.
Russia, which in the run-up to the elections said it would recognise them as legitimate, has yet to do so. Russia's foreign ministry referred to elections in "Donetsk and Lugansk regions" in a statement on November 3, calling them "on the whole organized with a high turnout", and saying that Russia "respects the declared will of the people of the south-east of Ukraine", falling short of full recognition, possibly fearing a sharpening of western sanctions if it did so.
Russia called for the elections to be a stepping stone towards a "sustainable dialogue" between "the central Ukrainian authorities and the representatives of Donbass" within the framework of the Minsk peace accords.
Despite fears that the unrecognised rebel elections have put an end to hopes of the reintegration of Donbass in Ukraine, there remains ongoing dialogue on economic issues, since Donbass and the rest of Ukraine are mutually interdependent in terms of energy and fuel.
Currently Kyiv continues to supply the rebel-territories with gas, although state energy company Naftogaz receives no payment for doing so, prompting calls from hawks in Kyiv for gas supplies to the rebel-held territories to be capped.
Kyiv has promised its international donors that it will abolish subsidised gas prices for households and utilities, which will be politically difficult to implement at the same time as supplying gas for free to anti-Kyiv rebels, say experts. But cutting gas supplies to Donbass would give Russia occasion for stepping up support for the rebels under humanitarian grounds, fear politicians in Kyiv.
Conversely, the rebel-held territories produce thermal coal needed in the rest of Ukraine to fuel power stations. Interruption of domestic thermal coal supplies due to the Donbass conflict has forced Kyiv to start expensive imports of coal from South Africa.
The mutual interdependency might allow a gas-for-coal deal to go ahead between Kyiv and Donetsk: Ukraine's first deputy energy minister Yuri Zyukov said on November 3 that Kyiv was now contemplating buying coal from the rebel-held territories, hoping in return for payment for energy supplied. "Regarding the coal which we are ready to buy on the occupied territories of Luhansk and Donetsk regions, we need to pay money [for it]. (...) This money will be used for paying salaries and above all for paying the energy bills and solving the social issues in mining towns," Zyukov said, according to RIA Novosti.
Rebel leaders indicated in response that they were ready to sell coal to Kyiv, and also would retain the hryvnia as currency, despite earlier statements that they would introduce the ruble.