Written by Nikolaus von Twickel<\/p>\n
Summary<\/p>\n
In a sign of growing political volatility, Donetsk separatist leader Alexander Zakharchenko declared surprisingly early that he would seek re-election next year and ousted Denis Pushilin from the ruling party leadership, replacing him with a drama theatre director. His move came after a high-profile assassination attempt and rumors of an impending leadership change. And while fear of spies is on the rise in both Donetsk and Luhansk, the economic situation remains stagnant at best.<\/p>\n
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In Donetsk, the leader of the \u201cpeople\u2019s republic\u201d, Alexander Zakharchenko, announced<\/a> on October 18 that he will stand for re-election in November 2018. The move came surprisingly early \u2013 not even Russian President Vladimir Putin has said publicly if he is running in the election next March. More importantly, it was accompanied by the removal of Denis Pushilin \u2013 long believed to be the number two in the separatist leadership – from his post as executive officer of \u201cDonetsk Republic\u201d, the political vehicle most likely to back Zakharchenko in an election.<\/p>\n Officially Zakharchenko, who chairs \u201cDonetsk Republic, declared<\/a> that Pushilin would focus on his \u201cmore important\u201d roles as speaker of the \u201cpeople\u2019s council\u201d (the de-facto parliament) and as chief negotiator at the Minsk talks, plus that he would concentrate efforts on reintegrating Donbass with Russia.<\/p>\n Relations between the two have never been warm. When Zakharchenko spectacularly announced in July that he was founding a new state called \u201cMalorossia\u201d, Pushilin was not even present. Instead, he dryly remarked a few hours later that such an initiative needed broader discussion. Zakharchenko\u2019s plan, which apparently wasn\u2019t well known even in Moscow, was then quietly dropped (see Newsletter 23<\/a>).<\/p>\n Pushilin\u2019s replacement as head of the executive committee of \u201cDonetsk Republic\u201d, which officially is a \u201cmovement\u201d but really functions as a ruling party, is Natalya Volkova, the director of the Donetsk Drama Theatre. While being well-known in Donetsk, Volkova is likely to be less independent from Zakharchenko\u2019s people, given her lack of political experience. Her position might also be weakened by the fact that she had publicly supported<\/a> Donetsk to remain in Ukraine in March 2014.<\/p>\n Zakharchenko, a former mine electrician and local pro-Russian activist, has been at the helm of the Donetsk separatists since August 2014. In November of that year, he was elected to the post of \u201chead of the republic\u201d in a vote that was widely criticized as illegal.<\/p>\n His \u201ccandidacy\u201d and the ousting of Pushilin are most likely an attempt to strengthen Zakharchenko\u2019s role in a time of growing volatility inside the separatist leadership. It is probably no coincidence that it occurred just two days after Zakharchenko met Kremlin official Vladislav Surkov during the opening of a monument<\/a> for Donbass volunteer fighters in the Russian city of Rostov-on-Don. Surkov is widely believed to oversee all important policy decisions inside the \u201cpeople\u2019s republics\u201d.<\/p>\n In the past two months, there were increasing signs of trouble in Donetsk:<\/p>\n On September 12, numerous<\/a> sources<\/a> in both Ukraine and Russia suggested that the Kremlin was looking at a leadership change in both Donetsk and Luhansk. This was not the first time such reports emerged, but given the uncertainties in international politics at the time (Donald Trump\u2019s US administration was again debating lethal weapons\u2019 deliveries to Ukraine, Germany headed for elections and Russia gearing up for the March 2018 presidential election), such a scenario did not look entirely unlikely.<\/p>\n Three days later, the Moscow-based news outlet RBC reported<\/a> that the Russian government was looking into significantly reducing its financial aid to the \u201cpeople\u2019s republics\u201d beginning in 2019. While this is a long way ahead by the standards of Donbass politics, it could be a warning shot that Moscow\u2019s bankrolling cannot last forever (see our annual report<\/a>, p 9-10).<\/p>\n On September 23, reports from Donetsk said that Alexander Timofeyev, the \u201cpeople\u2019s republic\u2019s\u201d powerful deputy \u201cprime minister\u201d and \u201cincome minister\u201d, was critically injured, when explosions hit his car. But hours later Timofeyev, better known by his nom de guerre \u201cTashkent\u201d, appeared on local TV<\/a> unharmed, accusing Ukraine for being \u201ca terrorist state that acts with the same methods as ISIS\u201d. In a later video interview<\/a>, Timofeyev denied that an internal dispute could be behind the attempt on his life by claiming that such disputes do not happen in people\u2019s republics, because \u201cthe people do not spar with each other\u201d.<\/p>\n Since no signs of an explosion were visible on photos published<\/a> from the scene, suspicion<\/a> was raised that the assassination attempt had been staged. While the benefits of pretending an attempt on one\u2019s own life are unclear, similar doubts emerged<\/a> one year ago after Luhansk separatist leader Igor Plotnitsky claimed that he was injured in a car bomb.<\/p>\n On October 3, the Donetsk \u201cState Security Ministry\u201d presented<\/a> two men who told a press conference that they had been hired by Ukraine\u2019s military intelligence service to carry out the attack.<\/p>\n Ukrainian media called the public confessions highly unconvincing<\/a> and pointed out<\/a> that the two suspects, Igor Yevtyushin and Denis Derbishin, were former fighters for the Luhansk \u201cpeople\u2019s republic\u201d militia, whom the Luhansk de-facto authorities put on a wanted list for armed robbery last year.<\/p>\n There were also new cases of public figures turning against the separatist leadership. Thus, prominent journalist Konstantin Dolgov announced<\/a> in September that he was looking for a new job outside the \u201cpeople\u2019s republic\u201d. Dolgov, a hitherto loyal video blogger<\/a>, explained that \u201cpeople with rifles do not need PR positioning, image making, and so on.\u201d<\/p>\n On September 28 reports<\/a> said that Roman Manekin, a prominent political consultant and former journalist, had been abducted from his Donetsk home. Nothing definite has been heard from Manekin since, but his friends claim<\/a> that he has been arrested and accused of wrongdoing by the \u201cpeople\u2019s republic\u2019s\u201d law enforcement agencies.<\/p>\n Manekin, an outspoken supporter of the separatists since 2014, had recently began to criticize the Donetsk leadership in public Facebook posts. On September 10, he claimed<\/a> that \u201cInterior Minister\u201d Alexei Diky had been placed under house arrest (Zakharchenko\u2019s administration denied<\/a>), and hours before he vanished he launched an attack<\/a> on Alexander Kofman \u2013 a former \u201cForeign Minister\u201d now believed to live in Moscow.<\/p>\n On October 17, an article<\/a> in Russia\u2019s Moskovsky Komsomolets newspaper quoted a former separatist minister as saying that Manekin had told him that he knew that Arsen Pavlov, the prominent separatist field commander known as \u201cMotorola\u201d, who was assassinated in Donetsk in October 2016, was not killed by Ukrainians, as claimed by the separatist leadership.<\/p>\n Zakharchenko himself announced<\/a> one day earlier that all members of a group of Ukrainian agents, responsible for the killing, had been arrested and added that Interior \u201cMinister\u201d Dikiy would soon make a statement about that. As early as last November<\/a>, weeks after Pavlov\u2019s death, the \u201cDNR\u201d leader had said that the assassination was organized by Ukraine\u2019s Security Service SBU and named two officers that he claimed were responsible (see Newsletter 5<\/a>).<\/p>\n Pavlov\u2019s assassination was followed in February by the violent death of fellow commander Mikhail Tolstykh (\u201cGivi\u201d), triggering speculation<\/a> of a Russian-ordered purge of hardline Donetsk field commanders.<\/p>\n <\/p>\n Separatist leaders vehemently deny any speculation of internal disputes and blame Ukrainian special forces squads (known by their Russian acronym DRG) for almost all acts of violence on their territory.<\/p>\n The ensuing \u201cspymania\u201d is also manifested – or promoted \u2013 by public arrests of purported enemy agents. In a typical instance in August, the Donetsk State Security Ministry (known as the MGB) published<\/a> a video of the detention of man who it said wanted to blow up the city\u2019s television tower.<\/p>\n Spying accusations have apparently also been levelled against Manekin and Stanislav Aseyev, a Donetsk-based journalist who disappeared on June 2. Six weeks later, the separatists reportedly confirmed<\/a> that Aseyev, who had written under the pseudonym Stanislav Vasin for Ukrainian media and Radio Liberty, was being held on espionage charges that carry up to 14 years in prison. However, \u201cDNR\u201d outlets never confirmed this – Donetsk police even put out a missing notice<\/a> for him.<\/p>\n Arguably, \u201cspymania\u201d is even stronger in the Luhansk \u201cpeople\u2019s republic\u201d, whose leader Igor Plotnitsky even called<\/a> for the introduction of mass-counterintelligence action modeled on the World-War-II-era SMERSH, or \u201cdeath to spies\u201d organization. \u201cSoon media will carry instructions on how to uncover terrorists and alert law enforcement agencies,\u201d he announced after a paratrooper monument in central Luhansk was blown up on September 18.<\/p>\n Luhansk leaders accused Ukrainian agents<\/a> of terrorizing the \u201cpeople\u2019s republic\u201d by going after monuments \u2013 another war memorial to the \u201cDefenders of the Republic\u201d was blown up already twice, first in September 2016, then on August 1<\/a> of this year.<\/p>\n Ukrainian agents were also blamed<\/a> for the mysteriously murder of two MPs for the separatist \u201cparliament\u201d in August and for maliciously setting a dry field on fire<\/a> in September, where they had placed anti-personnel mines \u2013 resulting in an explosion that killed three militiamen trying to put out the fire.<\/p>\n <\/p>\n On October 16, Donetsk separatist leader Zakharchenko made a rare public appearance<\/a> in Russia with Vladislav Surkov, the Kremlin\u2019s point man for the Donbass conflict. Together with the Moscow-based political consultant Alexander Borodai, who in 2014 was Zakharchenko\u2019s predecessor as leader of the Donetsk \u201cpeople\u2019s republic\u201d, they opened a memorial in the south Russian city of Rostov-on-Don to the volunteers who fought in eastern Ukraine.<\/p>\n While Ukrainian commentators<\/a> took the event as an another admission that Russians were fighting in what the Kremlin calls a \u201ccivil war\u201d in eastern Ukraine (Moscow has never denied the presence of Russian volunteers), neither Denis Pushilin nor Luhansk separatist leader Igor Plotnitsky were present at the ceremony. Plotnitsky\u2019s absence was widely ridiculed<\/a> in Ukraine, while Pushilin was removed from his important party position in Donetsk two days later (see 1).<\/p>\n <\/p>\n Some eight months after Ukraine cut off trade ties with the \u201cpeople\u2019s republics\u201d and the Russia-backed separatists effectively nationalized the big, hitherto Ukrainian-run factories in the areas they control, the economic effects are hard to gauge. While there is definitely no economic boom, there is also little indication that economic hardship is driving people to leave the areas outside of government control.<\/p>\n When the separatists decided to put all major industrial objects \u2013 mainly coal mines and metal works, but also smaller enterprises and hotels \u2013 under \u201cexternal\u201d (ie their own) control, they promised to reorient the local economy towards Russia within two months (see Newsletter 19<\/a>).<\/p>\n In reality, reorientation is proving to be slower. When Donetsk \u201cPeople\u2019s Republic\u201d leader Alexander Zakharchenko started steel production at the Yuzovsky Metallurgical Plant (known by its Russian acronym YuMZ) to great fanfare on October 5 in Donetsk, he admitted<\/a> that it had taken 1.5 years to get the plant going again. He did not mention that the reopening of the formerly Russian-owned plant was postponed multiple times (see Newsletter 23<\/a>).<\/p>\n Zakharchenko boasted that the plant would soon produce up to 40,000 tons of steel per month, however, his \u201cMinister\u201d for Industry and Trade, Alexei Granovsky, put<\/a> the plant\u2019s initial output at approximately 15,000 tons of steel within 1.5 months.<\/p>\n The challenges for restarting industrial production remain – supplying the plants with sufficient raw materials and finding buyers for their products outside Ukraine. Ukrainian experts said in July<\/a> that some 430,000 tons of iron ore were shipped to the Donetsk \u201cpeople\u2019s republic\u201d from Russia between April and June 2017.<\/p>\n The ore was supposedly from Russian state reserves, but media reports<\/a> suggest that it really came from metals giants Metinvest and Severstal \u2013 which the companies denied<\/a>. As publicly held corporations they risk being hit by western sanctions for selling production to the unrecognized \u201cpeople\u2019s republics\u201d in eastern Ukraine.<\/p>\n In return, some 208.000 tons of metals worth 70.6 million dollars from seized factories were shipped to Russia between June and August, from where they were exported to unknown countries by a company controlled by former Donetsk businessman Serhiy Kurchenko, according to a Ukrainian media report<\/a> published September.<\/p>\n Meanwhile, the separatists admit that they are having difficulties to sell their main produce \u2013 coal. Zakharchenko said in June that because of the blockade, the production of coking coal (which is used to produce coke) in the Donetsk \u201cpeople\u2019s republic\u201d has more than halved. \u201cNow we are producing 43,000 tons coal, but we should (produce) 100,000,\u201d he was quoted as saying<\/a>. He did not specify the time span of those figures.<\/p>\n Zakharchenko promised that the situation would improve after the opening of the aforementioned Yuzovsky Metallurgy Plant and of another furnace in the Yenakiieve Plant.<\/p>\n Notably, Zakharchenko did not mention exporting coal to Russia, which in the past has been touted as the solution by him and other separatist leaders.<\/p>\n In September, Sergei Nazarov, a deputy Russian economy minister, said that Russia is helping the \u201cpeople\u2019s republics\u201d to sell their coal internationally. As of August, nearly 1 million tons of coal per month are being shipped to Russia, Nazarov said in an interview<\/a> with US news agency Bloomberg. The deputy minister did not say how much revenue the coal generates, but claimed that the separatists are currently raising 5 billion rubles ($86 million) per month from coal sales and local taxation.<\/p>\n Coal from the separatist-held areas is also likely to make up a large share of continuing coal shipments from Russia to Ukraine. According to official figures<\/a> published earlier this month Ukraine imported coal worth 1 billion US dollars from Russia during the first nine months of 2017 (that would be 6.6 million tons at an assumed market price of 150 dollars per ton). Amid calls to prevent such shipments, which violate the spirit of the trade blockade imposed by Ukraine, the government in Kiev is promising<\/a> to refit those power plants currently running on anthracite coal, so that they can take other fuel.<\/p>\n\n
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