Ukrainians bank on Zelenskiy’s promise to make war-torn Donbas ‘flourish’

Reforms are urgently needed to help new firms replace ailing Soviet-era industry

The Donbas region of eastern Ukraine has long been known as a gritty rust belt of mines and metal plants, and since 2014 as a land divided by fighting between government troops and Russian-led militants.

Yet Serhiy Svyrydenko's patch of Donbas feels very different. It overlooks outhouses that are home to goats, pigs, ducks and chickens, and the table in his kitchen is laden with the fine cheeses, hams and salamis that his family makes and sells through their business, the Cossack Yard.

Up the road in Druzhkivka, a hardscrabble city of potholed streets, drab apartment blocks and ailing factories, Natalya Rak's cafe Pryaniville warms visitors with coffee and colourful iced gingerbread biscuits – called pryaniki – that are baked in aromatic batches on the premises.

Svyrydenko and Rak are two of about 1.5 million people who left their homes in Donbas in 2014, when Russia fomented war there after seizing Crimea in response to Ukraine's pro-western revolution.

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Rather than starting afresh in another part of Ukraine or abroad, however, they are among hundreds of thousands of people who moved across the frontline to Kiev-controlled Donbas, and they are determined to make a success of life here even as the war grinds on nearby.

In a region where Russian influence remains strong, they are also the kind of resourceful and tenacious Ukrainians that the nation's president Volodymyr Zelenskiy hopes will help government-run Donbas "flourish" and show people living in separatist-held areas that their future would be brighter in a reunited country.

During an election campaign that swept the erstwhile comedian into power last May, Zelenskiy vowed to do his utmost to end fighting that has killed some 14,000 people and to crush the corruption that has long strangled Ukraine’s economy.

“We must now fully redirect our maximum attention to Donbas,” Zelenskiy said in June on a visit to Mariupol, the region’s main port.

“This is our land, our territory and we want people on the other side, in the temporarily occupied territories, to see that Ukraine is flourishing here.”

He told businessmen a few days later that the country’s richest “oligarchs” should do more for Donbas and contribute to eventual reconstruction of the region that will cost at least €10 billion.

Billionaires

Ukraine’s billionaires are not rushing to make major new investments in Donbas, however: Ihor Kolomoisky, for one, is busy fighting to regain control of PrivatBank, a major lender that he allegedly looted; Donetsk native Rinat Akhmetov, meanwhile, has just added a €200 million villa on the French Riviera to his portfolio.

As Donbas’s industrial giants lumber towards obsolescence, and with their traditional Russian market now largely off-limits, analysts say the region must replace its Soviet-era behemoths with a new generation of smaller firms.

"Zelenskiy's right when he says government-controlled Donbas should be a 'shop window', to show how people over there how good things could be," says Svyrydenko, whose village of Ivanopillya is 30km from the frontline and 70km from militant-held Donetsk, where he lived before the war.

“But from officials I hear mostly empty words. They need to rewrite laws and remove bureaucracy and other obstacles to investment,” adds the businessman (46) who served in an army artillery unit in 2015-2016.

Meats and cheeses from Cossack Yard are sought after by delicatessens and restaurants 700km away in Kiev, but Svyrydenko says getting the required paperwork is a nightmare.

“So many things still work in the old Soviet ways . . . Officials just want to cover their backsides. It’s easier for them to impose a ban than do something positive.”

The city of Kramatorsk was under separatist control from April-July 2014, before being liberated by Ukrainian troops and becoming the de facto capital of government-controlled Donetsk region. Almost 50,000 displaced people have settled in the city, boosting its pre-war population by more than 20 per cent to about 220,000 people.

Revenue from the vast NKMZ machine-building factory still accounts for more than a fifth of the city budget, but its workforce has shrunk to 9,000 people from the 40,000 employed in its heyday.

"Kramatorsk is entering the post-industrial period and we want many more small and medium-sized businesses to open up," says Denis Oshurko, secretary of the city council, whose office overlooks a main square dotted with fountains that was rebuilt using European Union funds.

“The most important thing is that Kramatorsk is safe and people can invest here.”

Need for reforms

Pavlo Zaitsev, head of Kramatorsk-based IT company Areal, says some local and regional officials do understand the need for urgent reforms.

But transparency and the rule of law are still badly lacking, says Zaitsev (47), whose business was almost crippled when police seized its computers during a hacking investigation that he is sure was ordered by a rival. No charges were brought and the equipment was finally returned after eight months.

“If a year ago businessmen were thinking ‘Okay, a new president and government will change things, reforms will happen, the business climate will get better and legal abuses will end,’ then now that’s gone. There’s a sense of hopelessness and people are leaving the country in droves.”

Well over a million Ukrainians have gone abroad since the war began, but Rak moved back from Donetsk to her parents’ apartment 100km away in Druzhkivka, and started her business baking gingerbread in the family’s small 40-year-old oven.

Rak admits that bureaucracy is a burden and for funds to launch her cafe she – like many Donbas entrepreneurs – sought grants from international agencies such as the United Nations Development Programme rather than borrow at high interest rates from Ukrainian banks.

Yet deciding to stay in Donbas was much more than a business decision, she says.

“It’s also about wanting to remake the image of the town, to show it’s not just some dying place in the provinces,” she says.

“Small projects are being built from scratch, and others are being revived. There is energy and potential here, there is a future.”