NON-STANDARD CHALLENGES AND POTENTIAL RISKS FOR THE BUSINESS IN DONBAS

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NON-STANDARD CHALLENGES AND POTENTIAL RISKS FOR THE BUSINESS IN DONBAS

Journal Title: Baltic Journal of Economic Studies - Year 2017, Vol 3, Issue 4

Abstract

The purpose of the paper – the conflict, which began in 2014, in the political sphere of the state of Ukraine and which led to the violation of the country’s sovereignty, the occupation of the part of Donetsk and Luhansk regions adversely affected the state of the economy of the state. The region, in which the main production complexes of coal mining, the metallurgy of machine building were concentrated, because of military actions and political decisions, was deprived of the opportunity to legally carry out its social and economic activities. This article presents an attempt to systematize and show specifically tendencies of the organization of domestic business in conditions of military occupation. Methodology. The main research methods were: historical, statistical, a method of analysis, comparison. The historical method was used to recreate the picture of the industrial production capacities that existed before the conflict in the region began. The method of the comparison made it possible to track the use of “shadow” schemes in organizing a business for the sale of coal and electricity by enterprises located in the occupied territories of Donbas. Result. The method of analysis examined the negative consequences for the national economy of individual decisions of state policy, namely, the termination of the fiscal services of Ukraine to return value-added tax, for products exported, which led to a decline in production up to the shutdown of a number of metallurgical enterprises over the lack of working capital. Using the method of statistics and comparisons, the author analysed the dynamics of the decline in the level of production of the main sectors of the regional economic complex, and also illustrated the growth of social crises in the region and in the country: unemployment, reduction of social standards, wage arrears. Practical implication. On the example of a number of large industrial enterprises of Donbas, the author demonstrated a scheme for their destruction with the aim of depriving Ukraine of strategically important industries: brick, metal, limestone, and others. At the same time, as shown in the material of the article, the illegal authorities of terrorists “LNR” and “DNR” are interested in the fact that the remaining enterprises worked and brought income, both to the budget of unrecognized republics and personally to persons in power. However, attempts to establish production by the occupation authorities only prove the interdependence of the regional economic complex of Donbas and other regions of Ukraine. The loss of economic ties, commodity markets, and the receipt of raw materials objectively do not allow enterprises in the occupation to work at full capacity, to the end using their potential. Separately, an attention is paid to the problem of the revival of illegal coal mining in the occupied territories in the so-called private unformed mini-mines – “bootleg mines”. Value/originality. The result of the study was the discovery of the facts of the stagnation of the regional economic complex. The ineffectiveness of state policy and the lack of control over oligarchic business structures make it possible to assert that, in this historical period in Donbas, there is a redistribution of the remnants of existing enterprises, the purpose of which is not stabilization of the situation and withdrawal of the economy from the crisis but maximum shadowing and benefits for individuals.

Authors and Affiliations

Iryna Dolia

Keywords

occupation regional economy export shadowing bootleg mines coal anthracite electricity

EP ID EP635093
DOI 10.30525/2256-0742/2017-3-4-65-73
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