CONTENT PREVIEW
Country Risk

Cargo blockade of separatist-controlled areas to increase likelihood of continued 'unstable frozen conflict' scenario in east Ukraine

17 March 2017

Key Points

  • The government's decision to introduce regulations amounting to an economic blockade is likely to defuse pro-blockade protests across Ukraine.
  • Severing economic ties is likely to reorient Donetsk and Luhansk towards Russia, but risks of regulatory restrictions will cause closure of numerous heavy industry companies.
  • Russia is likely to need to increase financial support to the breakaway republics in east Ukraine to avoid a humanitarian crisis.
  • The most likely scenario is continued evolution to an "unstable frozen conflict", with a line of contact (stable since February 2015) but continued fighting between Ukrainian forces and separatist militias.

EVENT

On 15 March 2017, the Security and Defence Council of Ukraine announced the suspension of all cargo traffic between the areas held by separatist militias in Donetsk and Luhansk regions in eastern Ukraine, effectively introducing an economic blockade of these areas.

A view of train cars loaded with coal for a metallurgical plant in Donetsk. 25 January 2017. (PA)A view of train cars loaded with coal for a metallurgical plant in Donetsk. 25 January 2017. (PA)

The decision by the council to suspend cargo traffic came after protests across the country, mostly in Kiev, but also in regional centres in central and western Ukraine, in support of the cargo blockade.

The blockade of key railway and road routes across the line of contact (LoC) between the Ukrainian forces and the separatist militias in Donetsk and Luhansk regions was started in late January 2017 by nationalist activists, many of whom are veterans of the earlier fighting in 2014-2015. By mid-February the groups of activists carrying out the blockade said that their efforts had blocked all operational railway lines connecting separatist-controlled areas in Donetsk and Luhansk regions of Ukraine with the rest of the country. At that time they claimed they were blocking a total of 250 cargo trains (or 14,400 railcars) carrying coal, the delivery of which they referred to as the "trade in blood".

The government initially criticised the blockade, warning that its continuation would disrupt supplies of coal to thermal power plants in the rest of Ukraine and thus cause power blackouts across the country.

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