Rust Belt Rising

The Economics Behind Eastern Ukraine's Upheaval

Ukrainian miners finish their shift at the Kholodnaya Balka mine in eastern Ukraine's Donbass coalfield, November 2009. Gleb Garanich / Courtesy Reuters

In recent days, the armed conflict in eastern Ukraine has reached a new phase. With a political mandate to use force, and with Russian troops partially pulled back from the border, Petro Poroshenko, the newly elected president, has stepped up his government’s counterinsurgency operations in the east and vowed to end the separatist movement there within “hours.” Kiev has seen some successes in the new round of hostilities, wresting several towns back under its control. But the fighting has also exposed severe weaknesses on both sides and left little hope that peace will come anytime soon.

International observers have tended to paint the conflict as an ethnic dispute, engineered and coordinated by Moscow. Yet by attributing the conflict's causes and solutions to forces outside Ukraine, the West and Kiev risk misdiagnosing the ailment and writing the wrong prescription. Preliminary data suggest that the rebellion is more local than international, and that its domestic roots are more economic than ethnic.


By now, the timeline of events in Ukraine is well known. Pro-Russian protests first swept nine southeastern Ukrainian regions after the Ukrainian parliament voted to impeach President Viktor Yanukovych on February 22. The participants denounced Ukraine's new authorities as illegitimate, waved regional and Russian flags, and -- adopting tactics used by anti-Yanukovych protesters in western Ukraine -- occupied government buildings. The government's initial response was to arrest key protest leaders, as pro-Euromaidan demonstrators staged counter-rallies.

This strategy came to a dead end in Donetsk and Luhansk, two provinces in Donbass, an eastern coal-mining region. Over the course of four weeks in April, angry separatist mobs and armed men overran regional administration headquarters, city councils, prosecutors' offices, police stations, arms depots, and television towers in 32 cities, and established some 280 roadblocks. Encountering little resistance -- and occasional support -- from local police, the rebels declared regional autonomy and held a controversial referendum on self-rule on May 11. By Kiev’s conservative estimates, turnout reached 29 percent, or 1.5 million people. The separatists estimated that 75

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