Ukraine’s economy on brink of collapse due to blockade of coal

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Feburary 22, 2017 – Fort Russ News – – RIA Novosti – Translation by James Harmon

Ukrainian industry is falling apart because of the blockade of the Donbass coal supply, and the crisis in the steel industry will affect the whole economy of the country, writes the Ukrainian edition of “Vesti”.

The decline in production will provoke unpredictable fluctuations in the hryvnia exchange rate and reduce the inflow of investments.

According to calculations, Director General of Zaporizhstal, Rostislav Shurma, if the blockade did not stop immediately, in the next two or three weeks, “The link in the chain will break, effecting almost all the energy and heavy industry.”

Blockade of coal supplies and other strategic raw materials will stop the operation of several power plants. This was followed by rolling blackouts suffered by ordinary citizens and industries. At the same time, it is believed that if Ukraine turns off the electricity temporarily, without light and heat will be the whole country.

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There will be a shortage of electricity, which can not be compensated in the home. Thus, Ukraine will have two options: wait for three months, when shipments of coal arrive from South Africa, or import it from Russia, stated to the news, the general director of Zaporizhstal. 

According to experts, the extrtemist’s blockade will lead to the loss of foreign exchange earnings, employment, tax revenues and eventually will trigger the collapse of the entire economy. Because of the overall industrial decline expected , increased hryvnia devaluation may happen, necessitating more critical economic measures, says economist Andrei Blinov.

He estimated that if the blockade continues, a serious decline in production will occur within ten days, and the exchange rate will react to this in March. Financial experts also believe that the decline in production in the steel industry could lead to shortages of foreign currency and the devaluation of the hryvnia within a month, the newspaper writes.

On the eve of the railway blockade of Donbass production at  Yenakiyevo Steel Works (EMZ) completely stopped in the Donetsk region and PAO “Krasnodonugol” in the Luhansk region as well, included in the mining and steel group “Metinvest” Ukrainian businessman Rinat Akhmetov. YMP is a major producer of steel and “Krasnodonugol” – coking coal, a major energy source in Ukraine.

Former members of the military operation in the Donbass blocked freight train links with the Donbas in late January. The blockade provoked coal supply disruptions after which the Ukrainian authorities have introduced emergency measures in the energy sector.

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