Coal, Subsidies, and Offshore Companies: Why Donbas Wasn’t Ukraine’s “Breadwinner,” — Novak
18 May 18:19
The claim that eastern Ukraine has “fed” the entire country for decades is not supported by actual figures. Economist Andriy Novak explained on the "Komersant Ukrainian" YouTube channel where this myth came from and who has been “promoting” it.
According to him, the Donbas coal industry has almost always been unprofitable and relied on state subsidies. In fact, it was financed by all Ukrainian taxpayers. At the same time, the mines’ output was used by private factories, whose owners promoted the idea that Donbas is Ukraine’s breadwinner.
“The coal industry in Ukraine has practically always been subsidized. Subsidized from where? From the country’s central budget—that is, at the expense of all taxpayers across Ukraine, we subsidized the coal industry,” Novak noted.
The economist recalled that in the early 2000s, the Donetsk region consistently recorded a high gross regional product. However, this did not mean that the region was contributing to the national budget. According to Novak, a significant portion of the profits was funneled through offshore accounts.
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“The gross product was generated, but where did the financial proceeds go? Into the owners’ pockets. Mainly through offshore accounts. That is, bypassing the Ukrainian tax system,” the economist concluded.
Novak added that the myth of the “breadwinner” had been used for years by pro-Russian political forces. Initially, this narrative was promoted by communists and socialists, and later by the Party of Regions. According to the economist, this was their way of trying to explain why they should be in power.
“In reality, the East was feeding the owners—the so-called oligarchs—who seized key enterprises in the East, South, and beyond, using various methods,” the economist noted.
He also recalled that miners regularly took to the streets to protest low wages and problems in the industry. This, he said, indicated that the region was not as wealthy as politicians claimed.
“If Donbas fed anyone, it fed exclusively the owners of enterprises—that is, local oligarchs. We’re talking about oligarchs on a national scale,” Novak concluded.
The economist also stated that for years, the greatest support for the Ukrainian economy had come not from individual regions, but from Ukrainian migrant workers employed abroad.
“In reality, it was our migrant workers who fed Ukraine. Because every year, our migrant workers transferred approximately $12 billion (and that’s just through official money transfers) to Ukraine,” Novak noted.
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