Kyiv seeks EU support to revive war-ravaged businesses in eastern Ukraine

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Kyiv is proposing a multi-billion dollar investment plan for towns and businesses along the conflict line with Russian-backed separatists in eastern Ukraine, hoping to show its citizens that siding with the West brings prosperity.

According to a presentation to European Union officials in Brussels on May 28, reviewed by Reuters, the Kyiv government wants an “economic transformation” of the areas of the industrial regions of Donetsk and Luhansk not in separatist hands.

The cost of reviving the region is likely to be around $20 billion, according to a 2016 report by the Atlantic Council think-tank. The Ukrainian presentation did not detail figures but said it would help reintegrate the regions into the economy.

Backed by Moscow, separatists seized territory in eastern Ukraine after pro-Western protests in February 2014 and Russia annexed Crimea a month later.

Kyiv wants to set up a trust fund run by an international institution to attract a consortium of investors to spend cash on areas from transportation to agriculture. It will also seek to bring together donor money and cash to cover administration costs, the presentation said.

Investors would enjoy tax breaks, while Kyiv’s Western supporters would also see the benefits of reforming a region known for its outdated Soviet economy of monolithic factories.

The strategy to end prolonged power outrages, high unemployment, pollution and rebuild destroyed roads and airports is risky, however. A 2015 peace agreement and subsequent ceasefires have not led to an end in fighting.

Kyiv estimates the conflict has killed 14,000 people since 2014. Moscow massed some 100,000 troops along Ukraine’s borders with Russia last month, according to the EU. Not all troops have been withdrawn and Russian military equipment remains in the area, Ukraine and the United States say. The strategy could also cement a new de-facto Ukrainian border along the contact line, potentially ceding territory to Russia.

A special OSCE ceasefire monitoring mission recorded more than 20 explosions on Wednesday along the contact line between Ukrainian and separatist forces that runs northeast from the Azov Sea.

But Ukrainian officials say that violations of the ceasefire by rebels with snipers and shells do not reach beyond about 2 kilometres (1.24 miles) into Ukraine-held territory. 

Photo: A woman weeps near the wall of her house, which was damaged by shrapnel of artillery shooting in pro-Russian militants controlled village of Staromihailovka, Donetsk area, Ukraine. EPA-EFE/DAVE MUSTAINE