Dialog Europe Russia

Economic Challenges and Costs of Reintegrating the Donbas Region in Ukraine

DER commissioned a study at the renowned Vienna Institute for International Economic Studies (wiiw) concerning the Economic Challenges and Costs of Reintegrating the Donbas Region in Ukraine.

Even though the present COVID-19-situation has a huge impact also in the Donbass, we want to keep the basic problem in our focus. There is a suspicion that nobody can/wants to stem the costs of economically rebuilding this war shaken region – but actually, there is an almost complete lack of solid data giving a sober picture of the situation and the means needed. The study is a first step to tackle this problem.

The study is available for download.

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News Highlight

Anatoly Chubais to re-invent himself as eco-warrior

December 6th, 2020
The Bell

Political veteran Anatoly Chubais, who recently lost his job as head of state technology company Rusnano, seems to have found an even bigger challenge. On Thursday, The Bell was the first to report that he will now be in charge of Russia’s plans to combat climate change. On Friday, Chubais was appointed Vladimir Putin’s special representative for liaison with int’l organizations on sustainable development. For years, global warming and climate change have been marginal issues in Russia, but this looks set to change with new European Union carbon taxes that could mean major losses for Russian companies.

-Thursday was Chubais’ last working day at Rusnano. As part of a reform of Russia’s development agencies, Rusnano is being absorbed into state development bank VEB.RF under former deputy prime minister Igor Shuvalov. This loss of independence meant Chubais wanted to leave, according to one of his colleagues. His replacement at Rusnano is Sergei Kulikov, an executive with close ties to powerful state defense conglomerate Rostec and its influential head, Sergei Chemezov.

-There was much speculation about where Chubais — a man who has walked the corridors of power since the early 1990s — would end up. The Kremlin stonewalled any queries about his future for days, but announced Friday that he would become a special representative for the president, and responsible for working with international organizations on sustainable development.

-This is a new role, specially created for Chubais, and it is not clear exactly what it will involve. But two of Chubais’ acquaintances told The Bell that he will be working on climate change. The assumption is Chubais will be put in charge of a range of issues, from formulating a plan to meet Russia’s obligations under the Paris Climate Agreement to attracting ‘green investments’ like climate bonds.

-Climate change is a minor political issue in Russia, even though global warming is having a greater effect here than in most European countries and energy inefficiency is far higher. Russia signed up to the Paris Climate Agreement last year, but has still not put in place any mechanisms to implement its obligations.

-One of the big topics for Chubais in his new job could be developing a response to the EU carbon tax that is due to be introduced in 2022. Last week, Russia’s Central Bank listed the tax as a risk for the financial systems, estimating that it could cost exporters up to $4.8 billion a year. Several sectors — for example the production of nitrogen-based fertilizers — could lose access to European markets altogether.

Why the world should care

Chubais is a deeply controversial figure in Russia thanks to his role designing privatization in the 1990s. However, there is no doubt he is one of the most energetic and determined post-Soviet politicians around. Watching how he tackles climate change promises to be interesting, at the very least. Furthermore, this is a topic that could — if it becomes the basis for a rare dialogue between the U.S. and Russia — allow Chubais to wield significant influence.

Plan for Ukraine’s Reconstruction in the East (PURE)

The purpose of this Memorandum is to propose a strategy to reframe the discussion of the conflict in the Donbas and prepare a political foundation for post-war stability in Ukraine. This might be done by moving the focus of the Normandy Group from military de-escalation to economic reconstruction. The Minsk Process has succeeded so far in stopping the war, but it offers no framework for the reconstruction of those parts of Ukraine which were heavily damaged during one of the worst military conflicts in Europe since decades. De-escalation has so far not led to a lasting peace and restored prosperity. The Minsk Process is missing this last chapter: a credible Plan for Ukraine’s Reconstruction in the East.

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