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Evaluation by Donbas expert community of the situation in the region and prospects of its restoration Jury of opinion Community initiative «Restoring Donbas» February, 2015

Evaluation by Donbas expert community of the situation in the region and prospects of its restoration

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Evaluation by Donbas expert community of the situation in the region and prospects of its restoration

Jury of opinion

Community initiative «Restoring Donbas»

February, 2015

INFORMATION ABOUT THE RESEARCH

METHOD

RESEARCH SCHEDULE

SAMPLING

Extra-mural expert survey (online-interrogation)

From 27.12.2014 until 31.01.2015

400 representatives of expert community of Donetsk and Luhansk regions: volunteers, public figures, journalists, entrepreneurs, professionals in production sector and heads of enterprises. Experts (participants of the survey) are the residents of the following areas:- ATO area;- Donetsk and Luhansk regions (except ATO area);- other regions of Ukraine (except Crimea);- Kiev;- Crimea; - outside Ukraine.

Evaluation by expert community of Donbas of the situation in the region and prospects of its restoration

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CONTENTS

MAJOR FINDINGS 4

POLITICAL SOLUTION TO CONFLICT IN DONBAS 7

EXPECTED RESULTS OF CONFLICT RESOLUTION 12

PROBLEMS OF ECONOMIC DEVELOPMENT OF DONBAS 14

OPTIMAL ECONOMIC POLICY IN RESPECT OF DONBAS 15

PERSPECTIVE SPHERES OF ECONOMIC DEVELOPMENT OF DONBAS 16

DEVELOPMENT OF ENTREPRENEURSHIP AND INNOVATIVE TECHNOLOGIES 17

SUPPORT OF SMALL AND MEDIUM BUSINESS IN DONBAS 18

DEMAND FOR HUMANITARIAN ASSISTANCE 19

READINESS OF DONBAS BUSINESS TO ASSIST RESIDENTS OF ATO AREA AND IDPs 20

READINESS OF EXPERTS TO PARTICIPATE IN RESTORING OF DONBAS 21

DEMAND FOR INFORMATION SERVICES 22

SYSTEM OF VALUES OF DONBAS RESIDENTS 23

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MAJOR FINDINGS• More than half of the expert respondents (52,3%) state that continuation of the negotiation

process is the necessary condition for resolving the conflict in the East of Ukraine. About 34,9% of experts support continuation of armed hostilities. At the same time, only 12,8% of respondents support granting the right of self-determination to territories where the ATO is being conducted, as a course of action to resolve the conflict.

• Majority of experts, who recognize that the conflict in the East of Ukraine can not be resolved unilaterally, consider resolution of the conflict in Donbas to be a result of interaction of the parties involved. Thus, 73% of respondents identify two or more key decision-makers, capable to resolve the conflict or to improve the situation in Donbas.

• Experts believe that the main decision-makers, who are capable of changing things in Donbas, are President of Ukraine (53,1%), leaders of the EU and the US (46,3%), President of Russia (41,6%). This indicates experts’ impression of a high degree of personalization of responsibility for what is happening in Donbas, focus on specific individuals and their statements.

• Leaders of self-proclaimed "republics", regional elite and lawmakers in Verkhovna Rada of Ukraine are considered by experts to be subjects of decision-making to a much lesser extent – 7,7%, 15,6% and 18,9%, respectively. This indicates a crisis of representation of interests of Donbas residents both at regional and all-Ukrainian levels. Most experts (27,7%) identify residents of the ATO area themselves as a subject of conflict resolution.

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MAJOR FINDINGS• Whereas a political solution of the conflict, most of the surveyed experts (56,2%) see in the

returning to status-quo – preservation of Ukrainian state integrity and provision of Donetsk and Luhansk regions with the same conditions as for other regions of Ukraine. 31,8% of respondents believe that creation of autonomy within Ukraine is an acceptable political solution. Possibility of recognition of independence of the territories, where the ATO is being conducted, has meager support among the experts. Only 7,9% of the interviewed experts support this option. 4,1% of the respondents support affiliation of territories in conflict to the Russian Federation.

• Under conditions of military actions and economic blockade of territories in conflict, experts identify critical situation in financial sector and high degree of damage to production facilities (7,8 and 7,7 points out of 10, respectively) to be among the most important problems of Donbas economy. In addition, according to respondents, the lack of innovative developments (7,2 points) and unsatisfactory condition of transport communications (7 points) are rather significant problems for the region. Issues of the condition of raw materials base, condition of recreation and services and personnel training potential were named by experts as the least problematic for the region.

• Experts, in their opinion, associate the prospects for recovery of Donbas economy with 5 key economic sectors for the region : metallurgy, coal industry, small and medium enterprises in industrial sector, agricultural sector, innovative technology and communication services. More than half of the experts mark out the development of entrepreneurship and innovation among the priorities.

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MAJOR FINDINGS• In the aspect of focus on sectors of economy, traditional for Donbas (metallurgy and coal

mining), experts, support ideas of new economic approaches in development of the region. In particular, respondents believe that after the end of military actions it is necessary to create an innovative industrial area in Donbas (27%), pay attention to restoration of the banking sector (26%) and to introduce tax holiday for small and medium-sized business (25%).

• According to experts, development of small and medium-sized businesses in the industrial sector is placed among the top 3 priority sectors. Experts attributed non-production sector of the economy - transportation, services sphere and tourism to the secondary priorities.

• With regard to support of the of small and medium-sized business development, Donbas experts pointed out the necessity of provision of concessional loans to entrepreneurs (62,8%), conducting meetings and training sessions for entrepreneurs (60,7%), introduction of the "tax holidays" regime (58,4%). Furthermore, experts who live in the ATO area, consider tax measures to be a priority : introduction of tax holidays (70%) and exemption from taxes and fines (41,7%).

• According to experts, the most demanded humanitarian assistance for both, residents of the ATO area, residents of Donbas territories controlled by Ukraine, and IDPs is medicine. According to experts, it is also very important for the ATO area residents to obtain essential food products, baby (infant) food and personal care products. In addition to humanitarian assistance, the ATO area residents and IDPs require provision of information services.

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POLITICAL SOLUTION TO CONFLICT IN DONBAS

More than half of the expert respondents (52,3%) state that continuation of the negotiation process is the necessary condition for resolving the conflict in the East of Ukraine. 34,9% support continuation of armed hostilities. At the same time, only 12,8% of respondents support granting the right of self-determination to territories where the ATO is being conducted, as a course of action to resolve the conflict.

34,9%

12,8%

52,3%

What actions should be taken by Ukrainian side in order to resolve the conflict in Donetsk and Luhansk regions?

Negotiation process Continuation of armed hostilities

Granting the right of self-determination

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POLITICAL SOLUTION TO CONFLICT IN DONBAS

The negotiation process in order to resolve the conflict is being supported by the majority of experts, who are the residents of the ATO area (69,8%), Crimea (66,7%) and Kiev (51,6%). Respondents, who love in territories of Donetsk and Luhansk regions controlled by Ukraine (42,9%) and in other regions of Ukraine (45,7%) stand for continuation of military actions.

Outside Ukraine Donetsk and Luhansk regions

(controlled by Ukraine)

other regions of Ukraine

Kiev Crimea ATO area

37,5% 46,9% 49,6% 51,6%66,7% 69,8%

41,7%10,2% 4,7%

15,4%

33,3%15,1%

20,8%42,9% 45,7%

33.00%15,1%

What actions should be taken by Ukrainian side in order to resolve the conflict in Donbas?

(answers from regional perspective)

Negotiation process Granting the right of self-determination

Continuation of armed hostilities8

POLITICAL SOLUTION TO CONFLICT IN DONBAS

53,1% of respondents impose responsibility for resolution of the conflict and improvement of the situation in Donbas upon the President of Ukraine. Among the main decision-makers, who are capable of changing things in Donbas, experts also single out leaders of the EU and the US (46,3%) and President of Russia (41,6%). This indicates experts’ impression of a high degree of personalization of responsibility for what is happening in Donbas, focus on specific individuals and their statements.46.3% of respondents mark out Armed Forces of Ukraine as a subject of conflict resolution, 41,9% - Government of Ukraine.

President of Ukraine Leaders of the EU and the US

Armed Forces of Ukraine

Government of Ukraine President of Russia

53,1%46,3% 46,3%

41,9% 41,6%

Who, in your opinion, is capable of resolving the conflict and improving the situation in Donbas?

(several different options to choose from)

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POLITICAL SOLUTION TO CONFLICT IN DONBAS

7,7%15,6% 18,9% 22,9% 27,7%

Who, in your opinion, is capable of resolving the conflict and improving the situation in Donbas?

(several different options to choose from)

Some experts consider that leaders of the self-proclaimed "LNR" and "DNR" (7,7%), regional elites (15,6%), Verkhovna Rada (18,9%), international organizations (22,9%) and ordinary citizens of the ATO area (27,7%) are the subjects that may influence on the resolution of the conflict.

Undervaluation by experts of leverage of the leaders of self-proclaimed "republics", regional elite and Verkhovna Rada of Ukraine lawmakers indicates a crisis of representation of interests of Donbas residents both at regional and all-Ukrainian levels. In this situation, majority of experts (27,7%) identify residents of the ATO area themselves as a subject of conflict resolution.

According to experts, international organizations (UN, NATO, OSCE, EU, PACE, G7, Red Cross), can also influence on the situation to a greater extent than the regional elites and leaders of the self-proclaimed "republics". 22,9% of the respondents included international organizations into the list of subjects that are able to resolve the conflict. 10

POLITICAL SOLUTION TO CONFLICT IN DONBAS

73% of respondents identify two or more key decision-makers, who are capable of resolving the conflict or improving the situation in Donbas. Thus, majority of experts consider resolution of the conflict in Donbas to be a result of interaction of the parties involved, recognizing that the conflict in the East of Ukraine can not be resolved unilaterally.

Two and more subjects One subject No answer

73%

21%

6%

Who, in your opinion, is capable of resolving the conflict and improving the situation in Donbas?(variation of answers)

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EXPECTED RESULTS OF CONFLICT RESOLUTION

Whereas a political solution of the conflict, most of the surveyed experts (56,2%) see in the returning to status-quo – preservation of Ukrainian state integrity and provision of Donetsk and Luhansk regions with the same conditions as for other regions of Ukraine. 31,8% of respondents believe that creation of autonomy within Ukraine is an acceptable political solution.

Possibility of recognition of independence of the territories, where the ATO is being conducted, has meager support among the experts. Only 7,9% of the interviewed experts support this option. 4,1% of the respondents support affiliation of territories in conflict to the Russian Federation.

56.2%31.8%

7.9%

4.1%

How do you think, what political decision would maximally defuse the at the moment?

Return to status-quo

Creation of autonomy within Ukraine

Recognition of independence of the territories

Affiliation to the Russian Federation

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EXPECTED RESULTS OF CONFLICT RESOLUTION

In the regional context there are the largest number of supporters of returning areas, which are uncontrolled by Ukraine, to status-quo – 73% in the regions of Ukraine and 59,6% in Ukraine-controlled Donbas.

Recognition of independence of the ATO areas is supported by Crimea experts (50%). The same group would have supported a scenario of affiliation of uncontrolled Donbas territories to the Russian Federation.

Among experts, who are the residents of the ATO area, there is the largest number of supporters of autonomy within Ukraine (44,4%). Recognition of independence of territories or their affiliation to the Russian Federation is supported by 11,1% and 3.7% of experts, living in the ATO area, respectively.

Crimea Outside Ukraine ATO area Kiev Donetsk and Luhansk regions (controlled by

Ukraine)

other regions of Ukraine

16.7%

35%

44.4% 35.6%38.3% 21.4%

50%

20%

11.1% 9.2% 4.8%33.3% 20%

3.7% 4.6% 2.1% 0.8%

25%40.7% 50.6% 59.6%

73%

How do you think, what political decision would maximally defuse the at the moment?

(answers from regional perspective)

Return to status-quo Creation of autonomy within Ukraine

Recognition of independence of the territories Affiliation to the Russian Federation 13

PROBLEMS OF ECONOMIC DEVELOPMENT OF DONBAS

• Under conditions of military actions and economic blockade of territories in conflict, experts identify critical situation in financial sector and high degree of damage to production facilities (7,8 and 7,7 points out of 10, respectively) to be among the most important problems of Donbas economy. In addition, according to respondents, the lack of innovative developments (7,2 points) and unsatisfactory condition of transport communications (7 points) are rather significant problems for the region. Issues of the condition of raw materials base, condition of recreation and services and personnel training potential were named by experts as the least problematic for the region.

7.8 7.77.2 7.0

6.2 5.9 5.9 5.8 5.8

On the ten-point scale evaluate the importance of the following issues for the economy of Donbas nowadays?

(average)

Condition of financial environment

Condition of production capacities

Absence of innovative developments

Condition of transport communications

Level of entrepreneurial initiative of population

Absence of professional personnel and manpower reserves

Potential of professional personnel training

Condition of recreation and services

Condition of raw materials base14

OPTIMAL ECONOMIC POLICY IN RESPECT OF DONBAS

restoration of the banking

system26%

creation of export-indus-

trial area 15%tax holidays

for small and medium-

sized busi-ness25%

creation of an “offshore

area” in Donbas

6%

creation of an innovative

industrial area27%

complete economic

blockade of the region

1%

What economic policy should the Government of Ukraine carry out with respect to Donbas after assumed end of military actions?

In the aspect of focus on sectors of economy, traditional for Donbas (metallurgy and coal mining), experts, support ideas of new economic approaches in development of the region

In particular, respondents believe that after the end of military actions it is necessary to create an innovative industrial area in Donbas (27%), pay attention to restoration of the banking sector (26%) and to introduce tax holiday for small and medium-sized business (25%).

A scenario of complete economic blockade of the region support minimal amount of experts (around the 1%). 15

PERSPECTIVE SPHERES OF ECONOMIC DEVELOPMENT OF DONBAS

Experts define 5 key economic sectors, prospective in the context of recovery of Donbas economy: metallurgy, coal industry, small and medium enterprises in industrial sector, agricultural sector, innovative technology and communication services.

Consequently, development of small and medium-sized business in the industrial sector is placed among the top 3 priority sectors. Experts attributed transportation, services sphere and tourism (non-production sector of the economy) to the secondary priorities.

48,4% 47,8%42,4%

35,2% 33,6%28%

22,8%

11% 11% 9% 6,6%4%

Development of which economic branches will allow restoring Donbas economy in the shortest time possible?

Metallurgy Coal mining industry

Small and medium-sized businesses in the industrial sector Agrarian sector

Innovative technology and communication services Mechanic engineering/machinery

Small and medium-sized business in trade sector Food industry

Transportation Consumer goods industry

Services sectror Tourism 16

DEVELOPMENT OF ENTREPRENEURSHIP AND INNOVATIVE TECHNOLOGIES

In matters of restoration of Donbas, the emphasis on development of entrepreneurship and innovative technologies is made by those experts, who live in the territories of Donetsk and Luhansk regions, controlled by Ukraine, as well as by those, who had left for other regions of Ukraine and those, who have stayed in the ATO area.

56,9%54,5%

48,4%44,7%

32%

16,7%

Frequencies of mentioning of entrepreneurship as a prospective economy sphere for restoration of Donbas

Donetsk and Luhansk regions (con-trolled by Ukraine)

other regions of Ukraine

ATO area

Kiev

Outside Ukraine

Crimea

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SUPPORT OF SMALL AND MEDIUM BUSINESS IN DONBAS

62.8% 60.7% 58.4%

35.4% 34.9%

What measures for small and medium-sized business of Donbas you consider to be relevant after the end of hostilities?

In the aspect of supporting the development of Donbas small and medium-sized businesses, experts point out the following measures, which to their opinion, would be relevant after the end of hostilities: - provision of concessional loans to entrepreneurs (62,8%); - conducting meetings and training sessions for entrepreneurs (60,7%); - introduction of the "tax holidays" regime (58,4%).

The issue of exemption from taxes and fines turned out to be of secondary importance, as it was noted by only 34,9% of respondents. Tax issues are number one priority only for those experts who are the residents in the ATO area. Introduction of tax holidays is supported by 70% of them, exemption from taxes and fines - 41,7%.

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DEMAND FOR HUMANITARIAN ASSISTANCE

P – critical relevance, P- high relevance, P – medium relevance

АТО area Ukraine-controlled Donbas territories

Among IDPs

Essential medicineP P P

Medicine for special groups (insulin etc.) P P PEssential food products

P P PBaby (infant) food P P PChildren care products P P PPersonal care products P P PHousehold chemicals P P PWarm clothes P P PFuel for individual heating

P P P

According to experts, the most demanded humanitarian assistance for both, residents of the ATO area, residents of Donbas territories controlled by Ukraine, and IDPs is medicine. According to experts, it is also very important for the ATO area residents to obtain essential food products, baby (infant) food and personal care products.

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According to experts, business of Donbas is ready to support the activities of enterprises located in the ATO area itself at least (33,6%).

READINESS OF DONBAS BUSINESS TO ASSIST RESIDENTS OF ATO AREA AND IDPs

According to respondents, Donbas entrepreneurs are ready to participate in assisting the residents of ATO area and IDPs. 84,2% of experts believe that business of Donbas can provide employment for countrymen-IDPs in their enterprises. At the same time, 62% believe that entrepreneurs can assist IDPs in construction of temporary housing.

84.2%

62% 58.4%50.9%

33.6%

How, in your opinion, business of Donbas can help non-combatants, who are leav-ing the ATO area?

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58% of the experts are ready to participate in volunteer projects aimed at restoring devastations upon completion of hostilities. Experts, who live outside Ukraine and those, who live in Kiev are ready to volunteer least of all. Experts, who live in the Ukraine-controlled Donbas territories (67,2%), Crimea (66,7%) and in the ATO area (58,1%) are ready to volunteer the most.

41% of experts are ready to provide financial assistance to voluntary organizations.36% of respondents agreed to participate in restoration of Donbas for a fee.

READINESS OF EXPERTS TO PARTICIPATE IN RESTORING OF DONBAS

28.0%

50.5% 51.7%58.1%

66.7% 67.2%

Are you ready to actively participate in volunteer projects?

Outside Ukraine

Kiev

other regions of Ukraine

ATO area

Crimea

Donetsk and Luhansk regions (controlled by Ukraine)

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DEMAND FOR INFORMATION SERVICES

In addition to humanitarian assistance, according to experts, the ATO area residents and IDPs require provision of some information services. According to respondents, for ATO area residents the first and foremost is information assistance (85,9%) and psychological counselling (85,5%). For IDPs - legal consultations (92,4%) and information assistance (85,6%) are highly relevant.

Experts attributed remote consultations with medical professionals and online tutoring services to the secondary needs for both population categories.

Remote tutoring services (school, interest clubs)

Remote consultations with medical professionals

Legal consultations

Psychological counselling

Information assistance

52.3%

76.0%

79.0%

85.5%

85.9%

For ATO area residents For IDPs

- required - hard to tell - not required 22

Remote tutoring services (school, interest clubs)

Remote consultations with medical professionals

Psychological counselling

Information assistance

Legal consultations

40.7%

54.5%

84.6%

85.6%

92.4%

SYSTEM OF VALUES OF DONBAS RESIDENTS

According to experts, fundamental values for Donbas residents, are family (76,1%), stability (72,8%) and peace (62,3%). Also respondents included justice and property in the Top 5 list of fundamental values, but they are far behind the leaders, having got only 16% and 13,7% respectively.

Honesty

Equality

Right

Freedom

Social weight

Colleagues opinion

Property

Justice

Peace

Stability

Family

2.8%

4.3%

4.6%

9.2%

13%

13%

13.7%

16%

62.3%

72.8%

76.1%

Fundamental values of Donbas residents

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Thank you for your

attention!

© Community initiative «Restoring Donbas». 2015

http://[email protected]+38 (099) 074-91-60