In Ukraine's Industrial Heart, An Economic Affinity With Russia

In Eastern Ukraine, the country's industrial heartland, many workers fear for their jobs if Ukraine joins the European Union.

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AUDIE CORNISH, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Audie Cornish.

We'll begin this hour with the crisis in Ukraine. President Obama received a call from Russian President Vladimir Putin today. They discussed an American proposal for a diplomatic resolution and they agreed that Secretary of State Kerry will meet his Russian counterpart to discuss next steps. President Obama also reiterated his call for Russia to withdraw forces from its border with Ukraine. Moscow calls its troop exercises routine.

But some Ukrainians worry Russia could follow its annexation of Crimea by seizing more territory in eastern Ukraine. Many Russian speakers there feel a cultural affinity with Russia. And as NPR's Gregory Warner reports, they also have a financial interest in staying close to Moscow.

GREGORY WARNER, BYLINE: I was playing this game with an economist in Donetsk, where I would mention a major Ukrainian industry, he would say whether it would benefit from joining the European Union at the cost of losing Russia. Like steel.

ALEXEI RYABCHYN: Winner, because it's the main source of export of Ukraine.

WARNER: Or how about agriculture?

RYABCHYN: It will be definitely a winner, because EU have the technology and we have the best soils in the world.

WARNER: Now, this economist, Alexei Ryabchyn, might be slightly biased. He also consults to attract foreign investors. But he's not so sunny about heavy manufacturing.

RYABCHYN: Machinery can be the loser.

WARNER: Ukraine sells its machines to Russia, its airplane parts to Russia. Nearly all of those factories are located here in eastern Ukraine, along with the coal mines. And coal?

RYABCHYN: I would say that it will be a loser.

WARNER: But many, many people of Donetsk work in the coal industry.

RYABCHYN: Yeah, that's the thing that I'm afraid of.

WARNER: Ryabchyn's worries led me to a town hall building in the faded metropolis of Khartsyzsk, 20 miles east of Donetsk. Coal from Khartsyzsk once fueled factories across the Soviet Union. And its pipe plant supplied the gas lines that brought oil and gas from Siberia. And now there are large pro-Russia rallies every weekend. About 40 people are gathered here to talk about mobilizing support for Ukraine.

UNIDENTIFIED MAN: (Foreign language spoken)

WARNER: Sergei Nesterenko gets up and tells the small crowd he just returned from a business trip to Moscow. No one needs this territory, he says. And especially no one needs our coal. But afterward, Nesterenko, who has a business importing machine parts from China, says when he said they were not needed, he meant by Russia and by Kiev.

SERGEI NESTERENKO: Kiev no helping. Kiev always see to Germany and France, to other European countries, they pay money to these countries. (Foreign language spoken).

WARNER: Switching to Russian, he tells me that the new Olympic stadium in Kiev just finished, was built by firms and machinery from America and Korea and Europe, not Ukraine. Now, pro-Russian propaganda has exploited the sense of distance the people here feel from their new government. A riot nearly erupted over a rumor that coal miners' salaries would be docked to pay to clean up parts of Kiev that were burned during the uprising. An uprising that most people here say they didn't ask for.

And economist Alexei Ryabchyn says that whatever happens politically, the economy of eastern Ukraine will get worse before it ever gets better. People here are already feeling the pinch of austerity measures from the IMF.

RYABCHYN: And this automatically mean that Russia and pro-Russia supporters, they just can sit and wait and much more people will come to their camp.

WARNER: Without Russia ever sending in its troops like it did in Crimea.

RYABCHYN: The war for south and eastern of Ukraine has just begun. And the next battlefield, as they say, it will be the economic.

WARNER: Gregory Warner, NPR News.

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