Donbas In The 1990s: How It Defined Ukraine’s Future

Editor’s Note: This is the first story in a series about the 1990s in Ukraine and how that decade shaped the nation.

The Donbas constitutes 53,000 square kilometers, or nearly 9% of Ukraine’s territory, in the Donetsk and Luhansk oblasts. It’s long been a special place of heavy industry, coal mines and sunflower fields.

It gained favorable international attention when the provincial capital of Donetsk, which once had nearly 1 million people, hosted the UEFA Euro 2012 soccer championship. Thousands of foreigners came to the city, probably for the first time.

Two years later, the international spotlight shone on the Donbas again, not for the happy roar of a stadium crowd, but the frightening sounds of deadly missiles.

More than 13,500 people have been killed and 1.5 million have fled their homes since Russia invaded eastern Ukraine in 2014, leaving the Kremlin in control of 7 percent of Ukraine’s territory — Crimea and parts of the Donbas.

But in reality, Ukraine’s grip on the Donbas was shaky long before the Russian military invasion.

After decades of Russian influence, as well as indifference and corruption by Ukrainian authorities and local business elites, many economically desperate Donbas residents grew alienated from Kyiv’s central government — or perhaps never accepted its authority since the start of independence in 1991. Similar resentments were expressed on the Crimean peninsula, also heavily influenced by Russia.

Turbulence

To understand why the 2014 Russian invasion found fertile ground in the Donbas, the best place to start is the wild 1990s, the decade that does much to explain Ukraine’s situation today.

The Soviet Union, with its planned economy, collapsed. The newly independent Ukraine immediately fell into economic crisis. Several regions, including Crimea and the Donbas, started talking about federalization and gaining autonomy from Kyiv. Some local movements, like Interrukh of the Donbas, stood against “the nationalist rise in western Ukraine.” The Communist Party did well in the Donbas for a long time — as did calls for the return of the USSR.

“Everyone saw that Ukraine was not a monolith by nature. We had too many language, cultural and regional differences. So, we were searching for a way to keep such different regions together,” Leonid Kravchuk, Ukraine’s first president who served from 1991 until his re-election defeat in 1994, told the Kyiv Post.

Kravchuk remembers that it was hard to unite the country around an idea that had no financial stability behind it. In the first years of independence, Ukraine experienced hyperinflation, with prices rising by 1,000% per year. Companies did not pay workers their salaries for months, especially the ones employed by the more than 15,000 state-owned enterprises, most of which were flirting with bankruptcy.

“The times were definitely hard for everybody, but we remained hopeful about the future. Everybody was looking for new opportunities back then,” Rinat Akhmetov, Ukraine’s richest businessman and oligarch from Donbas told the Kyiv Post in a written comment.

While newly-made businesspeople like Akhmetov saw a window of opportunity in the early 1990s chaos, employees of hundreds of Donbas mines and factories that produced 15% of Ukraine’s gross domestic product from the 1990s until 2013, were on the verge of hunger.

Shaking Goliath

In 1989, Donbas was a region of more than 6 million people, 90 percent of whom lived in cities, which suffered since the start.

Since 1989, local coal miners went on strikes, fighting for better treatment — and subsidies — from the Communist Party. Ironically, more than 500,000 protesting coal miners in a region where many now claim to miss the USSR made a significant contribution to its downfall.

Workers at 173 out of 276 coal mines operating in the Donbas as of the early 1990s joined the protests, fed up with the fact that they were not able to buy simple goods for their salaries. They were supposed to get priority provisions. But the reality was different.

“After my shifts I was standing in line in a basement to get my portion of meat, wrapped in a plastic bag,” said Mykhailo Volynets, who used to work for Myrnohradvugillya state mining company in Donetsk Oblast in the 1990s. “But instead, I often got a bone from a cow’s leg with some tiny straps of meat on it.”

Volynets, now the head of the Independent Coal Miners Trade Union, recalls that during the Soviet Union, the wages came, but miners had nowhere to spend their money.

“We had to travel to Donetsk or Moscow to buy some food or other goods. When in Russia, we passed on sightseeing and stood in lines for groceries instead. All that to get a very bad and salty sausage.”

Donbas miners were among the first groups who felt they could demand changes from their government. After the authorities of the collapsing USSR did not arrest any of the protesters in 1989, they dared to call for the Soviet government to resign.

“Those red directors still blame us for destroying their beloved Soviet Union,” coal miner Oleksandr Abramov said.

“Red director” was a common name for the former communist directors of Soviet enterprises, stores and mines, mostly appointed by the Kremlin. Many of them, like Yukhym Zviagilsky, Oleksandr Yefremov and Yuriy Boyko, later formed the core of the now-disbanded pro-Russian Party of Regions. Ukraine’s second President Leonid Kuchma was the “red director” of a rocket plant.

In the 2000s, Kuchma introduced Donbas native Viktor Yanukovych to big politics. That’s how the rule of the so-called Donetsk clan in Ukraine was established.

But in the 1990s, the Donetsk clan was only starting to form.

New age

By 1993, Donbas elites understood that independent Ukraine was here to stay. They had to figure out how to keep their influence over the region and divide up the rich heritage it inherited from the USSR.

But they were not the only ones who wanted a slice of that pie. Hundreds of criminal gangs started rising from the streets of the Donbas, which was slowly slipping into an economic crisis.

Donbas mines, which employed most of the 800,000 people who worked in the coal industry in the 1990s, had already been exploited for more than 50 years without renovation.

They could cover only up to 70 percent of their own spending and were demanding more and more subsidies from the state budget each year. The Ukrainian government started closing the unprofitable mines, leaving more and more miners without work.

“In the 1990s, a miner would sometimes get like Hr 10–15 a month. This was just enough to buy two bottles of horilka. So a miner was drinking his grief after work and beating his wife for daring to argue with him about his spending,” Volynets recalled.

The decay of mines and factories contributed to the marginalization of the region and planted seeds of hatred towards central authorities, Donbas journalists Denys Kazansky and Maryna Vorotyntseva write in their 2020 book, “How Ukraine Was Losing the Donbas.”

As of 2020, 148 mines remain in the Donbas, but Ukraine controls only 33 of them. Most are located on territories, occupied by Russian-backed mercenaries.

Many of those former miners and plants workers were searching for ways to survive in the new reality. Some of them were turning to business, which in the 1990s, with no proper laws and tax codes, was very close to the criminal world.

Wild east

Donbas in the 1990s had its phase of post-apocalyptic looting. Locals were selling plants’ equipment for scrap metal, raiding enterprises and paying the gangs for protection from other new entrepreneurs. They called themselves businessmen, but the police called them gangsters.

“There was no fully legal business back then. Everyone was stealing,” recalls Serhiy Ivanov, a journalist who used to work as an investigator in the Luhansk Prosecutor’s Office in the 1990s. “So-called businessmen were killing each other, fighting for control over the cities and towns.”

Locals still remember that almost every day someone was shot or bombs went off in the Donbas. Law enforcers were finding graves of entrepreneurs who refused to give up their share of business.
“It was a time when police were either afraid of gangsters or working with them,” said Oleh Solodun, the former head of the Kramatorsk police unit fighting organized crime. “Why should a regular police officer risk everything to catch a dangerous gangster, if his own chief is on the payroll of that gangster?”

Ivanov remembers that locals were generally not aware that gangsters were robbing the Donbas. Moreover, they tolerated and even admired the gangsters, who frequently solved local problems instead of the authorities. Luhansk and Donetsk oblasts had their own godfathers, and they were often at odds with each other.

“In Luhansk we had Valeriy Dobroslavskiy, the owner of the Imperial firm. He had such support from locals, he could have been elected mayor. But he was murdered in 1997 and that murder marked the day when Donetsk gangsters took control of Luhansk,” Ivanov said.

Murders

Dobroslavskiy was only one man in the chain of murders of influential people in Donbas.

Before that, Yevhen Scherban, the most influential local businessman, was assassinated in Donetsk Airport in 1996.

Shcherban accumulated a business empire by buying the shares of local enterprises from their employees, who got them during the waves of privatization started by Kuchma in 1995.

Shcherban is often referred to as Ukraine’s first oligarch.

In 1995, Shcherban’s business associate Akhat Bragin was killed by a bomb at the Shakhtar Stadium in Donetsk. Bragin was the owner of the Shakhtar football team.

Bragin was also known as Alik Grek, the crime boss of Donetsk, Ivanov recalled. Bragin denied being a gangster.

In 1999, then-Prosecutor General Mykhail Potebenko said the killers of Bragin and Scherban were the members of one gang. Those who ordered the murders were never found.

One of the few Donbas bigshots who survived that period was Akhmetov. Today he is the richest Ukrainian by far, with a fortune recently estimated at $7 billion.

“Akhat was a very close friend of mine,” Akhmetov recalled in a written response to the Kyiv Post. “His death is a big tragedy for me personally.”

Akhmetov recalls that he narrowly escaped the explosion himself.

“Many say that the bomb detonated in the box (at the stadium). It is a lie. The explosion happened in the tunnel (leading to the box area),” he said. “We arrived at the stadium together, five minutes late. His car pulled up first, mine was second. Because we were late, he left his car and rushed inside without waiting for me. The gap was like five seconds, no more than that. The explosion happened when I opened the door of my car.”

After the death of Bragin, Akhmetov became the new president and owner of Shakhtar soccer club and inherited control over their common trading coal and coke business ARS. Another partner in the company was murdered earlier the same year.

“It was later, in the mid‑90s, when I used the trading profits to establish Donetsk City Bank, which became my gateway to financial resources. Thus, I was able to buy the dying industrial enterprises no one cared about. I built a team and we started investing in those enterprises, developing them. In 2000, we created SCM which evolved from these companies,” Akhmetov said.

Shcherban’s son claims that at the heart of Akhmetov’s empire are the companies he stole from the family of the murdered Shcherban. Akhmetov denies it.

In the mid‑90s, the Ukrainian government managed to eliminate some gangsters and made deals with others, Ivanov recalls.

“It was war back then, and at war every weapon is good. The authorities were letting gangsters kill other gangsters. But then, instead of eliminating those who were left, the government let them infiltrate its structures and get high posts,” Ivanov said.

This suited everybody back then as the gangsters were going legit, providing jobs and paying taxes, he added.

Giveaway

Kuchma, who was elected president in 1994, is often remembered as a reformer who managed to stabilize the currency and launched the first privatization drive in Ukraine in 1995.

Millions of Ukrainians got so-called privatization certificates, or vouchers — shares of Soviet enterprises. The government allowed citizens to sell their vouchers and did not control who bought the most shares. This allowed many of today’s Ukraine’s richest to accumulate assets. Enterprises were often sold in a non-transparent way to people close to the government.

Kuchma later said that he wanted big businesses to appear as a result of privatization because without them, “Ukraine would not have had capitalism.” That was when oligarchs were born in Ukraine.

The biggest oligarch is Akhmetov. Although Akhmetov owns many businesses and media, and reportedly influences dozens of lawmakers in parliament, he doesn’t agree he should be called an oligarch, preferring the title of “investor.”

“The state is an inefficient owner. Kuchma was the first to understand that,” Akhmetov said of the privatization campaign. “The enterprises were barely alive. Private investors entered the market and started modernizing businesses. People received salaries without delays, and during Kuchma’s presidency the economy grew by 12% annually.”

Akhmetov added that Kuchma “deserves the deepest respect, because everyone benefited from the privatization — companies, regions, investors and the country.”

Kravchuk also praised Kuchma’s reforms. But despite that, Kuchma treated Ukraine as a director, not as president, Kravchuk said, meaning that people from Kuchma’s inner circle used their ties with the director to get favors.

Akhmetov said he never needed any special privileges from Kuchma and only saw the president on TV in the 1990s.

Kuchma did not respond to a request for comment for this story.

“Those people were becoming billionaires so quickly. A person just could not make that much money in heavy industry in such a short time if he or she sticks to the rules of the market. But back then no market appeared yet,” Kravchuk said.

Thus, oligarchy became inevitable in Ukraine, Kravchuk added.

“It is normal when a person wants to make good money to have a good life. But it is not okay when that person uses wealth to influence politics and society to make even more,” Kravchuk added.

That is exactly what started happening in Ukraine.

Trading influence

A political clan from Donbas came out of the 1990s, united and powerful. Most of its members, including Akhmetov, joined the Party of Regions.

Kuchma made Yanukovych, the former Donetsk Oblast governor, prime minister and then his successor to the president’s post. The new Donetsk elites made their way to the top.

“Kuchma did not do anything to unite the regions,” Kravchuk said. “All the election campaigns held in Ukraine after the start of his presidency were built on pitting some regions against others. It’s been 30 years and we are still there. We’re at war with Russia, yet the (44) Opposition Platform For Life lawmakers frequently visit Russia to get some advice.”

Every time Ukraine wanted to move away from their Russian overlords, pro-Kremlin lawmakers of the Donbas and east Ukraine, strongly opposed the new course and renewed calls for a split from Kyiv. This happened in 1993, 2004 and 2014, finally bringing war to the region, Kazansky and Vorotyntseva wrote.

Locals in the Donbas trusted their people more and generally thought Kyiv did not pay enough attention or respect to them, said the U.S. historian Hiroaki Kuromia, the author of the 1998 book “Freedom and Terror in the Donbas: A Ukrainian-Russian Borderland, 1870s‑1990s.”

Furthermore, the region has had many ethnic Russians, at least since the start of the 1930s. Some of them were searching for freedom, others were fortune hunters, Kuromia said.

“Many of those who moved from Russia, came here for work but didn’t want to adapt to the country’s rules, and denied everything Ukrainian,” Kravchuk added. “This is the basis for what happened in 2014.”