Blessed with rich deposits of ore and coal, Ukraine’s eastern provinces serve as its industrial heartland and home to vast steel mills, chemical plants and machine-building factories. It is this export-oriented region that brings in much of the country’s foreign currency, and earns it the status as a top steel and chemicals exporter. It is also the region that exhibits an Achilles heel inherited from Soviet days when the factories were built: excessive consumption of fuel imported from Russia and Central Asia.
When energy prices were low in the 1990s, Ukraine’s industry kick-started its economic growth spurt, most recently buoyed by sharp domestic consumption. But its weakness was exposed and its economy rattled by three successive stiff price increases in natural gas imports in as many years.
