Ukraine’s Battle Scars Feed Mistrust as Unity Eludes East

July 16 (Bloomberg) -- American Action Forum President Douglas Holtz-Eakin and Bloomberg's Peter Cook react to President Barack Obama's comments on the new sanctions on Russia and the recent violence between Israel and the Hamas-ruled Gaza Strip. They speak with Pimm Fox on "Taking Stock." (Source: Bloomberg)

The exodus of separatist fighters from their stronghold in Slovyansk hasn’t ended the struggle for the war-scarred city in Ukraine’s restive east.

“I’m glad the shooting has stopped but I’m not glad the soldiers are here,” said Roman, a local resident who unlike the majority of the town’s 120,000 inhabitants stayed put during the bloody three-month standoff. “We didn’t ask them to liberate us. We didn’t call for them.”

Roman, a Russian speaker who declined to give his last name for fear of retribution, blames army artillery for killing civilians, leveling houses and destroying apartment buildings that were deprived of power and water because of the fighting. He doesn’t trust the pro-European authorities in Kiev, and supplied the rebels with food during their stay.

More on the Crisis in Ukraine:

As the army targets a decisive victory over the pro-Russian insurgents who’re now holed up in the regional capital of Donetsk, the mood in Slovyansk reveals the challenge President Petro Poroshenko faces in bringing reconciliation to Ukraine’s easternmost regions. Complicating his task, rebuilding efforts are being countered by Russian state media reports alleging military atrocities. Ukraine denies the accusations.

Photographer: Genya Savilov/AFP via Getty Images

Ukraine's Prime Minister Arseniy Yatsenyuk examines an explosive device after it was neutralized, in Slovyansk. Yatsenyuk said in an address to the eastern regions, “We must together rebuild Ukraine and your native towns.” Close

Ukraine's Prime Minister Arseniy Yatsenyuk examines an explosive device after it was... Read More

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Photographer: Genya Savilov/AFP via Getty Images

Ukraine's Prime Minister Arseniy Yatsenyuk examines an explosive device after it was neutralized, in Slovyansk. Yatsenyuk said in an address to the eastern regions, “We must together rebuild Ukraine and your native towns.”

“Defeating the rebels is one thing, winning over a skeptical population is quite another,” Eurasia Group analyst Alexander Kliment said July 11 by e-mail. “While local support for separatism is relatively weak, the legitimacy of the current Ukrainian government is, for many people, even weaker.”

Restoring Normality

Poroshenko visited Slovyansk three days after the rebels fled, telling locals the authorities would do “everything possible to restore normal life,” including repairing apartment blocks and schools before the new academic year in September.

“The main thing people need now is security,” Poroshenko said July 14. “It’s important not only to raise the flag but also to protect the flag, the state and the people.”

A Snapshot of Ukraine's Past and Future

Electricity supplies will be restored within 10 days, Energy Minister Yuri Prodan said July 9, while the Emergency Situations Service is sending psychologists to speak to those traumatized by the fighting. Prime Minister Arseniy Yatsenyuk has instructed the head of state-run Oshchadbank to go to the city and ensure pension payments are being met.

Yatsenyuk himself visited yesterday and was photographed with a blue and yellow national flag draped over his shoulders. Today, he told a government meeting about the difficulties in regaining support there.

Photographer: Genya Savilov/AFP via Getty Images

Ukrainian rescuers dismantle a damaged building in Slavyansk on July 16. Close

Ukrainian rescuers dismantle a damaged building in Slavyansk on July 16.

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Photographer: Genya Savilov/AFP via Getty Images

Ukrainian rescuers dismantle a damaged building in Slavyansk on July 16.

‘Bombed Us’

“People are scared -- I should be honest with you, they don’t like the Kiev authorities very much,” he said. “But I should also say people there hate” the separatists “ and other criminals that killed civilians and bully people there.”

Yatsenyuk said his government needs to cut social spending to a “minimum” as it must “finance the army, rebuild infrastructure, and finance those people who suffered because of the unrest.” Ukraine’s economy may contract as much as 6.5 percent this year, Finance Minister Oleksandr Shlapak said.

A week after the separatists fled, Slovyansk remains divided. For some locals, the reconstruction rushed through by the government to get people back on side isn’t enough.

“Slovyansk is split 50/50 between those who’re for Ukraine and those who want to be with Russia,” said Oleksandr, a 58-year-old pensioner who declined to give his last name for fear the army would punish him for his remarks. “We wish Russia had sent peacekeeping troops here and put everything in order.”

The center of Slovyansk fared better than the outskirts, where single-story houses were razed to their foundations and shells blew holes in the sides of apartment buildings. The legacy of the military campaign to retake the city weighs on Sergei, a local entrepreneur.

“The army bombed us,” said Sergei, who asked that his last name be withheld. “What kind of relationship can we have with them now?”

Sanctions Response

After annexing Crimea following a referendum dismissed as illegal by the U.S and the European Union, President Vladimir Putin stopped short of recognizing ballots in Donetsk and Luhansk. Even so, Ukraine says its neighbor is stoking unrest by supplying weapons and equipment, allegations Russia denies.

The U.S. announced stiffer sanctions against Russia last night, targeting energy companies OAO Rosneft and OAO Novatek and state development bank Vnesheconombank. Some Ukrainians doubt they’ll be effective.

“I don’t think economic sanctions will affect Russia,” said Dmytro Voloshchuk, 29, an account manager from Donetsk. “As we saw before, the situation in eastern Ukraine worsened after previous measures by the U.S. and the EU.”

Oleksiy Sheyka, a 22-year-old sports journalist from Kharkiv, said that any steps that hurt Russia are positive, though Ukraine needs the U.S. to assist its military.

Crucifixion Report

Ukraine also complains about its neighbor’s media coverage, with Russia piping in state TV broadcasts warning locals that “fascist” troops are advancing on them from Kiev.

The reports continued even after the rebels left Slovyansk. Channel 1 this week showed a woman who alleged the army had executed separatist sympathizers and crucified the three-year-old son of one in a city square. Ukrainian Interior Ministry adviser Anton Gerashchenko said in a statement that the woman was part of a “huge Russian fraud” designed to instill hatred toward Ukraine.

Only 29 percent of people in the Donetsk and Luhansk regions support Ukrainian unity, while 40 percent want the country to switch to a Russian-backed federal structure that would devolve powers from the government in Kiev, according to a June 17-24 survey of 2,000 people by the Rating pollster.

Even so, there are signs the tide may be turning. Rating said backing for unity has improved from 23 percent in March, when 59 percent of respondents sought federalization. Both polls had a margin of error of 2.2 percentage points.

U.S. ‘Mercenaries’

“Russia is losing the war both in military terms but also for ‘hearts and minds,’” Tim Ash, chief emerging-markets economist at Standard Bank Plc in London, said July 15 in an e-mailed note. “It’s been very noticeable in recent months that there’s been a fundamental shift of sentiment and orientation among a weight of the Ukrainian population.”

Some of those people can be found in Slovyansk.

Olga, a 57-year-old businesswoman, says attitudes toward the armed forces have begun to change since the troops arrived. She describes them as peace-loving and polite and frequently debunks tales of abuse that friends in nearby towns have heard.

“Of course there are some who haven’t changed their minds,” said Olga, who wouldn’t give her last name. “But many have begun seeing the soldiers as they should: their national army to whom they’re thankful we now have peace in Slovyansk.”

Those sentiments aren’t shared by Roman, who says the troops comprise U.S. “mercenaries” and pro-Europeans from Ukraine’s west, citing a report he saw on Russian television. He wants them gone.

“They are strangers,” Roman said. “People ask why they came here. Why didn’t they just stay at home?”

To contact the reporters on this story: Denis Kazansky in Slovyansk at dkazansky@bloomberg.net; Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net Michael Winfrey, James M. Gomez

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