KIEV, Ukraine — Ukraine's prime minister said Wednesday that the government will freeze budget subsidies for eastern territories controlled by pro-Russian separatists, a move that could worsen already grievous economic conditions there.
Arseniy Yatsenyuk said at a government meeting that $2.6 billion in state support will be held back from rebel-held areas in the Donetsk and Luhansk regions.
Aging industrial operations in Ukraine's economically depressed but coal-rich east have for many years relied heavily on state subsidies.
Yatsenyuk said the payment of pensions and government benefits to residents in conflict-stricken parts of the east will resume after they have been surrendered by separatist forces. The government has not been paying pensions in those areas for several months, but has said back-payments will be paid to recipients when the rebels move out.
Ukraine's government has blamed Russia for fomenting the last six months of fighting between government forces and separatist fighters. Moscow denies that it supplies rebel fighters with either manpower or military equipment.
Yatsenyuk said suspending subsidies to the rebel-occupied areas would cut a vital source of funding for rebel forces.
"The money we pay into those territories today does not get to the people, but is stolen by Russian bandits, and this would be nothing but directly supporting Russian terrorism," he said.
The regions are some of the most economically depressed in Ukraine, and living standards have slipped further since hostilities erupted.
Yatsenyuk said gas and electricity would continue to be supplied to rebel zones.
"Those are our citizens, and the government will not allow these people to freeze as this would lead to a humanitarian catastrophe," he said.
A cease-fire deal was agreed in early September by rebel leaders, and Ukrainian and Russian officials, but fighting has continued all the same. More than 4,000 people have been killed in the region since the conflict began, according to UN estimates.
Interfax-Ukraine news agency quoted deputy Defense Minister Petro Mekhed as saying Wednesday that military intelligence had noted a recent increase in the number of Russian troops in the Donetsk and Luhansk regions.
In apparent response to a feared imminent escalation in hostilities, Ukrainian President Petro Poroshenko said Tuesday that additional troops are being deployed to the east. Poroshenko said the units would defend cities still under government control against possible incursions.