Ukraine to halt budget subsidies to eastern territories controlled by pro-Russian separatists

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Ukraine's prime minister says the government will freeze budget subsidies for eastern territories controlled by pro-Russian separatists, a move that could precipitate already grievous economic conditions there.

Arseniy Yatsenyuk said at a government meeting Wednesday that $2.6 billion in state support will be held back from rebel-held areas in the Donetsk and Luhansk regions.

Yatsenyuk says the payment of pensions and government benefits to residents in those territories will resume after they have been surrendered by separatist forces.

Aging industrial concerns in Ukraine's coal-rich east have for many years relied heavily on state subsidies.

The regions are some of the most economically depressed in Ukraine, and living standards have slipped further over six months of fighting between government forces and separatist fighters.