Ukraine's Oligarchy Persists
The Kiev Post Editorial Board
September 24, 2015
Often as a justification for their lack of success in key areas, many of Ukraine's post-EuroMaidan Revolution politicians like to describe Ukraine as a noisy, vibrant democracy that requires public debate to achieve political consensus.
Another common excuse among those in power is that “populism” is standing in the way, as if “populism” is the surname of a powerful politician putting the brake on changes in the public interest for Ukrainians. It’s akin to blaming “the system” and just as useless.
The first excuse - that people shouldn’t expect fast progress because Ukraine is a democracy - has elements of truth. While clearly more democratic than Russia and most of the post-Soviet neighborhood, and more democratic than at any time since independence in 1991, Ukraine remains too much of an oligarchy with too little rule of law.
The fact that Ukraine’s politicians want to dance around the truth also likely explains their other bogeyman excuse of “populism.” Exactly who and what are they talking about? If it’s people, name them. If it’s selfish interests they are protecting, name those. The public has a right to know.
The reason that politicians are reluctant to take on the oligarchs is because they need them and because they are still too powerful, compared to the state, but not to the people.
Those in power need the oligarchs to support the fight against the external enemy, Russia, which will likely wage a low-intensity war against Ukraine for years to come. Those in power also need the oligarchs to pay taxes and keep employing people, even if those businesses benefit Russian-occupied areas of the Donbas.
The Associated Press published a wonderfully revealing story this week by Nataliya Vasilyeva headlined “Ukraine’s richest man plays both sides of war’s frontline.”
Of course, the subject is the reclusive Rinat Akhmetov, who will forever be tarnished, and deservedly so, for his fervent and longstanding support of the deposed dictator, President Viktor Yanukovych.
The story notes that Akhmetov, who employs 300,000 people, keeps running businesses on both sides of the war front -- on the Ukrainian-controlled side and the Russian-controlled side. It’s so perverse that Akhmetov’s steel products are finished in separatist areas and sold to the West, indirectly propping up the Russian-backed government, the Associated Press writes.
“It makes for a striking picture of economic cooperation between enemy areas: Coal produced in Krasnodon mines, on rebel territory, travels to the Avdiivka coking plant on the government side,” the Associated Press writes. “Coke is then shipped back to rebel lands, to a metals smelter in Yenakieve, and the metals produced there are transported to government territory on the Azov Sea — for shipping to the West.”
Akhmetov’s Metinvest metals and mining holding posted revenues of $1.8 billion in the first quarter of the year, a 6 percent increase over the previous year, with Europe accounting for 35 percent of sales, the story reports, noting: “Only Akhmetov — worth $6.7 billion according to Forbes magazine — has been allowed to operate on both sides.”
He is allowed to play both sides of the fence because both sides need him -- Ukraine needs his taxes, and the Donbas separatists need his factories and employment. Akhmetov has become (and maybe always has been) too big for anyone in government to cross. And if the biggest oligarch is too big to take on, then there will be no de-oligarchization of Ukraine’s economy, politics or media.
Another oligarch who has been throwing his considerable weight around again is billionaire Igor Kolomoisky, whose 1+1 channel pulled Savik Shuster’s political talk show off the air on Sept. 18 just before Radical Party leader Oleh Lyashko was to appear, no doubt, to talk about the selective justice involved in the arrest of one of his party members in parliament, Ihor Mosichyuk.
The sordid Mosichyuk episode managed to reveal how far Ukraine still has to go to achieve democracy and a competitive, rule-of-law economy. It showed that oligarchs are still in charge. They control most of the nation’s big news media outlets, as they did before the revolution. And they, or their representatives, are top suspects in why General Prosecutor Viktor Shokin is a failure, who has now resorted to breaking laws to launch a selective justice campaign against “little-fish” lawbreakers such as Mosichyuk, while ignoring much bigger crimes against the state and the people of Ukraine.
It is not only oligarchs who form power centers. Ukraine’s army of bureaucrats is so against any change that threatens their corruption schemes. We suspect that’s why civil service reform keeps stalling.
This government has not yet demonstrated the will or strength to end special privileges and subsidies for the entrenched elite, much less impose rule of law. We understand that politicians are up against strong, vested interests who are blocking change. But it would be more helpful if today’s political leaders would be more forthcoming about the challenges they face so that they can rally support from the public, honest businesses and civil society. Independent journalists are ready to expose wrongdoing wherever they find it, which is more than the nation can say about its police, prosecutors and judges. Ukraine deserves a stronger fight against unfairness and injustice than it is getting from its elected officials and unelected public servants.
Another common excuse among those in power is that “populism” is standing in the way, as if “populism” is the surname of a powerful politician putting the brake on changes in the public interest for Ukrainians. It’s akin to blaming “the system” and just as useless.
The first excuse - that people shouldn’t expect fast progress because Ukraine is a democracy - has elements of truth. While clearly more democratic than Russia and most of the post-Soviet neighborhood, and more democratic than at any time since independence in 1991, Ukraine remains too much of an oligarchy with too little rule of law.
The fact that Ukraine’s politicians want to dance around the truth also likely explains their other bogeyman excuse of “populism.” Exactly who and what are they talking about? If it’s people, name them. If it’s selfish interests they are protecting, name those. The public has a right to know.
The reason that politicians are reluctant to take on the oligarchs is because they need them and because they are still too powerful, compared to the state, but not to the people.
Those in power need the oligarchs to support the fight against the external enemy, Russia, which will likely wage a low-intensity war against Ukraine for years to come. Those in power also need the oligarchs to pay taxes and keep employing people, even if those businesses benefit Russian-occupied areas of the Donbas.
The Associated Press published a wonderfully revealing story this week by Nataliya Vasilyeva headlined “Ukraine’s richest man plays both sides of war’s frontline.”
Of course, the subject is the reclusive Rinat Akhmetov, who will forever be tarnished, and deservedly so, for his fervent and longstanding support of the deposed dictator, President Viktor Yanukovych.
The story notes that Akhmetov, who employs 300,000 people, keeps running businesses on both sides of the war front -- on the Ukrainian-controlled side and the Russian-controlled side. It’s so perverse that Akhmetov’s steel products are finished in separatist areas and sold to the West, indirectly propping up the Russian-backed government, the Associated Press writes.
“It makes for a striking picture of economic cooperation between enemy areas: Coal produced in Krasnodon mines, on rebel territory, travels to the Avdiivka coking plant on the government side,” the Associated Press writes. “Coke is then shipped back to rebel lands, to a metals smelter in Yenakieve, and the metals produced there are transported to government territory on the Azov Sea — for shipping to the West.”
Akhmetov’s Metinvest metals and mining holding posted revenues of $1.8 billion in the first quarter of the year, a 6 percent increase over the previous year, with Europe accounting for 35 percent of sales, the story reports, noting: “Only Akhmetov — worth $6.7 billion according to Forbes magazine — has been allowed to operate on both sides.”
He is allowed to play both sides of the fence because both sides need him -- Ukraine needs his taxes, and the Donbas separatists need his factories and employment. Akhmetov has become (and maybe always has been) too big for anyone in government to cross. And if the biggest oligarch is too big to take on, then there will be no de-oligarchization of Ukraine’s economy, politics or media.
Another oligarch who has been throwing his considerable weight around again is billionaire Igor Kolomoisky, whose 1+1 channel pulled Savik Shuster’s political talk show off the air on Sept. 18 just before Radical Party leader Oleh Lyashko was to appear, no doubt, to talk about the selective justice involved in the arrest of one of his party members in parliament, Ihor Mosichyuk.
The sordid Mosichyuk episode managed to reveal how far Ukraine still has to go to achieve democracy and a competitive, rule-of-law economy. It showed that oligarchs are still in charge. They control most of the nation’s big news media outlets, as they did before the revolution. And they, or their representatives, are top suspects in why General Prosecutor Viktor Shokin is a failure, who has now resorted to breaking laws to launch a selective justice campaign against “little-fish” lawbreakers such as Mosichyuk, while ignoring much bigger crimes against the state and the people of Ukraine.
It is not only oligarchs who form power centers. Ukraine’s army of bureaucrats is so against any change that threatens their corruption schemes. We suspect that’s why civil service reform keeps stalling.
This government has not yet demonstrated the will or strength to end special privileges and subsidies for the entrenched elite, much less impose rule of law. We understand that politicians are up against strong, vested interests who are blocking change. But it would be more helpful if today’s political leaders would be more forthcoming about the challenges they face so that they can rally support from the public, honest businesses and civil society. Independent journalists are ready to expose wrongdoing wherever they find it, which is more than the nation can say about its police, prosecutors and judges. Ukraine deserves a stronger fight against unfairness and injustice than it is getting from its elected officials and unelected public servants.
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