Country’s Future and Drastic Reshuffle in Ukrainian Tycoons’ Ranks
Dmitry MININ | 20.02.2015 | WORLD | BUSINESS

Country’s Future and Drastic Reshuffle in Ukrainian Tycoons’ Ranks

The civil war unleashed by the ruling regime in Ukraine resulted in human suffering and degradation of national economy, as well as transformation of ruling elite. The perception that nine families of tycoons rule the country does not correspond to reality anymore. The ruling circle gets rapidly narrowed as big business in the south-east gets bankrupt with its property systematically eliminated as if it were done according to some plan. More Ukrainian experts say the military operation in the Donbass is an action undertaken to divert attention from the main battle raging in the country – the battle for property. 

The temporary cease-fire is in force as a result of Minsk agreement, but the internal fight between tycoon clans is in full swing. The aim is to get hold of the assets that belonged to overthrown President Yanukovych and his retinue, to confiscate and appropriate what belongs to the supporters of «separatists» (any private property owner from the Donetsk region could be the one), to privatize the titbits of state property, especially economic infrastructure, energy facilities and military industry. The battle for Naftogas, Energoatom, military industry, (especially in view of growing military expenditure), sea and riverine ports, airports and many other assets can undermine the fragile armistice and make the country plunge into the quagmire of further bloodshed. 

Serhiy Taruta, the head of the Donbass Industrial Union and former governor, said he was completely broke. There were times when Rinat Akhmetov was the richest man in Ukraine, now he has only one significant asset left at his disposal – the Mariupol Metallurgical Plant – which is on the brink of bankruptcy. His Ukrtelecom suffered greatly as a result of nationalization in Crimea. The whole empire of Akhmetov ekes out its existence at the expense of Kryvorizhstal-produced iron ore. Dmytro Firtash will be out of business if the country loses its status of the transit route on the way of exporting Russian hydrocarbons to Europe. The company Interpipe founded and owned by Victor Pinchuk cannot shoulder its foreign debt burden. It already exceeds $1, 3 billion. According to experts, Interpipe is facing bankruptcy. Many believe that the return of former Ukrainian President Leonid Kuchma into big politics in the capacity of guarantor of the Minsk accords is an attempt to rescue the business of Pinchuk, his son-in-law who is pressed hard by tycoon Igor Kolomoisky. Zaporizhia (Zaporozhye) clans cannot recover from the losses suffered by well-known Zaporizhia Automobile Building Plant, that had to has stop production, and Motor-Sich (a Public Joint Stock Company in Zaporizhia, one of the largest engine manufacturers for airplanes and helicopters worldwide) is unable to operate at full capacity. The «unfortunate oligarchs» may not be worthy of our pity - in recent years they have transferred at least $100 billion to offshore zones and will hardly die of hunger. The matter is – the formal bankruptcies destroy the economic and technological potential of the country negatively affecting the lives of millions. 

More predator-like and unscrupulous rivals are coming to take the place of East-Ukrainian tycoons. The duo of Petro Poroshenko and Igor Kolomoisky is stepping in. The country is actually divided between the two. The reasons for making these leading clans prevail are obvious. The business climate and all economic indicators are significantly degrading to make administrative power a determining factor as it allows to support allies and put pressure on rivals. Contrary to what he promised, Poroshenko has not given up the ownership of a single enterprise that belonged to him before being elected as President while all his assets started to miraculously bring in huge profits as presidential powers are actively used for this purpose. On his part, Kolomoisky is getting closer to the cabinet led by Arseniy Yatsenyuk and the Ukraine’s National Security and Defence Council headed by Oleksandr Turchynov. The control over power agencies plays a big role in the competition as the civil war continues. Poroshenko has the advantage of being the Supreme Commander-in-Chief, but Kolomoisky is the chief sponsor of volunteer armed formations and has some units under his direct command, for instance, the battalions Dnieper, Donbass and some others. 

The conflict of interests between Petro Poroshenko and Igor Kolomoisky to large extent defines the Ukraine’s fate. The stakes are getting higher. The media outlets which belong to Kolomoisky have been trying to paint President Poroshenko as an interim leader who committed an act of national treason by being a party to the Minsk accords. In particular, they actively discuss the issue of President’s business (Roshen confectionary manufacturing group) on the Russian market. They serve as the sources of information about the looming «third Maidan» and inevitable coup. The Poroshenko-oriented media constantly comes up with the stories about Kolomoisky’s dishonest schemes launched to get profit thanks to defence deals and appropriation of state resources. The nucleus of Kolomoisky’s empire – Privatbank – may soon go bust. This issue is also kept in focus by pro-Poroshenko media. The President can rely on the support of other Ukrainian tycoons as Kolomoisky has antagonized many of them. Some experts believe that the Privatbank owner has crossed the red line in his drive to get all the state resources under his control and become the only beneficiary as the property of Yanukovych family is divided. Kolomoisky has come up with an initiative to transfer the property of disloyal «oligarchs» to the reserve fund for anti-terrorist operation that he heads - the gesture to evoke extreme annoyance. The attacks against the Minsk accords launched by pro-Kolomoisky media, politicians and members of parliament are to great extent influenced by the tycoon’s private interests. Billionaire Viktor Pinchuk launched a lawsuit against Kolomoisky in London for over $2 billion in damages for unfulfilled pledges on mining investments. Pinchuk has Leonid Kuchma behind him. By criticizing the Kuchma’s performance in Minsk Kolomoisky attacks Pinchuk as well. Pursuing the same purpose he tries to revive the relatively forgotten case of Gongadze. He wants the related information to be declassified. It may result is giving a start to a large-scale investigation in the Kuchma’s case to involve many supporters of Kolomoisky. The tycoon has also used his pocket media and some members of parliament to get rid of General Prosecutor Vitaly Yarema who was disloyal to him. With a lot of compromise coming to surface the President had to fire the official. 

Poroshenko hit back. He nominated Victor Shokin, the former Kolomoisky’s adversary, for the Prosecutor General’s position. The President’s nominee was endorsed by parliament on February 10. Unlike Yarema, he is a professional lawyer. His biography includes an interesting detail. In 2005 he launched a criminal case against Kolomoisky. 

The system of duumvirate is taking shape and it does not bode well for Ukraine. Those who share power view the country exclusively as a source of income. That’s the result of «Maidan revolution» taking place under the national banner but transferring the power to cosmopolitans. 

Levko Lukyanenko, a Soviet dissident who has served 26 years in prison camps and exile for propagating the ideas of Ukrainian nationalism, has become a fierce opponent of tycoons. He said their guilt was comparable to the largest crimes against humanity that were committed in the XX century. According to him, in 23 years since independence Ukraine has made no progress. To the contrary, it has degraded in all spheres. He wants the oligarchs to be held responsible. Lukyanenko is an inveterate nationalist. He believes that the gist of the problem is that the ruling class was nationalist in all the countries of Eastern Europe unlike in Ukraine where it was «pro-Russian international». To assert its nationhood Ukraine needs «the second phase of Russian Empire’s disintegration.» I wonder what Lukyanenko meant talking about the domination of «Russians» among the ranks of Ukrainian tycoons? Did he mean Poroshenko and Kolomoisky? Until Ukrainian masterminds see the specially invented «dummy targets» as the source of their troubles the people of the country will not become masters in their own house. 

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