May 20, 2021

Finally, the primacy of Ukraine’s oligarchs is in question


To the surprise of the sceptics, panic of those targeted and a cautious thumbs up from those who domestically and externally had called for such developments, President Volodymyr Zelenskyy has reaffirmed his determination to end the oligarchic set-up in Ukraine that has dominated economic and political life for so long.

Whatever the reasons and motives, the Ukrainian leader has begun an unprecedented shake-up of the system. For the first time in the history of independent Ukraine, a Ukrainian president has launched a broad offensive against the oligarchs – not against one, or even two, but against almost half a dozen of the key oligarchs all at once.

In this process, which is still unfolding, Ihor Kolomoisky has long been in the spotlight. The notorious tycoon had the country’s largest bank, PrivatBank, taken away from him in 2016 because of brazen attempts at embezzlement. Mr. Zelens­kyy’s detractors have claimed that Mr. Kolomoisky was the president’s partner, if not patron, during his accession to the presidency.

When challenged by Mr. Zelenskyy, Mr. Kolomoisky was initially very self-confident and even aggressive. But after facing serious charges in both the United States and Britain, and with his remaining assets, particularly in the energy sphere, threatened by legal authorities in Ukraine, Mr. Kolomoisky has become conspicuously silent in recent months.

The former Ukrainian president and oligarch Petro Poroshenko is also an obvious target of Mr. Zelenskyy’s efforts. Mr. Poroshenko, who was not gracious in losing the presidential election of 2019, has remained an implacable political foe of Mr. Zelenskyy’s.

The moves against Mr. Poroshenko have included accusations of corruption, but also increasingly, if still implicitly, treasonable activities while he was president through his cooperation with the principal tycoon and politician under fire at the current moment, the chief representative of Russia’s fifth column in Ukraine, Viktor Medvechuk.

Mr. Medvechuk, who has flaunted his close ties with Russian President Vladimir Putin, has in recent months suffered the shock and ignominy of having his propagandistic TV channels in Ukraine shut down and a pipeline transporting Russian oil products to Europe taken away from him.

Since then, Mr. Medvechuk has been charged with treason, raising the ire of Moscow. Under house arrest, he is now forced to follow the news as more and more purported secret recordings of his telephone conversations in 2014-2015 with Russian officials and their proxies in occupied areas of eastern Ukraine have been made public. Many of these recordings implicitly implicate Mr. Poroshenko, with whom Mr. Medvedchuk has had both a political and business relationship.

But two other unsavory oligarchs have also been targeted and are feeling the pressure. Both have made fortunes exploiting Ukraine’s natural resources and economic potential and have built up considerable political clout as a result.

The first is Dmytro Firtash, who made a huge fortune as a corrupt gas middleman between Russia and Ukraine. He was indicted in 2014 on U.S. federal foreign bribery charges and he has spent the last seven years fighting extradition to stand trial in a Chicago federal courtroom, though he has nonetheless retained considerable business interests in Ukraine.

The second is Rinat Akhmetov, the energy giant, who with his very dubious and politically ambiguous background from Donetsk, has for long enjoyed the position of Ukraine’s wealthiest oligarch.

Mr. Poroshenko, while president, also seems to have colluded for mutual benefit with Mr. Akhmetov in dealings concerning the lucrative energy sector.

Until recently, Mr. Akhmetov appeared to be politically untouchable because of his wealth and influence. He was said to have the new president’s ear and backing. But in recent months, Mr. Zelenskyy’s administration has moved step by step to fight the oligarchs, even Mr. Akhmetov. As a result, Mr. Akhmetov’s golden days of getting away with playing the system to his personal financial advantage have been seriously challenged and are now in question.

Both Messrs. Firtash and Akhmetov are clearly feeling the heat from Washington, Kyiv, and possibly Brussels, among others. The indicted Mr. Firtash issued a rare statement at the end of April denying any involvement in Rudy Giuliani’s attempts to discredit U.S. President Joe Biden.

And the very crafty and affluent Mr. Akhmetov has also been seeking to defend his image. He took the step recently of talking with, remarkably in his case, the U.S.-funded Radio Free Europe/Radio Liberty’s Ukrainian Service. During that interview on April 3, Mr. Akhmetov maintained that he is a businessman not interested in politics. He did not mention his television channel and its political influence, nor his record of alignment with pro-Russian political forces.

Undoubtedly, the pressure on the Zelenskyy administration from the U.S., EU and others has had an impact on the Ukrainian president’s recent steps to combat corruption in the country. But it is also possible that Mr. Zelenskyy has realized that the Kremlin under Mr. Putin is not prepared for reasonable compromises. As a result, there is no point in skirting a fight with the likes of Mr. Medvechuk.

Mr. Zelenskyy no longer pretends not to see the issue, nor to understand it. He has finally begun to speak clearly and forcefully. Understandably, U.S. support for Ukraine’s fight against the oligarchs is crucial, so Mr. Zelenskyy has simultaneously pitched his messages in this regard to his constituency in Ukraine and Washington.

Mr. Zelenskyy has also made his case publicly in the Atlantic Council’s influential Ukraine Alert publication. In a May18 story, titled “De-oligarchizing is the key to Ukraine’s future success,” the Ukrainian president made clear his intention to fight against an entrenched system in which oligarchs control much of the power in Ukraine.

“Since the 1990s,” Mr. Zelenskyy wrote, “a small handful of Ukrainians have dominated the economic and political life of the country… Ukraine’s unelected elite has rigged the system and established a set of rules designed to perpetuate the current status quo indefinitely.”

But, Mr. Zelenskyy stressed, “Two years on, we are now making progress in the quest to transform Ukraine.” Mr. Med­vechuk has been stopped. “This is just the beginning. There will be many more such measures until all of Ukraine’s oligarchs are cut down to size and reduced to the status of ordinary big businessmen.”

Mr. Zelenskyy has instructed the National Security and Defense Council (NSDC), the Antimonopoly Committee and the President’s Office to draft a law on oligarchs. The NSDC Secretary Oleksiy Dani­lov has since announced it has confidentially classified 13 Ukrainians as oligarchs.

Mr. Zelenskyy is no longer mincing words about what is at stake.

“The example of Mr. Medvedchuk offers insights into the substance behind oligarch status in today’s Ukraine. If such people are deprived of their media resources, denied dubious access to strategic state assets and stripped of political protection, they become toothless and are unable to weaken Ukraine further,” he wrote in the Atlantic Council story.

“This is the purpose behind our policy of de-oligarchizing. By curtailing the power of the oligarchs and preventing them from blackmailing the state, we will create a fairer Ukraine that is truly competitive on the global stage and able to defend its sovereignty effectively,” Mr. Zelenskyy wrote. “Our goal is to prevent destructive concentrations of power and resources, while guaranteeing the equality of all Ukrainian citizens before the law.”

Furthermore, Mr. Zelenskyy also made it clear that he believes additional steps are needed to win the fight against Ukraine’s oligarchs.
“There are dozens of reforms required to achieve the necessary transformation. These include a fair judiciary, effective decentralization, a modern financial sector, transparent privatization of state-owned assets and the completion of land reform,” Mr. Zelenskyy wrote.

The proverbial die is now cast, and we will have to wait to see how this historic confrontation plays out. One thing, however, is clear – this is a defining moment of truth for Ukraine.

Mr. Zelenskyy has remained in a fighting spirit. At his press conference on May 20 he declared that, “I will bring to an end the epoch of the oligarchs.” The battle against the oligarchs has been launched and there’s no going back.