News / Economy

Eastern Ukraine Oligarchs Seek to Avoid Economic Disaster

Eastern Ukraine Oligarchs Seek to Avoid Economic Disasteri
Patrick Wells
May 17, 2014 5:52 PM
In a potentially seismic shift in the power dynamics of eastern Ukraine, industrial workers in Mariupol and other cities have risen up against armed separatists after business leaders claimed that secession would be economically disastrous for the region. But many separatists believe that the oligarchs are only looking out for their own interests. Patrick Wells reports from Mariupol, Ukraine.
VIDEO: Citing financial risks of secession, industrialists set up worker patrols to remove armed insurgents. Patrick Wells reports from Mariupol, Ukraine.
Patrick Wells
Smoke billows from Azovstal steel works here, one of the many gargantuan industrial assets in this southeastern port city owned by Ukraine’s richest man, Rinat Akhmetov.
Akhmetov employs more than 300,000 people across the region. This plant alone produces four million to five million tons of steel each year for markets around the world.
But vital export markets in Europe and elsewhere would be cut off to local industry if the so-called Donetsk People’s Republic were to secede from Ukraine, a move supported in last week’s unofficial referenda there and in Luhansk. Only a handful of countries would recognize the two republics’ sovereignty.
In a potentially seismic shift in the power dynamics of eastern Ukraine, business leaders — claiming that secession would be economically disastrous for the region — this week began mobilizing industrial workers to rise up against armed separatists here and in a handful of other cities.
The workers have formed patrols, removing armed groups from checkpoints and occupied buildings around Mariupol. Some 100 groups are patrolling Mariupol, each consisting of six to eight workers and two policemen.
On Friday, businessmen such as Akhmetov signed a memorandum with police, union leaders and some separatists, renouncing political violence and calling for armed groups to lay down their weapons. But on Friday night, the Ukrainian military still controlled access in and out of Mariupol.
The workers recently forced separatists to abandon the Mariupol administration building. But as they patrolled before the cameras Friday, tensions were high.
The directors of two steel plants owned by Akhmetov have been leading patrols themselves.
Yuriy Zinchenko said it was important to take the separatists’ views into account, but not at the risk of jeopardizing jobs or the regional economy.  
“All of us have good brains and we don't want to turn Donetsk into a war zone,” said Zinchenko, who heads Illich Steel Works. “All of us understand that this is just destruction. This is the road to nowhere.”
Skeptical of motivations
Many observers said they were skeptical of the patrols, suggesting the oligarchs are only looking out for their own interests.
“Patrolling is a good thing, but you must understand, this is not a patrol, it is just a PR stunt from comrade Akhmetov,” said Aleksander Sukhovsky, an unemployed machinist. “Akhmetov is trying to show all of us that he is the real boss of the entire region.”
Separatists who had met with the steel companies tried to win over the crowd, with mixed results.
An unidentified separatist leader addressed the crowd, saying, “The sense of this memorandum is to request the authorities in Kyiv to pull their troops back from the borders of Mariupol and to dismantle the roadblocks."  
“Don't lie to people, don't try to trick us,” a female observer shouted back in Russian.
“Resign! Resign!" the crowd chanted to the separatist leader.

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Comment Sorting
by: Martin Macdonald
May 24, 2014 2:16 PM
Capitalism saves the day. I'm not joking. Free market capitalism is the only condition proven to raise living standards for the bulk of the population.
Let Ukrainians get to work and send the warriors and politicians back to their dens.
The EU has shown that free trade is a huge disincentive to war. It is more profitable to trade with your neighbor than to invade. The US clearly demonstrated this, also, when after WW2 they turned enemies into prosperous friends. Russia chose to enslave the surrounding countries keeping the eastern bloc in rags. Capitalism is win-win. War and occupation is lose-lose.
Free economies are wealthy, command economies are poor.
But, Ukrainians must throw away crony capitalism and allow laissez-faire. Otherwise they will not improve their lives.
In Response

by: Jerzy from: Calgary, Alberta, Canada
May 25, 2014 2:23 AM
"Let Ukrainians get to work and send the warriors and politicians back to their dens". They will get to work for sure. Except that it will not happen in Ukraine but in the Netherlands, Belgium, France, Germany, UK and the rest of the most prosperous countries in the EU. This a good news for Poland though. Why go there when they can steal from the richer members of the EU once they will get membership. Ukrainian Laissez faire, unfortunately" means theft and corruption and, considering how long they were being demoralized, (did they even ever have any morals?) will it take less than 100 years for them to become normal? I also sincerely hope that the "right factor" will not ever win an election. They have already started making territorial claims against Poland, the country that provides strong support for Ukraine even though her products are being banned from the Ukrainian territory. I believe there should be an international commission established to run Ukraine until they learn the meaning of the word "democracy".

by: melwin from: India
May 19, 2014 1:20 PM
America just want Ukrainian uranium.

by: Regula from: USA
May 18, 2014 7:37 AM
I think the unemployed Machinist is right: Akhmetov is engaging in PR for his profit. The industrial tycoons were appointed as governors - to make the rules most in favor of their business, not what is best for the people. Had he had any interest to solve the problem for both, himself and the people, he would have insisted with the government in Kiev that Ukraine needed to be federalized. That would leave the "separatists" inside Ukraine. The referendum only asked if people want independence. It left the question where that independence would be open. It can be either inside Ukraine, as a separate state or inside Russia. Which is ultimately chosen depends on the reasonability of the Kiev government. But Akhmetov was only concerned about his profits. The workers have no say and no rights. When laid off, they have no place to go and no genuine safety net to fall back on, while the tycoons are billionaires.

The revolt of the protesters is very justified. They want a government that looks out for the people not just for the tycoons. Up to Kiev to have some insight. Ukraine needs to be federalized with elected governments in the regions not appointed tycoons tweaking the laws in their favor and against the people.
In Response

by: Daniel from: USA
May 19, 2014 12:08 PM
Let's keep things in perspective. This is a conflict created by geopolitical interests on two sides (Russia on one side, and the west on the other). Ukraine is sandwiched in this conflict, as it occured before with other countries. Russia is trying to survive and keep NATO away from its borders, while the west (NATO) is trying to surround Russia in order to gain strategical advantages. Strategical advantages are decisive in international politics, because the more unprotected a country is, the weaker its position will be in international politics.

Russia is a huge territory, with a (still) powerful army and a lot of resources. For as long as it stays that way, Russia will always be seen by the west as a threat. It is in the interest of USA that no country becomes an hegemon. That is a prerogative of USA alone, and all efforts will be done to keep Russia from becoming one.

by: Jonatan from: new york
May 18, 2014 2:58 AM
US Army and NATO must be drop out from ukraine to make better....

by: Victoria from: Paris
May 18, 2014 12:54 AM
In Response

by: vitaliy from: usa
May 19, 2014 2:08 AM
You do have war in Ukraine. What is Russia fault in that situation? It is so easy to start war, but it is so complicated to get pease.

by: Baldu Dasche from: Monrovia
May 17, 2014 11:14 PM
A correspondent's report (Sydney Australia paper) from Mariupol to-day reported that the city was again under NO control after steelworkers 'removed' dissidents from occupied buildings. Like last week's National Guard foray into that town to destory the police station, the steelworkers apparently 'withdrew' after their 'work' was done.

by: Phil Simon from: USA
May 17, 2014 8:33 PM
I have noticed that most of the separatist and radicals all seem to be unemployed bums looking to steal from the working class and get free hand-outs.
Eg. " said Aleksander Sukhovsky, an unemployed machinist. “Akhmetov is trying to show all of us that he is the real boss of the entire region.”
Throw all the bums out of Ukraine and give them to Putin.

by: Dell Stator from: US
May 17, 2014 6:31 PM
Enlightened Greed can work
Makes on nostalgic for the good old days in the US, when a factory owner might actually build housing (schools, parks, towns) for his workers (and not just to keep them in debt to him).
Obviously an iron clad deal was finally agreed on between the billionaires who control 90% of the wealth, jobs, etc. in the Ukraine, ie, control the country, and the gov't..
The billionaires stop pumping money into the militants (to create a situation where they can get more power), pay off the police to grow a pair, provide boots on the ground to replace all the police who proved to be Russian sleepers, and in return, the billionaires will get to loot, steal, and support their business from multi billion dollar slush funds to each province care of the central gov't (who will just borrow it, as the Ukraine already runs in the red, does not provide adequate gov't wages (leading to corruption), cannot fund policies to provide for the people, to create a free country or capitalist economy.)
But it might literally buy the country another year or two for a real leader to emerge and lead them out of the darkness.
In Response

by: Popsiq from: Buganda
May 17, 2014 11:22 PM
Historical, but how appropriate? While at one time communities for business or industrial enterprise were a fairl;y notable aspect of tthe American experience (Amana, Hershey, etc) are there any still in existence?

The current philosophy of 'greed' is far more 'self serving' in that working people, like capital materials, are seen as a part of the means of production - often without the 'value' attached to hardware - and as a prime focus of cost reduction.

The current Ukraine situation seems based on fear - no job, no pension unless the workers get with the oligarch's program. ukraine is an economic basket case and a'good' job is probably noone could afford to lose. The subsistance coal mining 'industry is an indicator of how tough things there really are.

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