News / Europe

Oligarchs Adapt to New Ukraine

Petro Poroshenko, the billionaire owner of  Ukrainian chocolate manufacture Roshen, and front-runner in Ukraine's presidential election, listens during an interview with Reuters in Kiev April 4, 2014Petro Poroshenko, the billionaire owner of Ukrainian chocolate manufacture Roshen, and front-runner in Ukraine's presidential election, listens during an interview with Reuters in Kiev April 4, 2014
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Petro Poroshenko, the billionaire owner of  Ukrainian chocolate manufacture Roshen, and front-runner in Ukraine's presidential election, listens during an interview with Reuters in Kiev April 4, 2014
Petro Poroshenko, the billionaire owner of Ukrainian chocolate manufacture Roshen, and front-runner in Ukraine's presidential election, listens during an interview with Reuters in Kiev April 4, 2014
— In Ukraine regimes come and go, but oligarchs continue to make money.

The oligarchs, powerful business leaders who impact Ukraine’s politics as well, have carefully positioned themselves in both spheres to try to ensure their prosperity.
 
As the situation unraveled for President Viktor Yanukovych early this year, oligarchs who benefited from his regime abandoned him once he was no longer useful.

Some observers point to this as a key reason why Yanukovych left Kyiv in late February for de facto exile in Russia’s Rostov-on-Don.
 
And, there are allegations that these wealthy individuals are hedging their bets politically.

Andy Hunder, who has spent years doing government relations in Ukraine, told the Financial Times, “They are bargaining with both the Kremlin and the new Ukrainian authorities to agree [to] a status quo where their businesses and assets will be protected and allowed to prosper in a post-Yanukovych Ukraine.”
 
Indeed, Ukraine’s richest man, Rinat Akhmetov, exemplifies how he and other oligarchs have moved beyond Yanukovych. Akhmetov once supported the departed president and served in the National Assembly for Yanuokovych’s Party of Regions.
 
Since Yanukovych’s departure, Akhmetov has tried to insert himself as a so-called mediator. Earlier this month, he joined talks in Donetsk involving pro-Russian separatists and the new government in Kyiv.

Akhmetov issued a public statement that “together, we must stop and think how to glue the country together. Not to split it, but glue it together.”
 
Victor Pinchuk, said to be Ukraine’s second-richest man, is another who appears to now tread a fine line.

Shortly after Yanukovych left, he offered support to the protesters in Kiev but later, Pinchuk reportedly decided not to provide assistance to the new government despite its requests.

Observers say his posture reflects caution in the face of today’s uncertainties.
 
But another Ukrainian oligarch, banking and energy giant Igor Kolomoisky, is casting his lot squarely with Kyiv.

Kolomoisky, who in March was appointed governor of the Eastern Ukrainian region of Dnipropetrovsk, is bolstering the central government by offering his own cash as bounties for the capture of pro-Russian militants who have seized government buildings.

Kolomoisky, who strongly dislikes Russian President Vladimir Putin, is reportedly offering cash for weapons held by insurgents: $2,000 for grenade launchers, $1,500 for machine guns and $1,000 for automatic weapons.
 
While some Ukrainian oligarchs seek to influence politics from behind the scenes, others are directly participating in the May 25 presidential balloting. 

Leading the race, according to polls, is Petro Poroshenko, head of the Udar party. Poroshenko is Ukraine’s so-called “chocolate king,” whose Rosen Group also holds companies producing vehicle parts, shipbuilding, armaments and Kyiv’s Channel 5 TV.
 
Poroshenko, who wants Ukraine to strengthen relations with the European Union, said, “The priorities are to preserve sovereignty and territorial integrity. We will also have to work on the country’s unity.” 
 
His main rival is former Prime Minister Yulia Tymoshenko, leader of the “Fatherland” party, who made a fortune in energy during the 1990s.

That earned her the nickname “The Gas Princess.” Tymoshenko became a leading figure in the Orange Revolution, which upended the 2004 presidential election with a re-vote that put Viktor Yushenko in power.

When Yanukovych won the presidency in 2010, Tymoshenko was jailed on ”corruption charges” and finally released in February 2014.

The former prime minister is behind Poroshenko in the polls, but observers say she appeals to a broad range of Ukrainians with her populist stance supporting price controls, subsidies to low-income people, and other public assistance. 
 
One strongly pro-Russian Ukrainian oligarch, Dmitry Firtash, has been sidelined.  Firtash, whose Group DF holding company has major gas, banking, fertilizer and titanium interests, was arrested in Vienna last month and is fighting extradition to the United States for alleged violations of the U.S. Foreign Corrupt Practices Act.

A U.S. grand jury says Firtash was involved in efforts to bribe entities in India that were to supply one of his U.S.-incorporated companies with titanium.
 
The May 25 presidential election will give Ukraine a new leader.

But analysts say it is business as usual for the oligarchs.

Political analyst Taras Berezovets is quoted by Financial Times as saying they are engaging in ”negotiations with Kyiv’s new authorities, aimed at preserving their influence going forward, or playing into Russia’s interest in case the region gets taken over by Russia.”
 
But former U.S. Ambassador to Ukraine William Taylor told VOA that for the time being, at least those oligarchs supporting Kyiv have not wavered.

“I haven’t seen them switch sides,” he said.

Jeffrey Young

Jeffrey Young came to the “Corruption” beat after years of doing news analysis, primarily on global strategic issues such as nuclear proliferation.  During most of 2013, he was on special assignment in Baghdad and elsewhere with the Special Inspector General for Iraq Reconstruction (SIGIR).  Previous VOA activities include VOA-TV, where he created the “How America Works” and “How America Elects” series, and the “Focus” news analysis unit.

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