Backing the winning presidential candidate can help businessmen win privileges and inside access. Siding with the losing candidate, however, can be damaging to an oligarch’s business interests.
The net worth of Ukraine’s influential oligarchs may have plunged with last year’s global financial and economic crisis, but they retain a strong hold – some say stranglehold – over Ukraine’s economy and politics.
They also are playing a major role in the presidential election. But they are not monolithic and some find themselves on opposite sides – with different items at stake – in the Feb. 7 contest between Victor Yanukovych and Yulia Tymoshenko.
These captains of industry, banking, media and other businesses finance political parties and have commanding influence on decisions made by government on all levels. They are, in this respect, very much unlike their counterparts in Russia, where the wealthiest have lost their “oligarch” status and been brought to heel politically by the Kremlin.
Rinat Akhmetov, Ukraine’s richest billionaire, backs Yanukovych. So does Dmytro Firtash, the gas trader. Tymoshenko has been trying to squeeze Firtash from the lucrative gas trade among Ukraine, Russia and Central Asian producers.
Others, such as Vitaliy Haiduk and steel tycoon Serhiy Taruta, are supporting Tymoshenko’s candidacy.
“Ukraine’s elite is tied up in political rivalries,” Taruta said in a Financial Times interview this month. “Some leading business groups are actively involved in [politicians’ battles], manipulating the political situation for personal gain.”
Much is at stake for the businesmen involved.
Backing the winning candidate could provide access to lucrative inside deals; backing the loser could cut off such access and lead to political persecution.
“Akhmetov and Firtash are supporting Yanukovych, but Akhmetov is not so aggressively fighting against Tymoshenko. He is such an influential figure, that it matters less to him who wins, be it Yanukovych or Tymoshenko,” said Vadim Karasiov, political adviser to Ukraine’s outgoing president, Victor Yushchenko.
Victor Luhovyk, an expert for Dragon Capital, Ukraine’s largest securities brokerage, said certain businesses would benefit more than others.
“Ukrainian exporters stand to gain if Yanukovych is elected, because he favors a flexible exchange rate. Tymoshenko, on the other hand, has pushed for a stronger hyrvnia,” Luhovyk said.
Dnipropetrovsk-based billionaire Ihor Kolomoisky may not feel comfortable with a Yanukovych presidency, which would boost the influence of his principal rivals from Donetsk, including Akhmetov. But he is also on bad terms with Tymoshenko, and may see her as the bigger evil.
On the other hand, a few of Ukraine’s billionaires don’t seem – on the surface – to be taking sides, including Victor Pinchuk, the son-in-law of ex-president Leonid Kuchma, and Kharkiv’s Oleksandr Yaroslavsky.
Pinchuk’s television channels have given positive coverage to most leading candidates in recent months.
Yaroslavsky, meanwhile, claims that the cost of backing top politicians far outweighs the benefits and could create enemies.
“Pinchuk is sort of playing in the middle, insuring himself for all possible scenarios,” Karasiov said. “The most at stake in this election is for Firtash and Kolomoisky, as they are at war with Tymoshenko. Firtash will lose everything if Tymoshenko wins, while Kolomoisky will lose his bid to gain control over Odesa Portside Plant. Therefore Kolomoisky is on a situational basis supporting any candidate that is anti-Tymoshenko.”
Karasiov fears that the oligarchs see the Feb. 7 presidential contest as a winner-takes-all battle, a scenario which could lead to social discontent, as in 2004.
Victor Chumak, director of political programs for the Kyiv-based International Center for Policy Studies, said that no one wins by letting the political situation spin out of control.
“They will all lose money,” Chumak said. “Even if different oligarch groups unite to pressure the nation’s leading politicians to seek compromise, there is little they can do because there is no one in line to replace the leaders of the country’s two most influential political groups, Victor Yanukovych and Yulia Tymoshenko.”
The country’s billionaires made spectacular fortunes from the opaque privatizations of government-owned assets after the nation gained independence in 1991 following the collapse of the Soviet Union. Some like things the way they are and have been accused of blocking changes that would make the nation’s economy fairer and more competitive – such as progressive yet simplified taxes, effective law enforcement and less bureaucracy.
Late last year, the European Union’s top official in Ukraine dropped diplomatic nuance and said what he and a lot of others really think about what’s wrong with the nation.
“Corruption, red tape, administrative obstacles of every kind – these are only things that serve the interests of those who today control the economy because they do not want competition. They are allergic to competition,” Jose Manuel Pinto Teixeira of Portugal told journalists on Nov. 30. “The vast majority of Ukrainians cannot have employment, cannot have decent salaries, do not have a decent social system, because the country today is in many aspects like 20 years ago.”
Teixeira’s comments came against a backdrop of the nation’s slow European integration and incomplete attempts to shed its Soviet past.
And it is hard to identify the “reformer” in this race.
Tymoshenko backer Taruta admitted that rivalries among the business elite – and the top politicians they back – had stifled changes. He called for consensus to diversify Ukraine’s economy and lift competitive barriers that retard development of smaller businesses.
The status quo, Taruta said, is not sustainable.
“We see that the government is split, with each political grouping controlling branches of government for personal gain,” Taruta told the Financial Times. “”Monopolies are thriving in the fight and the infighting is not allowing Ukraine’s economy to develop.”
