But we don’t get any sweetheart deals. This puts us in contrast to many of Ukraine’s oligarchs and other elites, who got wealthy on non-transparent — or rigged — privatizations of state assets during the gangster capitalism days after the collapse of the Soviet Union nearly 25 years ago.
Now these oligarchs, down for awhile, are again ruling the country — with oligarch-in-chief Petro Poroshenko as president setting a poor example with his broken 2014 campaign promises, his continuation of doing business with Russia and his offshore holding firm in the British Virgin Islands, exposed because of leaked documents in the Panama Papers.
Far from de-oligarchizing and de-offshoring Ukraine, he is re-legitimizing both. Offshores cost Ukraine upwards of $10 billion in lost taxes — or 10 percent of gross domestic product. Since we don’t know what the effective tax rate that the president and his businesses pay, we don’t know whether he is paying his fair share of taxes or not. Nonetheless, if the president can trade with the enemy and set up a business in a notorious offshore tax haven, the message is clear: so can everyone else.
Past injustices are one matter, but there’s every reason to believe that Ukraine’s rich and powerful continue to get subsidies for many state services. Fortunes can and do grow this way, at the expense of Ukraine’s educated yet exploited people, who still are denied lives of justice and prosperity. The recent rise in natural gas to market prices shut off a big source of ill-gotten riches, but there are many others.
This is why one key person to watch in the government that came to power on April 14 is Infrastructure Minister Volodymyr Omelyan, the former deputy to Andriy Pivovarsky. His realm is the state-owned railways, roads, airlines, ports and postal services. “It was happening 25 years, all the time,”
Omelyan told the Kyiv Post in an interview published on April 29, referring to sweetheart deals that such Ukrainian steel, chemical and coal barons as Rinat Akhmetov, Victor Pinchuk and Konstantin Zhevago have gotten on state transport.
“We endured a great fight on tariffs with them,” Omelyan said, who pledges transparency and equal access to state resources for all. But it looks like the oligarchs have won the battle, if not the war. “My hope is that we are able to reach some compromise and that those tariffs will be increased as they were before,” he said.
His ministry will also be watched for whether it can end featherbedding as well as favoritism. The 280,000-member workforce of Ukrzalyznitsia is twice the size that the railways need. And this is only one of more than 1,800 state-owned enterprises.
These battles are taking place largely out of the public eye, but their outcome in favor of fairness for all Ukrainians is essential to a brighter future for the nation.
