It is a mistake of many regular Ukrainians, and even some Western observers, to think of Ukrainian oligarchs as financial tycoons who can be compared with Western business and financial elites.
That’s just not what they are – at least, in the majority of cases. The problem with Ukrainian oligarchs is that they use their political influence for gaining an advantage over competitors, creating hidden monopolies and, in the worst case, just stripping Ukrainian taxpayers of their money. Oligarchs themselves are the source of Ukraine’s notorious corruption.
A good example is the standard financial scheme that almost killed the Ukrainian banking system. During the rule of Viktor Yanukovych, many oligarchs used their banks to give lavish loans to their own offshore companies without any intention of repaying them. After that, they just blackmailed the state – the bankruptcy of large banks could be a disaster, so the National Bank had to intervene and recapitalize banks using its own funds.
This scheme was used by Ihor Kolomoisky, by the Surkis brothers, by Oleg Bakhmatiuk – the whole list could be quite long. And now some of them are using their political influence, trying to return their banks after nationalization or just blackmail the National Bank further.
Most of the time, the Ukrainian Cabinet of Ministers was some kind of compromise between technocrats and reformists from one side and the oligarch quota from the other. In the previous Cabinet of Oleksiy Honcharuk, technocrats dominated. That changed.
In the current Cabinet of Denys Shmyhal, the prime minister himself is a former top manager of the company owned by oligarch Rinat Akhmetov. The godfather of the child of current Minister of Health Maksym Stepanov is Ihor Palytsia, a lawmaker and the closest business partner of oligarch Kolomoisky. Minister of Economic Development Ihor Petrashko is a former manager of the oligarch Bakhmatiuk. Minister of Territorial Development Oleksiy Chernyshov is a former manager of the oligarch Oleksandr Feldman and is also connected to Kolomoisky, according to ex-journalist and politician Sergii Leshchenko.
That’s just the ones we know – just the ones that are connected with oligarchs clearly and directly. They worked as managers at business groups owned by oligarchs and enjoyed the best salaries in the country. Now they are working in the Cabinet of Ministers and their salaries are somewhere around $1,500-1,700 a month. Which leaves us to wonder, was patriotism the only reason for that financial downshifting?
There are many signs that the new government officials work in the interests of oligarch business groups.
For example, the new version of the Ukrainian electricity production plan, published by the Ministry of Energy, provides for lowering of production for most of the market players, both private and state-owned. A noticeable exception is made for the companies of Akhmetov. The acting Energy Minister Olga Buslavets is a protégée of Prime Minister Shmyhal – who is, as it was already mentioned, the former manager of one of Akhmetov’s companies.
At the same time, the government is planning to introduce quotas on the import of fertilizers. The farming community has already protested – and many protesters claim that the quotas are good for just one person, oligarch Dmytro Firtash and his Ostchem holding.
At the same time, oligarch Kolomoisky is waging war against the Ukrainian state on many fronts, using his lobbies in the parliament and in the judicial system. He fought to maintain control of Centrenergo, the biggest state-owned energy company. He is trying to change the National Bank’s management. He is trying to make the state pay more and more for the nationalization of PrivatBank – the biggest bank in the country that he milked by giving loans to his own offshore companies. And now lawyers for PrivatBank, which is owned by the state, are complaining that, in their struggle with Kolomoisky’s oligarch partners, the Surkis brothers, the state Executive Service and Justice Minister Denys Maluska are playing on the enemy’s side.
President Volodymyr Zelensky has his own justification for having former managers of oligarchs’ companies in the government.
“They (oligarchs) own 70-80% of assets in this country. Every manager in Ukraine worked for one of them or is somehow linked to one of them. And they hire the best — we should understand that,” Zelensky told Bloomberg.
The president is also sure that the oligarchs have no power over their former employees. This assumption sounds too optimistic, considering that oligarchs maintain their own groups of support in the Ukrainian parliament and media. The president’s party has a majority in the parliament, but recently passing a bill to limit the power of only one oligarch, Kolomoisky, proved extremely difficult for him and his office — and all because several dozen of Zelensky’s MPs proved to be, in fact, Kolomoisky’s MPs.
When Zelensky had just come into office, he promised a government of a new type, free from the oligarchs’ influence. The previous Cabinet of Ministers seemed to be a step in that direction. It wasn’t completely free, but the balance of technocrats vs. oligarchs’ protégés was not so bad compared to what Ukraine was used to seeing. The Cabinet of Shmyhal demonstrates the shift in the policies: The “new faces” are gone and the old practices are renewed.
The oligarchy again makes up the core of the Ukrainian political system. Solving this problem requires not just taking localized actions against specific persons, but creating a system where the big businesses will be unable to control the country’s political landscape.
Victor Tregubov is a Ukrainian columnist, political blogger and the former editor-in-chief of Petr and Mazepa online news outlet. He is also a co-founder of the Democratic Axe (Demokratychna Sokyra) political party.
