UKRAINE WITHOUT OLIGARCHS?

Last month in Ukraine's domestic politics passed under the sign of an argument between President Petro Poroshenko and the businessman, now former governor of Dnipropetrovsk oblast, Igor Kolomoyskyi. The president came out on top, at least formally, and everyone immediately started trying to guess what it meant.

Things came up against a brick wall after the Verkhovna Rada [Ukrainian Parliament] adopted amendments to the law on joint-stock societies on 19 March. The law reduced the quorum needed to convene a shareholders' meeting, and this did in actual fact deprive Kolomoyskyi of his control [as a minority shareholder] over the oil company "UkrNafta". At the same time, Kiev tried to strengthen its control over the operator of the oil pipelines, the company "UkrTransNafta". This was achieved by sacking the head of that company, Oleksandr Lazorko, who was loyal to Kolomoyskyi.

Surrounded by armed men, the indignant Kolomoyskyi turned up at the Kiev office of "UkrTransNafta" to defend his own assets. An unpleasant altercation between the oligarch and the Radio Svoboda [Liberty] journalist Sergey Andrushko at the entrance has tarnished the governor's "official image" quite considerably. The authorities reacted to Kolomoyskyi's actions quite harshly, setting up an iron fence around the "UkrNafta" building. Prime Minister Arseniy Yatsenyuk convened a meeting of Interior Ministry representatives, and President Poroshenko sent two battalions of the National Guard to Dnipropetrovsk in connection "with the exacerbation of the situation". Besides this, steps were also taken by the state in the financial sphere, directed against the "Privatbank" which belongs to the oligarch whose share of which amounts to a quarter of all the deposits in the national banking system.

At the same time, the local media reported that Kolomoyskyi's supporters were calling upon the residents of Dnipropetrovsk to convene an assembly of the public, but later Hennadiy Korban, the deputy governor of the Dnipropetrovsk oblast stressed that the official authorities had nothing to do with the organisation of the protest and that this was only a public initiative. As a result, to everyone's amazement, Petro Poroshenko and Igor Kolomoyskyi  decided not to follow the example of [Ukrainian writer Nikolay] Gogol's famous characters and draw out the confrontation. Kolomoyskyi resigned from the post of governor that he had occupied since March last year "of his own free will". The former head of Dnepropetrovsk Region decided to step down, having stated that [President Petro] Poroshenko must have a sea of patience, since, in the president's place, he would have sacked him in the first three months and not waited a whole year. The oligarch stressed that he has no political ambitions and promised to help the new governor.

Literally while Kolomoyskyi's trail was still warm, the Ukrainian president announced the start of a broad-scale operation with the involvement of all the Interior Ministry structures, to "deoligarchise the country" and stressed that not a single governor should have "his own private armed forces". 

It is quite difficult to sort out what is happening in the authorities' and business circles in Ukraine since the items of news on the subject frequently contradict each other. But, for all that, several versions do exist, the first of which is that the authorities in Kiev are cracking down on the oligarchs' positions, and Kolomoyskyi among them, although he is neither the wealthiest nor the most prominent or ambitious of them. There have been rumours about reviewing the results of the privatisation of the last few years, which could go ahead at lower prices and making use of ties to the country's political leadership. But the minister of economic development and trade, Aivaras Abromavicius, has stated that he does not support the idea of conducting renationalisation in the country.

At the same time, if one turns one's attention from privatisation to the words of Poroshenko regarding the "deoligarchisation" of the country, then one can detect some kind of dirty trick or understatement, for Poroshenko himself is an oligarch in this sense. A number of foreign publications write that of late things have been doing rather well in his confectionary empire, and not only there. Thus, is what we are talking about a confrontation between the authorities and the oligarchs or a confrontation among the oligarchs? Thus, various sources are talking about frictions between Poroshenko and the country's richest man, Rinat Akhmetov, between Akhmetov and the Sarkies brothers, between Akhmetov and Kolomoyskyi, between Kolomoyskyi and Viktor Pinchuk, over the falling star of Dmytro Firtash and so forth.

It would seem that they were all particularly dissatisfied with the "rise" of Kolomoyskyi. It is pointless to try to get to the bottom of this tangle of multi-billion mutual accounts and claims. Poroshenko will not be able to play against the wealthiest people in Ukraine because that will mean playing against the state as a whole. The large-scale sharing out of Ukrainian business will evoke the same outcome. Thus, Akhmetov, for example, owns the DTEK [System Capital Management holding] company, which, in its turn controls most of the thermal power stations (TEC) in Ukraine.

The state did not raise electricity charges for a long time, and has ignored the energy market's huge debt to the thermal power stations. The treasury previously made up for the shortfall, but this has become increasingly more difficult every time. Akhmetov's company began to experience difficulties, which, in the event of a Poroshenko-Akhmetov confrontation really taking place, would play into Poroshenko's hands, but would also be fraught with the collapse of the energy sector. So, the cost of the utility services in the housing sector simply had to go up. But this example points to the fact loyalty to and understanding of the state on the part of business should be ensured in equal measure. 

 According to another version, the confrontation between Poroshenko and Kolomoyskyi is by no means over. It is said that Kolomoyskyi has too many financial, manpower, media and other assets for him to give them up just like that or to so rapidly forget his direct and indirect hints that he is not preparing to obey the president's orders. Korban's words can still be found throughout the Internet on the need to "introduce order in Kiev" which "promised a lot, but has done nothing". At the same time, the leader of the military-political [far-right] "Right Sector" movement, Dmytro Yarosh, has, according to rumours circulating among those close to Kolomoyskyi, talked about the possibility of a new Maidan occurring in Kiev. It is no secret to anyone that the influence of the former governor affects other oblasts [regions] of Ukraine like Odessa and Kharkiv. In general, they are saying that Kolomoyskyi left his post to allegedly clear the way for him to manoeuvre, because for all that he does have political ambitions.  

But what made Kolomoyskyi take the post of governor in the first place?  "The Financial Times" writes that in connection with the events surrounding Crimea and southern Ukraine last year, Kiev put forward a new idea of appointing the wealthiest people in Ukraine as regional governors in an attempt to prevent the unrest in the centre of the country from spreading and Ihor Kolomoyskyi was the first to consent to this. It is believed that Kolomoyskyi financed the voluntary battalions that are taking part in the fighting in the south-east of the country - the "Azov", "Aidar", "Donbass", "Dnipr-1" and Dnipr-2" battalions. Everything was quite normal until Kiev became aware that Kolomoyskyi's build-up might pose a danger to them, and the oligarch himself only underlined these fears by moving a military column around the streets of the Ukrainian capital.

The principle upon which any state's existence rests is that it alone has a monopoly over the use of force. Otherwise, the state is threatened by chaos and collapse. And wasn't that what Kolomoyskyi began to talk about when he left his post? "I forgot that I was a subordinate and that I had a boss. I acted as if I was equal to the president. Other governors saw that and that undermined the vertical structure of authority… There was no struggle between Poroshenko and Governor Kolomoyskyi. There was a conflict of interests affecting Kolomoyskyi himself. There was a certain dualism in my personality, which I think has been happily resolved," the oligarch stated in an interview with the "1+1" television channel.

It is not clear from these words, however, which side of Kolomoyskyi's personality Ukrainian citizens will be able to see in the future, and whether it will turn out that Ihor Kolomoyskyi will return to power, but already in the capacity of main guardian of its vertical base? It is not for nothing that he particularly emphasised that the Dipropetrovsk Region is the buttress of "Ukrainianism", the "centre of heavy industry" and the country's "bastion in the east". It is hardly likely that anyone will dispute the fact that Kolomoyskyi retains enormous influence in the region, even after he has stepped down as a governor.