Every day since Ukraine’s president was removed and ran away from Kiev, developments vis-à-vis Russia continue at what seems like an alarming pace. I can’t possible keep up with them. There is a presidential election scheduled for May 25th of this year. But by that time, will there be an independent Ukraine in which to hold an election? Our country’s representatives continue to meet from time to time with their counterparts from Russia, Ukraine and the European Union to discuss what a future Ukraine will look like. What will it look like? Nobody knows yet, but here is glimpse into what shaped Ukrainian politics as they were until three months ago.
As the Soviet Union collapsed in the early 1990s, there were many state owned industries that were soon to be without owners. These properties were divvied up among Communist nomenklatura, crooks, and emerging entrepreneurs. What ensued was a Darwinist form of capitalist economy where the rule was “pay to play.” After Ukraine gained independence in 1991, connections between corrupt politicians [who were elected legally] and the entrepreneurs [some of whom started from literally nothing] enabled the new capitalists to gain control of the formally Soviet industries. As the new capitalists began to get rich [many of whom had/have close business ties with Russia], the new capitalists [dubbed the ‘oligarchy’ by Olga Kryshtanovskaya, a sociologist from the Russian Academy of Sciences] began to funnel their new-found wealth back into the Ukrainian political parties in order to protect their business interests. There is a mutual back-scratching between the politicians and the oligarchs – “you protect my business interests, I’ll spend money to keep you in power.” Some of the oligarchs became politicians themselves. Others chose to remain out of the spotlight but are still politically active behind the scenes. While Ukraine is a nominally democratic society, it is politically unstable as the oligarchs use their political control to grow their businesses; they support whoever can advance their business interests. Ukraine has an economy in which the workers have no pensions and low wages, while the guys with the big bucks hide their fortunes overseas beyond Ukrainian government control.
Here is how Merriam-Webster’s Dictionary defines an oligarchy -
ol·i·gar·chy
: a country, business, etc., that is controlled by a small group of people
: the people that control a country, business, etc.
: a government in which a small group exercises control especially for corrupt and selfish purposes; also
: a group exercising such control
Imagine if you will the Koch Brothers, Donald Trump, George Soros, Bill Gates, Jeff Bezos, and other billionaires occupying positions of political power. Sure, all of these people exert some kind of influence over government policy to a degree, but they aren’t in positions where they can write laws and/or execute them. Some would argue that these people and others of their ilk are already doing that [and they might be right], but that is an argument for another time. This scenario is our country’s nightmare – this scenario is Ukraine’s reality. Big business not only controls the Ukrainian economy, but it also wields vast influence in Ukraine’s governance.
Who are these people, and how do they hold such influence over Ukrainian politics? These are people who control entire sectors of the Ukrainian economy and electronic mass media. Those who control the media control the message. It’s a cliché that these folks adhere to the “Golden Rule” – he who owns the gold makes the rules. And so it goes for Ukraine. There are several big “groups” of oligarchs. Among them are the Akhmetov Group, the RUE Group, and the Privat Group. There are some oligarchs who belong to no ‘group’ but still wield vast influence. As you read these names, get used to them because you’ll probably hear them again from somebody besides me. Up until Viktor Yanukovych’s ouster, Yanukovych’s Party of Regions was the dominant political party. I’ve been trying to find out what passes for a Party of Regions ideology. Some members are pro-Western, others are pro-Russian, but they are all pro-money. And judging by their holdings [see below], they make a lot of it. The Party of Regions is no longer in control, but they haven’t gone away, nor have their sponsors.
Rinat Akhmetov – He’s the richest guy in Ukraine, and as his name would suggest, the head of the Akhmetov Group. He is worth $15 billion and is head of the holdings company System Capital Management (SCM) Holdings. SCM Holdings controls over 100 companies and employs more than 300,000 people. A big piece of SCM is Metinvest, which owns approximately 40 percent of Ukraine’s steel production. Other companies include pipe factories, iron ore and coal mines, banks, real estate firms, mobile phone enterprises and a large media company. He owns the football team Shakhtar Donetsk. He’s not a politician, but he is a “kingmaker.” According to the Ukrainian edition of Forbes, the various businesses in Akhmetov's extensive empire obtained 31 percent of all state contracts in January 2014. He has been a key sponsor of the Party of Regions. He was very close to Viktor Yanukovych. But since Viktor Yanukovych’s ouster from the Ukrainian presidency, he said he supported Ukraine’s territorial unity and would focus on running his company to improve the economy. But as recently as this week, Akhmetov voiced his support for ‘regional autonomy’ from Kiev, negotiations with Ukrainian ‘separatists,’ and opposes the use of force by the current Ukrainian government.
Dmytro Firtash – Like Rinat Akhmetov, Firtash is a key sponsor of the Party of Regions. He has stakes in the energy, media, real estate, banking, and chemical industries, most of which are part of Group DF. He owns 45% of RosUkrEnergo [RUE], the Swiss-registered gas trading company co-owned with Russia’s Gazprom. RUE was once Ukraine’s only importer of Russian natural gas. Through Inter Media Group, Firtash now owns seven television channels. He is currently under arrest in Vienna for fraud.
Viktor Pinchuk– Worth approximately $3.2 billion, he is Ukraine’s second-richest man. He is the son-in-law of ex-president Leonid Kuchma. His core asset is the steel tube company Interpipe. He owns the StarLight Media group, which includes five television stations. He also owns some periodicals, including a Russian-language newspaper and magazine Investgazeta (Investment Newspaper); [Fakty i Kommentarii [circulation – 1.1 million]. He also controls the Dniprovsky Railroad Car Repair and Construction Plant, Kherson Combine Plant, Aerosvit airline and other companies. He actively supports Ukraine’s European integration by holding the annual summit in Yalta and the ‘Ukrainian lunch’ during the Davos forum. On top of that, he’s donated millions to the Bill, Hillary & Chelsea Clinton Foundation. On his own Facebook page, he announced his support for the Maidan protesters against Yanukovych.
Igor Kolomoysky – He is Ukraine’s third-wealthiest man [approximately $2.4 billion], and new governor of the Dnepropetrovsk region. He’s a principal supporter of the pro-European UDAR Party. He co-owns Privat [which includes Privatbank], and has holdings in the oil, ferroalloys and food industries, agriculture and transport. He also owns the FC Dnipro Dnipropetrovsk football team and 1+1, a television station.
Sergei Taruta – Worth approximately $2 billion, he is the new governor of the Donetsk region. He leads the ISD Corporation, one of the biggest mining and smelting companies in the world. According to their website, ISD [the Industrial Union of Donbass] is ranked among top 40 largest international steel producing companies with the annual production capacity amounting to 10 million tons of steel. He owns the football team FC Metalurh Donetsk. Right now his focus is to keep the Donetsk region as part of Ukraine.
Petro Poroshenko – This guy is known as “The Chocolate King” – he owns Ukraine’s largest confectionery manufacturer, Roshen. He also owns 5 Kanal TV, the most popular news channel in Ukraine. He has diversified into car and bus plants, and a shipyard. Forbes estimated his wealth at $1.6 billion in March 2013. He was a strong backer of Viktor Yushchenko during the Orange Revolution. He was one of the early supporters of the Euromaidan protests that are credited with toppling Yanukovych.
He’s running for president of Ukraine and is polling ahead of the rest of the field so far. He has prior political experience. According to the BBC, he helped establish the Party of Regions in 2001, but left the party that same year to lead Viktor Yushchenko’s Our Ukraine electoral bloc. He served as foreign minister in Yulia Tymoshenko’s government from 2009 to 2010. He also briefly served as economic and trade minister in 2012. Poroshenko currently has no affiliation with any party. UDAR leader and former heavyweight boxing champion Vitaly Klitschko endorsed Poroshenko for president last month.
Yulia Tymoshenko – Much has been written about Yulia Tymoshenko – allow me to write some more. Before she became a politician, she made a killing in natural gas. She was the general director and co-founder of the Ukrainian Petrol Corporation, a business venture that for a time made her one of the 100 wealthiest Ukrainians. She was known as the “Gas Princess.” She served as the deputy prime minister for fuel and energy under then-prime minister Viktor Yushchenko. In 1999 she formed the Fatherland Party, of which she is still the nominal leader. She was one of the leaders of the 2004 Orange Revolution that was instrumental in overturning the rigged presidential election of that same year. Following the Orange Revolution, she was Ukraine’s Prime Minister twice between 2005 and 2010. While she was Prime Minister and her partner in the Orange Revolution Viktor Yuschenko was President, governing was not easy. They didn’t not often see eye to eye, and the goverments limped from one crisis to another. She ran for President in 2010 against Viktor Yanukovych and lost. In 2011, she was arrested, tried and convicted for overstepping her authority and profiting from a gas deal with Russia. Many considered her incarceration to be politically motivated. It is alleged that the charges were fabricated by Viktor Yanukovych.
After Yanukovych’s removal from office, Yulia was released from prison after serving three years of her seven-year sentence. The appointments of Sergey Taruta and Igor Kolomoysky to their current positions by Ukraine’s acting president Oleksandr Turchynov [he is also a Fatherland Party member] was reportedly Yulia’s idea – though nobody knows that for certain. Apparently she thinks these men can control their respective regions and keep them from leaving Ukraine. Only time will tell if that strategy will work. A polarizing figure who is seen by many as part of Ukraine’s political and economic dysfunction, she’s is also running for president. She is for strengthened ties with Europe and opposes Ukraine entering Russia’s Customs Union with Belarus and Kazakhstan. While she is seen as a political martyr at the hands of Viktor Yanukovych, others see her as part of the problem and wish she would just go away. She is polling a distant third behind Petro Poroshenko.
Serhiy Tihipko – He used to be a member of the Party of Regions, but was expelled from the party on 7 April 2014. He was Minister of Economics from 1997 to 1999. He was the head of the National Bank of Ukraine from 2002 to 2004. His claim to Ukrainian fame lies in banking. He started out as a private banker after Ukraine gained its independence. He move to bigger and better banks in his short career until he got to Privat Bank [see Igor Kolomoysky blurb above] During Tipikho’s tenure as Chairman of the Board at Privat, the bank became one of the biggest and most prosperous banks in Eastern Europe. In past elections he has favored privatizing the transportation of natural gas to Ukraine. He favors making Russian the second official language of Ukraine.
Regardless of who wins the election in May, he/she will ponder and deal with the legacy of the guy who ran away - Viktor Yanukovych. From what I’ve gathered these past few weeks is this – Yanukovych’s legacy is one of kleptocracy, corruption, and wasted opportunity for reform. I have picked up on opinion pieces from around Europe and Ukraine. Assuming Russia doesn’t own Ukraine by the time the election happens [remember, Russia thinks this whole election exercise is illegitimate], these pundits expect to see more of the same in Ukrainian politics. The Ukrainian oligarchy is deeply rooted and will prove difficult to remove from Ukrainian politics. The Euromaidan protests from late year and the first quarter of this year may have been triggered by Yanukovych’s walking away from a big deal with the EU, but it seems the underlying cause of their discontent is the nature of Ukraine’s power structure. As long as these familiar faces remain entrenched in Ukrainian politics, so too shall the frustrations of the Ukrainian body politic.
Thursday, April 24, 2014
Monday, March 24, 2014
Russians Acting Like Russians? How Dare They!
Kievan Rus – Both Russia and Ukraine trace their roots [cultural and religious] back to this first Eastern Slavic state . Founded by Vikings (Varangians) in the 9th Century AD, the Kievan Rus stretched from the Baltic to the Black Sea. They established their capital in Kiev, a city documented to be about 700 years older than Moscow. With the conversion to Eastern Orthodoxy in 988, Kiev became the spiritual center of the Rus. This is considered the official beginning of the Russian Orthodox Church. After the Mongol conquest, the nexus of this church moved to Moscow. The Kievan Rus lasted until it was conquered by the Mongols in the 13th Century. In the 14th Century Kiev was captured by the Grand Duchy of Lithuania. In 1569 Lithuania and Poland united in the Lithuania-Polish Commonwealth, with Ukrainian lands going to Poland. In 1667, Russia acquired Ukrainian lands east of the Dnieper River after a long war with Poland. In 1783, the Russians conquered that part of Ukraine which was part of the Crimean Khanate [along the Black Sea coast]. This land [called ‘New Russia’] was settled by Ukrainians and Russians. In 1793, the Second partition of Poland [between Russia, the Austria, and Prussia], Russia acquired the rest of what is now Ukraine. Russians have considered Ukraine as part of their country ever since.
The Russian Experience – Russia has a long history of being surrounded by and being invaded by enemies along its borders. The Russians have been invaded by the Mongols, Tatars, Swedes, Napoleon, the Germans [twice], fought the English and the French in Crimea, Allied expeditionary armies in the Russian Civil War…you get the idea. To keep their enemies at arms-length, they expanded their empire. Ivan IV [‘The Terrible’] annexed Kazan, Astrakhan, and Siberia. Peter the Great won territory from Sweden to establish a new capital, a Baltic Sea port, and a ‘window to the West’ – St. Petersburg. They acquired Ukraine [as noted above]. Catherine the Great took part in the Third Partition of Poland. Alexander I took Finland from Sweden in 1809, and Bessarabia from the Ottomans in 1812. The Soviets annexed Estonia, Latvia and Lithuania in 1940. After World War II, the Soviets also established satellite regimes in Eastern Europe [the Warsaw Pact] as a buffer zone against further attacks from the West. Those are just some of the highlights of Russian expansion. To paraphrase a friend, ‘it’s what they do.’
NATO Offensive Actions
In 1949, the North Atlantic Treaty Organization formed as a defensive alliance to protest countries from Soviet aggression. Specifically in Article 5 of the NATO treaty, an attack against one of the member state is considered an attack against the entire alliance. Article 5 has been invoked only once – that was in the aftermath of the September 11, 2001 attacks against the United States. But strangely enough, this alliance that was formed at the beginning of the Cold War as a defensive alliance has actually initiated hostilities on several separate occasions. These instances include the following:
1. Yugoslavia
Operation Deny Flight - 12 April 1993-20 December 1995
- Enforcement of a UN no-fly zone over Bosnia and Herzegovina
Operation Deliberate Force - August and September 1995
- Sustained air campaign conducted by NATO, against the Army of the Republika Srpska (VRS), to protect UN-designated "safe areas" in Bosnia and Herzegovina during the Bosnian War
Operation Allied Force – 24 March – 10 June 1999
- An end to all military action and the immediate termination of violence and oppression in Kosovo by Serbia;
- Withdrawal of all Serbian military, police and paramilitary forces from Kosovo;
- Stationing of UN peacekeeping presence in Kosovo;
- Unconditional and safe return of all refugees and displaced persons;
- Establishment of a political framework agreement for Kosovo
- Never was an operation so aptly named, because we acted like big OAFs in a place we didn’t need to be [Editor’s Note]
2. Libya [involvement in Libyan Civil War]
Operation Odyssey Dawn/Unified Protector – 19 March – 31 October 2011
- Enforce UN no-fly zone
- Naval arms embargo against Libya
So what are the Russians to make of a defensive alliance being used for offensive purposes? From their perspective, NATO used their might [the diplomacy of the gun] to pressure Serbia into a desired outcome [autonomy and ultimately independence for Kosovo]. Why do I point out these facts? With NATO having participated in offensive [vice defensive] actions, it makes it very easy for Vladimir Putin to say we are being just a tad hypocritical about his actions in the Crimea.
There is one thing to consider. In 1939, Britain and France made guarantees to Poland that they would come to their aid in case the Germans attacked. This arrangement was an informal alliance. That attack came, and Britain and France honored their commitment to Poland and declared war on Germany two days later. But that’s as far as it went. There was no invasion of Germany. Quite the opposite happened. There was the so-called “Phony War” in which not much happened. And while there was no action against Germany, the Soviet Union invaded Poland on 17 Sept to claim ‘their part’ of Poland guaranteed to them by a nonagression pact between Germany and the Soviet Union. Unknown to everybody except those who negotiated the pact, there was a secret protocol that allowed the Soviets to have free reign in the Baltic States – Estonia, Latvia, and Lithuania. Until the end of World War I and the ensuing Russian and Bolsheviks Revolutions, those countries had been a part of the Russian Empire. With Czar Nicholas gone, and the Russians engaged in their own very bloody civil war [1918-21], those three Baltic countries declared their independence from Russia. What does that have to do with the secret protocol? The secret protocol allowed the Soviets [as the Russians became known after the Communists won the Russian Civil War] to occupy the Baltics without German interference. In 1940, the Soviets exercised their “rights” under the protocol and occupied the Baltics. What did the US do? What could the US do? We sent the Soviets a letter to tell them that we were very cross with them, and we continued to recognize the independence of those Baltic nations under Soviet occupation. Other than that…
Fast forward 74 years to today – 2014. To say that things have changed since 1940 would be an understatement. Poland, Estonia, Latvia, and Lithuania are all now members of NATO. Each country is also a member of the European Union. If Vladimir Putin casts his wandering eye in the direction of the Baltics, what happens then? We’re bound by treaty to fight for them if they are attacked. The same can be said for Poland. In 1939 there was an informal agreement between France, England and Poland about support to Poland in case the Germans attacked. That didn’t work out so well for the Poles then. But we’re bound by treaty to fight for them as well. I believe a test for the NATO alliance is coming soon, much sooner than anybody would like to think about. Another question to ponder – what is the Russian Baltic Fleet doing right now?
Before he left office, George W. Bush made promises to both the Poles and the Czechs to establish missile defenses in their countries. Barack Obama has since decided against such a course of action. I’m not going to argue the merits of those decisions – I’m pointing out facts. In light of what is happening in Ukraine, the Poles are understandably nervous about what happens next. Vice President Biden was over there trying to re-assure the Poles we have their back. Whether the Poles believe his reassurances is to be seen.
The fact that NATO has expanded so far eastward annoys the Russians. Mikhail Gorbachev believes to this day there was an understanding between the US, USSR, UK and France that NATO would go no further east once Germany was reunified. My understanding is that was Gorbachev’s price for agreeing to German reunification in the first place. If that is the case, I can imagine the Russians’ surprise and annoyance about Poland, the Baltics, Slovakia, the Czech Republic, Hungary, Bulgaria [all former Warsaw Pact members] and Romania all becoming part of NATO.
Why Crimea? - Simple – because he could. The Black Sea Fleet is based at Sevastopol. In light of the chaos and confusion that reigns in Kiev, Putin couldn’t pass up the opportunity. He saw the shot and he took it.
So Vladimir Putin has the Crimea. What is next? Does he invade Ukraine and ‘protect’ the 40% of Ukrainians who claim to be Russians? If so, how far will he go? Are there two Ukraines in our future, will other Ukrainian provinces ‘secede’ and join Russia [leaving a ‘rump’ Ukraine’], or will there be one Ukraine under Russian domination? Or maybe he has other places in mind – Moldova perhaps? Vladimir Putin has said that the dissolution of the Soviet Union was a ‘great tragedy.” To what lengths will he go to get the band back together? One has to remember – Putin was a colonel in the KGB. Old habits die hard with those folks.
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