Ukraine and the battle of the oligarchs

As the crisis in Ukraine spirals out of control, with government troops trying to suppress what Kiev calls “separatist movements” in the east of the country, behind the scenes, the battle of the Ukrainian oligarchs for power and control of assets continues. It’s a covert war that most people don’t really hear about in the news, even though the names of key players are well-known in Ukraine and beyond.

Take the former Prime Minister of Ukraine, Yulia Tymoshenko, who has been very active since her release from prison in February, after ex-President Viktor Yanukovich had been forced to go on the run, and ended up in Russia. The word on the street is she’s trying to avenge some of her enemies who, she thinks, were instrumental in putting her behind bars on charges of fraud. 

Although she has failed to win the presidency, probably as a result of discreet pressure from the West, where she is seen as damaged goods, she is now allegedly making life difficult for several oligarchs who were close to Yanukovich.

Another oligarch, Rinat Akhmetov, who has vast interests in the east of Ukraine, is under pressure from the government. He has had to look for ways to regain his political influence after the ouster of his close ally, Yanukovich. As for billionaire Igor Kolomoisky, current governor of the Dnepropetrovsk region appointed by the interim government in Kiev, he is reaping the rewards of his support for the “revolution”, rapidly extending his business empire – and having created a private army.

Too much at stake?

The extraordinary thing about Ukrainian oligarchs is that most of them have come out as fervent supporters of the “people’s revolution” that ousted Yanukovich – albeit, you would have expected them to have been on good terms at least with the previous regime, if only to keep their massive assets intact. But no, now they boast about their involvement in bringing down Yanukovich. And that may well be the case. As my sources on the ground in Kiev have told me, the oligarchs quickly figured out that it was unwise to keep their eggs in one basket, i.e. remaining on good terms with Yanukovich and his people.

“There was too much at stake for them,” one former government minister said.

Ironically, the current president of Ukraine, Petro Poroshenko, himself an oligarch who made his fortune, apart from other things, by having good relations with Russia, was not exactly a vocal critic of the previous regime before the protests in Kiev started in earnest last year. But lo and behold, now it turns out that Poroshenko was a devout “revolutionary” and his greatest wish of all was to see Yanukovich go and Ukraine joining the EU. 

Now that the dust has started to settle over the fall of the Yanukovich regime, with some protesters from Kiev’s Independence Square still making their presence known, insisting that their struggle is not yet over, it is becoming pretty obvious that the oligarchs played a key role in financing the uprising. It is also clear that these very same people are now trying to benefit from the regime change, jostling for power and influence and, of course, a piece of the action.

It makes you wonder what Russian President Vladimir Putin and his advisers might be thinking these days, eyeing some of the oligarchs in their part of the woods, so to speak, for who knows what sort of ideas they might be getting. It’s no big secret that most of the top Russian businessmen keep their vast wealth abroad and some of them have been known to support causes that are not exactly beneficial for the Kremlin.

It is also a fact that some Russian oligarchs view the interior ministry and even the security agency FSB (KGB’s successor) as their “in-house muscle”, staging dramatic raids on their competitors, trying to take over their assets or just sending them a signal.

Power of the oligarchs

The memory of the not-so distant, very public police raids on the offices of the Marshall Group in Moscow headed by billionaire Konstantin Malofeev, a close ally of the Kremlin, serves as a reminder that the power of the oligarchs goes way beyond simply buying up state assets for cheap, or owning football clubs, villas and of luxury yachts and jets, both at home and abroad. And with so much power, it should be a worrying prospect for the Kremlin, whatever these oligarchs say in public and however passionately they claim to be supportive of the leadership.

One would have to be a brave man to dismiss the possibility that the crisis in Kiev (also playing out on the streets of Moscow) is funded and supported by some of the oligarchs who have amassed vast amounts of money and influence. Especially if one considers that they either own the media or exercise tight control over it.

The example of Mikhail Khodorkovsky, the oil tycoon and once the richest man in Russia, who had made a big mistake back in the beginning of the 2000s by challenging the existing status-quo and ending up in prison as a result, may by now seem like a distant past.

Times have changed since then. The overall political situation in the world has changed as well. The US is now more aggressive in taking on Russia and, considering that the Yanks are now ready to target individuals and freeze their assets and accounts in the West, most self-respecting Russian oligarchs, with their fortunes kept abroad, would think twice before upsetting the US Big Brother.

As things stand now, the current wave of patriotism that has swept Russia as a result of Crimea breaking ranks with Ukraine is creating a confusing picture that leads some people to believe that the nation, including the big vested interest groups, stands united behind its leadership. Boosts of patriotism don’t tend to last long and, once they fade, considerations of personal gain start to dominate again. And that is when the real challenges for the political leaders begin to mount.

Alexander Nekrassov is a former Kremlin and government adviser.