Ukraine has long had an issue with oligarchs standing in the way of progress, and they have almost always been linked to the Kremlin. Now in the context of the war with Russia, President Zelensky has no choice but to tackle this problem.
When Volodymyr Zelensky was first elected president, he had two defining challenges, one from home and one from abroad: Russia’s continued aggression; taking on Ukraine’s oligarchs.
Back then, it may have seemed like the domestic challenge was the more imposing of the two, with the deep-seated corruption and grip on power of his country’s own lineup of cynical multi-millionaires and billionaires. That all changed with Russia’s all-out invasion, and Zelensky has risen to the challenge of a war leader of historic proportions.
Yet over the past few weeks, accelerated by the close-up scrutiny of Ukraine’s candidacy for EU membership, it seems that the dual challenges of Russian aggression and domestic corruption are ultimately bound together.
It is another reminder of how much the history and destiny of these two nations are connected.
The power of both Russian and Ukrainian oligarchs derives from respective false steps into would-be capitalist systems, and a kind of continuation of the centralized power of the Communist Party of the USSR.
Business in bed with politics
After gaining independence in 1991, not all post-Soviet republics were able to escape from the system in which money equals power. In Ukraine, Russia, and Belarus, it was simply impossible to do any significant business without being associated with politics. So there were entire families and clans that controlled the most profitable sectors of the economy and simultaneously controlled the political course of the country.
Since initially all the money of the USSR was in the Kremlin, the strings of new clans from Ukraine and other republics were also pulled from there. Three decades later, although Ukraine was striving with all its might to become a part of the European Union, it was still firmly tied to Russia through corrupt schemes and political influence.
Virtually every Ukrainian president announced a course toward Europe and promised to crack down on oligarchs and destroy corruption. But now, unlike his predecessors, Zelensky does not have the luxury of continuing to play a double game, advocating for the end of corruption while maintaining ties with the oligarchs — especially because the latter are, in one way or another, connected with Russia.
An EU requirement
The crackdown is not brand new, but became particularly active after Ukraine gained EU membership candidacy status, as the fight against oligarchs is one of the conditions set by Brussels for candidate countries to receive membership. In July, Zelensky fired two top officials, Prosecutor General Iryna Venediktova and the head of the Security Service of Ukraine Ivan Bakanov, facing allegations of high treason and cooperation with Russia. Ruslan Demchenko, the first deputy secretary of the National Security and Defense Council, was also dismissed.
At the same time, a law to curb the political influence of oligarchs, which the parliament approved in September, came into force on June 7. Now the National Security Council is working on the Register of Oligarchs, which is expected to be finalized soon, reports the Ukrainian edition of Radio Svoboda.
As many as 86 people can fall under the label of “oligarchs” in Ukraine.
National Security Council secretary Oleksiy Danilov has said that as many as 86 people can fall under the label of “oligarchs” in Ukraine — generally referring to a monopolistic businessmen with major influence in politics and often an owner of some media holdings. Historically Ukrainian oligarchs are closely connected and dependent on the Kremlin.
Danilov’s high number of potential oligarchs stunned many, with most Ukrainians believing they could be counted “on the fingers of two hands.” “Indeed, big regional businessmen, who are not well known at the national level, can also be included in the ranks of the oligarchs," said the Radio Svoboda report.
The very next day after Danilov's statement, the National Television and Radio Broadcasting Council of Ukraine revoked the licenses of the TV channels owned by the Ukrainian oligarch Rinat Akhmetov through the SCM investment company. The group has handed over its media holding to the state, relinquishing on-air and satellite television licenses and print media licenses.
Former Ukrainian President Petro Poroshenko with oligarch Igor Kolomoisky at a press conference in 2015.
The Kolomoisky question
Some of the lesser known oligarchs are trying to fight openly: the Ukrainian newspaper Obozrevatel writes that Russian-Ukrainian oligarch Pavlo Fuchs together with his partner Vitaliy Khomutinnik are likely to threaten the Security Service of Ukraine with complaints to the EU embassy and to Washington. They consider the current scrutiny as pressure on "foreign investors".
Among the oligarchs there will definitely be the name of Igor Kolomoisky, who was originally considered to be Zelensky's patron, the man who some say pushed Zelensky into politics in order to have him as his puppet. Zelensky has long denied such connections with Kolomoisky.
And yet, the conversation has fundamentally changed since Feb. 24. Even if he had connections with Ukrainian oligarchs, the war seems to have forced Zelensky to pursue a bigger battle for the very survival of the people of Ukraine and a future of democracy, rather than try to juggle the interests of some individuals.
Kolomoisky, as well as some other Ukrainian oligarchs, were recently stripped of their Ukrainian citizenship and it was suspected that this was done so that they could avoid prosecution. But Danilov said that the registry of oligarchs will not only include people with Ukrainian passports, meaning that having been stripped of Ukrainian citizenship will not save them from prosecution.
Still, there are fears that the most important names with a strong influence on politics will not be included in the registry. Time will show how serious Zelensky is about his fight against corruption.
According to the reliably well-sourced correspondents of the RBC-Ukraine newspaper, many influential people, who could potentially become part of the infamous list, hoped that Zelensky would either reconsider his law or delay its enactment. In practice the document does not significantly affect their status in Ukraine — it is much more of a problem for their affairs abroad.
Vladimir Putin has long used these connections to get a share of money as well as vital information coming out of the country.
Since the beginning of the war, these tycoons have lost almost all of their business in Ukraine, but were able to take huge sums of money abroad. Getting on the list of oligarchs will mean that all their accounts and property will become the subject of investigations and arrests. In fact, the Ukrainian law on oligarchs will be a repeat of the Western sanctions on Russian politicians and businessmen — and trigger a hunt in foreign countries through Ukrainian oligarchs' property, bank accounts, yachts and businesses.
The fight against oligarchs in Ukraine ultimately comes back to Vladimir Putin, who has long used these connections to get a share of money as well as vital information coming out of the country.
Zelensky seems to understand the unique dynamic of the war against Russia, whose affairs and history are so entangled in Ukraine’s. Dismantling the oligarchs and their 30-year-old system of corruption — even more than nationalistic pride — is the truest way for Ukraine to show it is a nation very different than Russia.