Will Ukraine Snatch Defeat from the Jaws of Victory?

By Elizabeth Pond

(Preprint version of the article in Survival  Dec. 2015/Jan. 2016)

Kiev has won an improbable victory by holding Russia’s military behemoth to a stalemate in Russian President Vladimir Putin’s undeclared war on Ukraine. After a year of intensive shelling during a poorly observed truce in the Donbas, the big guns went silent there on 1 September and have stayed silent ever since.

Yet as the immediate existential threat recedes, the oligarchs who once personally financed the country’s defense seem to be trying to snatch defeat from the jaws of victory. They have forgotten their original shock at Moscow’s lightning annexation of Crimea in March 2014 and are reverting to their cozy personal exploitation of Ukraine’s patrimony. This is precisely the kind of dysfunction that Putin is now counting on to make Kiev implode, even as he eases outside pressure by accepting military deadlock in eastern Ukraine and redeploys some combat forces from Ukraine to Syria.

Putin’s hopes to subdue Ukraine by its own collapse are based on the events of the first pro-European revolution on Kiev’s Independence Maidan (Square) a decade ago. A comparison of that Orange Revolution with the 2013/14 Revolution of Dignity is sobering. In the pioneer exercise of street power by Ukraine’s robust civil society in 2004 pro-democracy Maidan demonstrators forced a rerun of rigged elections that would have elevated pro-Russian Prime Minister Viktor Yanukovych to the presidency. The protesters succeeded in no small part because they were secretly helped by Colonel General Ihor Smeshko, head of the SBU successor to the Soviet KGB in independent Ukraine. Smeshko, whose own family members were demonstrating on the Maidan, enlisted some Ukrainian army support to thwart a bloody crackdown by Interior Ministry forces in the last hour before the planned bloodbath. The demonstrations ended peacefully. Reformist Viktor Yushchenko won the new vote, and reformers constituted a majority in parliament for the first time in Ukraine’s 13 years of independence–only to self-destruct through vicious infighting.

For a time the oligarchs and politicians subordinated their own intranecine feuds and banded together to prevent any Russian installation of Yanukovych as president. The oligarchs–who had acquired their wealth by buying privatised state assets cheaply in sweetheart political deals–were by no means democrats, but their interests lay in keeping the vastly richer Russian energy oligarchs from scooping up their own assets. So acute was their fear that for a few weeks in 2006 most of the wealthiest ones began to negotiate a joint pact in which they would emulate earlier Western robber barons, pay their taxes, and perhaps even become philanthropists to redeem their social debt.

At that point, however, hostility between President Yushchenko and Yulia Tymoshenko, his co-leader at Maidan and by then prime minister, was all-consuming. It paralysed the government, halted the metamorphosis of oligarchs into civic benefactors, reinstated backroom crony capitalism, disgusted the public and handed the presidency to Yanukovich in the 2010 election, this time in a fair vote. The moment of transformation was lost. (So was the career of Col. Gen. Smeshko, not because of his clandestine defense of the demonstrators, but because an SBU subordinate was implicated in the poisoning of candidate Yushchenko that had failed to kill him but left him permanently disfigured.)

Too calm after the storm

Today, as Putin suspends his war on Ukraine, a complacency similar to that in the Orange Revolution prevails among oligarchs. In large part, it reflects satisfaction at having called Putin’s bluff last year after a hundred Euromaidan demonstrators were shot and killed by the Berkut Special Police of Ukraine President (and Putin protégé) Viktor Yanukovych. Yanukovych’s own Party of Regions deserted him after the violence, he fled to Russia, and for months some 80,000 Russian troops exercised on Ukraine’s northern, eastern, and southern borders.

Politically, Ukrainians kept their nerve. Party of Regions parliamentarians voted with the former opposition in the Rada to appoint a new interim president and government. Subsequently, defying the threat on their borders, voters elected and legitimised a new president in May and a new Rada in October 2014. And the elected parliament passed a series of urgently needed reform laws to curb graft, probe the murky energy sector and begin building nascent democratic institutions. Moreover, under Putin’s threat Ukrainians – for the first time in their history – began forging a consensus on a national identity as distinct from Russian and allied instead to European identity.

Militarily, Dnipropetrovsk Governor Ihor Kolomoyskiy and other oligarchs swiftly raised private militias that not only supplemented Ukraine’s ragtag army but bore the brunt of the heaviest fighting against the modern tanks and multiple rocket launchers that Russia pumped over the border into the Don Basin (Donbas). They spearheaded the recovery of land initially lost to the Russian-armed and -led insurgents and by mid-August reduced the self-styled People’s Republics of Donetsk and Luhansk to two besieged pockets. That pushback, on top of Putin’s disappointment over the unexpected failure of Russian speakers in eastern Ukraine to rally to the cause and rebel against Kiev, was too much for the Russian president. In late August, for the first time, he sent elite airborne units into Ukraine in a full (if unacknowledged) invasion; within days these professional soldiers restored half of the territory the insurgents had originally taken and went home again, some of them in Cargo 200 caskets. The message was that Russia would not let its proxies be defeated in eastern Ukraine. Ukrainian President Petro Poroshenko understood the message and quickly agreed to a 5 September “Minsk” truce brokered by Germany.

The militia battles forced Putin’s hand. He had to decide if he really wanted to pay the costs of escalating from limited “hybrid warfare” by stealthy commandos to full combat–with the rising numbers of dead Russian troops, military overstretch, and proabably years of fighting Ukrainian guerrillas that occupation would entail. The rebels kept edging the frontline west during the year of the poorly observed truce, kilometer by kilometer, and tried for one last major breakthrough in January and February of 2015. Yet the Ukrainian lines basically held. For a few months more Putin continued to talk about his original dream of reconquering “New Russia,” the eastern 40 percent of today’s Ukraine that Catherine the Great had seized from the Ottoman empire in the 18th century. By May he dropped the subject, however, and by the end of August there was a sudden change in leaders among his Donbas proxies that brought the less militant Denis Pushilin to the fore in time to approve the new 1 September 2015 truce. Shortly thereafter Russian negotiators also initialled a deal to resume gas supplies to Ukraine at market prices over the winter months. And Moscow released from jail and returned to Tallinn the Estonian security officer it had kidnapped at gunpoint on Estonian soil a year before, in exchange for a Russian spy.

As provisional peace breaks out, the 1,000 Russian officers and trainers in the Donbas and 50,000 troops still massed just over the Russian border no longer seem menacing to Kiev. Corruption as usual has resumed, if with fewer pots of state gold to plunder. The will to root out corruption and implement tough reform of Ukraine’s post-Soviet kleptocracy is ebbing proportionately. Implementation of the crucial political and legal reforms that President Petro Poroshenko and Prime Minister Arseniy Yatsenyuk began is stalling.

Clearly, all the oligarchs who are now working primarily within the new Euromaidan ecosphere are currently focused on a dog-eat-dog fight for redistribution of the Ukrainian assets of those who are still sulking or equivocating–primarily ex-President Viktor Yanukovych and his one-time financier, Rinat Akhmetov, whose base in the Donbas iron and coal industry obliges him to balance off Kiev and the Russians who have the final say in separatist territory. So far President Poroshenko has won the most. The latest annual list of the country’s wealthiest oligarchs published by the Ukrainian magazine Novoye Vremya shows that he was the only one to get richer rather than poorer over
the past year. His assets rose 20% to bring him up to $979 million and sixth place on the list, behind Central Ukraine baron Ihor Kolomoyskyi (down 17% to $1.9 billion, for second place) and Akhmetov (down 56% over last year, but still in first place with $4.7bn).

Under the circumstances, is Putin right in anticipating a second Ukrainian implosion that he can exploit? Or are the Euromaidan idealists right in thinking they can avoid the Orange Revolution trap this time around?

Power struggles

In politics, the main power struggle pits the two oligarchs who were the earliest friends of Euromaidan–President Poroshenko and Central Ukraine grandee Kolomoyskyi–against each other. Second-tier oligarch Petro Poroshenko, the “Chocolate King,” helped fund the Euromaidan movement from its inception in 2013, was elected Ukrainian president in May 2014, and has been building up a wide presidential party ever since. Triple Ukrainian-Israeli-Cypriot citizen Ihor Kolomoyskyi returned to Ukraine from Switzerland to become Governor of Dnipropetrovsk under the interim Ukrainian government in March 2014. The two had a public clash last March, when the government fired Kolomoyskyi lieutenants as managers of the state-owned oil and gas monopolies and Kolomoyskiyi sent well-armed men to the firm’s Kiev headquarters in an unsuccessful attempt to reinstate them. Poroshenko took a risk and managed–barely–to fire Kolomoyskyi as Dnipropetrovsk governor without triggering serious repercussions. In October Kolomoyskyi took his revenge at the ballot box, when his candidates for mayors of the three largest cities outside of Kiev–Dnipropetrovsk, Kharkiv, and Odesa–looked likely to win, as of this writing.

When Kolomoyskyi’s mayoral candidate in Kiev was then suddenly detained before the run-off vote in mid-November by criminal investigators on suspicion of embezzlement and kidnapping, critics of Poroshenko accused him of playing politics with the prosecution office. Poroshenko described the arrest instead as just the ‘start’ of the anti-corruption fight. This rivalry and the corollary vendettas among Akhmetov, member of parliament Yulia Tymoshenko, titanium and fertiliser magnate Dmytro Firtash, and others seem not yet to have the venom of those during the Orange Revolution, but a comparable flare-up cannot be ruled out.

On the other hand, the younger Ukrainians who have now grown up in an independent country and take its existence as a given–and do not want the deaths of their fellow “heavenly hundred” to have been in vain–bring a new determination to their struggle for a more open society and polity. Mustafa Nayyem, the ethnic Afghan and investigative reporter who started the Euromaidan protest in 2013, along with a core of two dozen other activists, won seats in the present Rada, cooperate across party lines, and keep up the pressure for democratic reform and resistance to backsliding into the old crony system. They are conscientious about writing reform legislation. They use the weapon of naming and shaming liberally–and they are inventive in seeking allies in the West who can ferret out proof of Ukrainian money-laundering in British and German and Cypriot banks and give them the documents to confront culprits and urge them to contribute their wealth to Ukraine if they don’t wish to be taken to court.

In addition, the increased scrutiny of Ukraine by European partners that will accompany the coming into force of the European Union-Ukraine Association Agreement on 1 January 2016 should help Ukrainian anti-corruption activists. Already German, Polish, and other advisers are assisting various ministries–and gaining insights into the modus operandi of mid-level bureaucrats who conduct many of the routine bribe operations. They will be additional eyes and ears for the young Ukrainians who have come back after studying and working in the West with enough savings to take senior ministry posts and still support themselves on the low salaries paid to officials.

Second time lucky?

One final difference between today and a decade ago that offers hope of a better outcome from the second Maidan revolution than from the first is structural. Kharkiv University political scientist Oleksandr Fisun thinks that this time around, Euromaidan has already made Ukraine’s political system “more democratic and transparent” through its “civic activism, the absence of a dominant party of power, and improved competition among power centers.” For the first time, “Ukraine’s patrimonial politics are paradoxically contributing to the institutionalization of political pluralism, via a series of formal and informal power-sharing arrangements between the major Euromaidan players.”

Thus, President Poroshenko’s agreement of cooperation with Prime Minister Arseniy Yatsenyuk in April 2014, which was blessed by “Yanukovych semi-insiders” like oligarchs Dmytro Firtash and Serhiy Lyovochkin, helped to “marginalize the political avant-garde of the Euromaidan [right] radicals, Svoboda,” and also paved the way “to secure support from moderate factions of Yanukovych’s former Party of Regions,” like those around Borys Kolesnikov, the eastern Ukrainian Opposition Bloc’s shadow prime minister and former secretary of the presidium of Yanukovych’s Party of Regions.

Fisun calls this evolving system “neopatrimonial democracy, in which rent seeking remains the key driver of politics. Multiple patron-client oligarchic networks compete through formal electoral mechanisms, but their primary goals still focus on capturing positions to control sources of rents.”

If Professor Fisun is right, this neopatrimonial democracy might eventually lead, in conjunction with the current anti-corruption drive and with decentralization on the highly successful Polish pattern, to real political parties instead of today’s patron-client clans devoid of policy content. The parties might begin to aggregate and define the real interests of their constituents and then find fair compromises with other constituencies. They might even capitalize on the new Ukrainian identity that Vladimir Putin has bestowed on them by war to reconcile western and eastern Ukraine politically.

The immediate test of whether the oligarchs, having shuffled a few chairs, can now simply reconstitute with impunity their old rent-seeking empires with scant regard for the public weal will be the fate of the government’s balleyhooed reforms. The Rada took the first essential step to political reform in the wake of Yanukovych’s flight by revoking the super-presidential system of the new Yanukovych constitution and returning to the earlier constitution balancing the prerogatives of president and premier. And the Rada has passed more market and anti-corruption legislation in the past year than in the previous two decades of Ukraine’s independence.

Yet implementation is sluggish, especially in rule-of-law and corruption issues. The most glaring example of malfunction of the hyped anti-corruption drive is probably the retention of Viktor Shokin as chief prosecutor despite his conspicuous failure to bring any high-level graft indictments to court so far. With undiplomatic bluntness, US Ambassador to Ukraine Pyatt warned his Ukrainian friends recently that ‘Corruption kills…Ukraine can, and must, address the problem of corruption now…Rather than supporting Ukraine’s reforms and working to root out corruption, corrupt actors within the Prosecutor General’s office are making things worse by openly and aggressively undermining reform. In defiance of Ukraine’s leaders, these bad actors regularly hinder efforts to investigate and prosecute corrupt officials within the prosecutor general’s office.’

The man who has the authority to remove Shokin, but has not done so, is President Petro Poroshenko.

Ambassador Pyatt might have, but did not, conclude his speech by saying that if Ukrainians don’t get it right this time, they are unlikely to get a third Maidan chance for at least another decade.

Elizabeth Pond is a Berlin-based journalist and author.


The Version of Record of this manuscript has been published and is available in Survival: Global Politics and Strategy, vol. 57 no. 6 | December 2015–January 2016 | pp. 59–68

http://www.tandfonline.com/doi/full/10.1080/00396338.2015.1116148

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