http://www.osw.waw.pl/sites/default/files/prace_42_en.pdf
The Oligarchic Democracy
The Influence of Business Groups on Ukrainian Politics
Slawomir Matuszak
Sep 2012
Centre for Eastern Studies
(113 pages)
==
Theses
• The Ukrainian oligarchic system developed into its ultimate shape during
Leonid Kuchma’s presidency (1994–2004). Although this system has undergone
some form of evolution, it appears to be very durable. Oligarchic
clans emerged in the mid 1990s and would gain a dominant influence on
the country’s political life over the course of a few years. The Orange Revolution
triggered a reshuffle among the oligarchs, but the system itself has
remained unaltered. Representatives of big business still have a decisive
impact on the politics and economy of Ukraine.
• Big business not only controls entire sectors of the Ukrainian economy and
the electronic mass media—it also has a vast influence within political parties.
It is often the case that the overriding goal of a given grouping’s existence
is to represent the oligarchs who sponsor it. A network of mutual
connections exists between politicians and oligarchs. In some cases these
connections are so durable that it is fair to say that oligarchic groups have
been formed (consisting of businessmen, politicians and state officials who
support each other). Representatives of big business are often much more
important players on the Ukrainian political scene than the politicians
themselves. One may risk stating that it is the interplay of the interests of
the oligarchs that is the real mechanism which shapes Ukrainian politics.
When giving their support for a given political grouping, representatives of
big business are guided by nothing more than their own interests, and they
do not identify themselves with the views of the political parties and politicians
they are offering financial support to. If the political configuration
changes, the oligarchs usually have no problems finding common ground
with the new government.
• Although the oligarchic system does have some positive elements (for
example, it contributes to pluralism in political life and the media), it
needs to be stated that the overall influence of Ukrainian big business
is harmful and hinders the country’s development in both political and
economic terms. The monopolisation of the key economic sectors has
constrained competition and is one of the causes of the unfavourable
investment climate in Ukraine. The dependence of most political forces
on big business means that the government in many cases is guided by
the interests of the oligarchs who are sponsoring it instead of the interests
of their country; this often leads to multi-billion dollar losses in the
Ukrainian state budget.
• The influence of the oligarchs on Ukraine’s foreign policy is limited when
compared to economic or internal policy. They do not seem to have a coherent
strategy in external relations, but their actions resulting from their
individual interests often have a significant impact on Ukraine’s behaviour
on the international arena. Sometimes their influence serves the Ukrainian
national interest. However, where the interests of big business come
into conflict with the interests of the state, oligarchs lobby (often successfully)
for their own benefit.
• In some sectors (primarily metallurgy), representatives of big business are
the main barrier to Russian capital expansion in Ukraine. Russian business
is their key competitor on foreign markets. However, oligarchs are sometimes
forced by the circumstances to sell their businesses, and Russian investors
are often the only prospective buyers in such cases. Given the high
degree of ownership concentration in the hands of relatively few oligarchs,
it is very likely that Russia would take control of a number of Ukraine’s
strategic companies should an emergency situation arise (for example, the
second wave of the economic crisis).
• When Viktor Yanukovych won the presidential election in 2010, representatives
of one political grouping, the Party of Regions, gained strength
to an extent unseen so far in Ukraine’s history, and completely monopolised
political power in the country. The coalition partners of the Party of
Regions and opposition groupings have been marginalised to a large extent.
The network of the groups of influence which emerged after the Party
of Regions took power has remained essentially unchanged over the past
two years. The government and the presidential administration have been
divided between the RUE Group and the ‘Donetsk clan’, currently the two
strongest groups.
• The emerging business of ‘the family’ – this term is used to refer to the people
who are directly linked to President Viktor Yanukovych and his sons –
is a new phenomenon. The political and economic expansion of ‘the family’
began shortly after Yanukovych took office as president of Ukraine, and
gained momentum in 2011 and in early 2012. Although Yanukovych’s political
power is stronger than that of any other president in Ukraine’s history,
the financial strength of ‘the family’ is still limited.
• A further strengthening of ‘the family’s’ position in business at the expense
of other oligarchic groups is very likely to bring about a conflict between
Yanukovych and most representatives of big business. The consequences of
this are difficult to predict. The concentration of huge political power in the
hands of Yanukovych has already given rise to concern among oligarchs,
including those who have so far formed his political base.
• It seems quite unlikely that a system resembling the Russian model, where
big business is subordinate to the government, will be created. Yanukovych’s
main weaknesses are the limited number of people who he can see
as unconditionally loyal to him and the strength of the other oligarchic
groups. It seems that the most likely scenario for the development of the
situation in the next few years (at least until the presidential election in
2015) will be the development of a compromise between the oligarchs and
President Yanukovych. If this is the case, ‘the family’ would gain an important
but not dominant position in the model of power and business in
Ukraine.
• The political influence of those oligarchic groups which are not linked to
the governing Party of Regions has lessened significantly since 2010. However,
this has not led to any major ownership changes so far. Other groups
have managed to keep their assets, although the government has taken
some action aimed against their representatives. However, financial support
from big business for opposition political parties has either ceased or
been significantly reduced.
Main sectors of business activity of the key Ukrainian oligarchs
Rinat Akhmetov
Metallurgy, media, banking, transport, conventional
power engineering, insurance, retail trade
Ihor Kolomoyskyi and Henadiy Boholyubov
(Privat Group)
Banking, media, metallurgy, oil sector, chemical
industry, air transport
Dmytro Firtash
Chemical industry, gas sector, banking, titanium
industry
Viktor Pinchuk
Metallurgy, media
Serhiy Tihipko
Financial sector, machine-building industry
Kostyantin Zhevago
Metallurgy, machine-building industry, banking
Vadym Novinsky
Metallurgy, machine-building industry, shipbuilding
industry, agriculture
Oleh Bakhmatyuk
Agriculture, food industry
Andriy and Serhiy Klyuyev
Metallurgy, machine-building industry, renewable
power engineering
Serhiy Taruta
Metallurgy, media
Petro Poroshenko
Food industry, automobile industry, media
Borys Kolesnikov
Food industry
Valeriy Khoroshkovskyi
Media
Tariel Vasadze
Automobile industry, insurance
[ . . . ]
============================
This archive was generated by hypermail 2b30 : Tue Apr 01 2014 - 00:58:48 EST