Deoligarchization or New Property Redistribution? What’s Actually Coming for Ukraine

The future of Ihor Kolomoisky in Ukraine will be an indicator of whether Kyiv is ready for a real liberation from the power of the oligarchs

This week, Ukrainian oligarch Ihor Kolomoisky gave the first interview in five years to the Russian media. The businessman was quite frank talking to the RBC correspondent, and told about the relationship with the current President of Ukraine, and the war in Donbas, and many other topics. In interview Kolomoisky looked like a wise statesman and ‘pro-Ukrainian patriot’, sometimes even commending his former opponent Petro Poroshenko for successes in opposing Russia. Kolomoisky also was quite discreet about his partners and competitors inside and outside Ukraine.

The businessman is now the focus of increased attention. From the very beginning of the election campaign the rumors about the close ties of Volodymyr Zelensky and the oligarch, who was called almost the patron of the future head of state, swept Ukraine. His rivals in the presidential race constantly spoke about the same. Kolomoisky’s return immediately after the election only added fuel to the fire. It is clear that in this environment, the businessman wants to improve his public image, which has been significantly demonized in recent years.

In this sense, the interview with the Russian news agency is an excellent PR move. The very fact of exclusivity caused greater citation in Russian and Ukrainian media and helped to convey the message to a wide audience. Kolomoisky tried to dispel rumors about his influence on the administration of Zelensky (though he did not reject the previously existing ties with the President himself and his current team) and plans to get back his former property, adhering to the simple principle of ‘business is business’. These statements in general correspond to the overall strategy of Kyiv to reformat the holders of large capital from sponsors of political groups in businessmen respecting the law and far from the politics, willing to invest in the country.

This approach largely corresponds to the region-wide trend to oppose oligarchic influence on the policies of post-Soviet countries. In neighboring Moldova deoligarchization became the flag that united the ideologically diverse forces to overthrow the ruling oligarchic elite. A similar idea was promoted through the entire election campaign of Volodymyr Zelensky, who built the image of an independent politician, not well-connected with big business unlike all former Ukrainian leaders.

Now the actions of the Ukrainian authorities demonstrate, at least, the desire for a real division of politics and capital. For example, Volodymyr Zelensky managed to convince oligarch No. 1 Rinat Akhmetov to contribute “significant funds” for social needs and reintegration and restoration of Donbas. Along the same lines, the criminal prosecution is brought against ex-head of state Poroshenko, which is also aimed at the destruction of corruption schemes, the ultimate beneficiary of which was the former Ukrainian leader.

Against this background, Ihor Kolomoisky, who was absent in the country for a significant period of time, strengthening business ties within and outside Ukraine, but at the same time disavowing interference in politics, should become a new model of cooperation between the government and capital. The examples of Akhmetov and Poroshenko in this context become a demonstration of readiness (Akhmetov) or resistance (Poroshenko) to the updated format of relations between ‘politics and money’.

At the same time, some recent steps of Zelensky’s team partly indicate that it is too early to talk about the prospects of the removal of oligarchs from Ukrainian politics, and real changes will occur only in the redistribution of spheres of influence in the big money world. So, recently there was information that Zelensky’s team plans to privatize the state banks of Ukraine – PrivatBank, Oschadbank, Ukrgazbank and Ukreximbank, and also state enterprises Ukrzaliznytsia and Ukrpochta. Ukrainian experts agree that of these assets, only PrivatBank is really profitable (and, accordingly, interesting for new owners). The potential return of the bank to Ihor Kolomoisky, who owned it before nationalization in 2016, as well as the price and principles of the deal will tell a lot about the real relations of the new government and the old oligarchs.

Doubt that such a deal will be clear arises after the news that Windrose (which is associated with the Privat group of Kolomoisky) has won the tender for air transportation of the top public officials until the end of 2019 for 35.1 million hryvnia. It is symptomatic that Windrose was the only participant of the competition.

Indeed, rumors about the privatization of PrivatBank by Kolomoisky and the winning of Windrose in the tender for Zelensky’s flights can be just unrelated to each other. Nevertheless, these are quite wake-up calls for the government, which is building its entire domestic policy on the anti-oligarchic agenda. In any case, the future of Kolomoisky is likely to be a real indicator of whether Ukraine is ready to embark on the path of deoligarchization, or the country will undergo new property redistribution.