12 November: demonstrators carry banners as they walk along through Kyiv during the "March of the Outraged" action. Photo(c): Olena Khudiakova/Zuma Press/PA Images. All rights reserved.Ukraine’s president Petro Poroshenko is spending his fourth autumn in power against a background of protest — protests provoked by the president’s lack of desire to fulfill his own promises in the fight against corruption. Pressure from the street still isn’t enough to break the wall the authorities have built around themselves, but protests are provoking conflicts inside Ukraine’s ruling coalition, where the war against an external enemy is moving into a stage of internal conflict.
Poroshenko is an avid user of Instagram, where earlier this year he congratulated Ukrainian citizens on the European Union’s decision to grant Ukraine a visa-free regime. “This is a final break with Russia after a 300-year union,” wrote Poroshenko, who, in recent months, has begun to abuse patriotic rhetoric.
There were expectations that Poroshenko, who took office off the back of the EuroMaidan street protests, would enact radical reforms in Ukraine. But the oligarch’s instinct to convert political status into material benefits has prevented him from breaking the corruption status quo.
Today, Ukraine’s democracy is entering a period of turbulence
Poroshenko may have suffered from the repressive system of the state in the past, but on becoming president, he did not change the state ideology, but merely re-routed financial flows in favour of his own circle. The General Prosecutor’s Office, which targeted Poroshenko’s group when they were in opposition, has become a faithful servant to the current president. The creation of a Financial Investigations Service has been blocked. And the announced policy of “de-oligarchisation” has ended in a strategic alliance between Poroshenko and Rinat Akhmetov, the main beneficiary of Ukraine’s system of crony capitalism.
On coming to power, Poroshenko began a systematic attack against Akhmetov, who took control of his main assets during the presidency of his friend, ex-president Viktor Yanukovych. There were threats to de-monopolise certain sectors, and the Prosecutor’s Office began a criminal investigation into Neftegazdobycha, Akhmetov’s gas company. However, this year, there were signs of reconciliation after Marina Poroshenko, the president’s wife, began to host a morning exercise programme on the Ukraine television channel, which belongs to Akhmetov.
President Petro Poroshenko. (c) Ye Pingfan/Xinhua News Agency/PA Images. All rights reserved.The main deal between the two groups was reached at the intersection of business, law enforcement and politics. The Prosecutor’s Office did not charge anyone in the investigation into the kidnapping of Oleg Seminsky, the director of Neftegazdobycha, and Ukraine’s energy regulator raised tariffs on electricity bought from Akhmetov twice in the course of 12 months. To increase Akhmetov’s wealth further, a new coal-price calculation formula (“Rotterdam+”) was introduced. According to this formula, Ukrainian coal power networks buy domestic low-quality coal at a price which includes the cost of sale at the Dutch port, plus its transport to Ukraine. At the same time, the Poroshenko-linked ICU investment company bought DTEK Eurobonds prior to the formula’s introduction, making Akhmetov an invisible beneficiary of the scheme.
The fact that the Ukraine TV channel joined in the campaign to discredit anti-corruption activists, who have criticised Poroshenko and exposed schemes of unlawful enrichment, was a nice addition to the deal. For instance, this year the channel broadcast an entire series in which regime critics are presented as living prosperously on American grants — much in the same vein as Russian discreditation campaigns.
Another participant in the new oligarchic consensus is Viktor Medvedchuk — the only Ukrainian citizen allowed to fly via private jet directly to Moscow. Ukrainian state agencies have ignored the purchase of assets in Ukraine that formerly belonged to Russian oil company Rosneft by a businessman close to Medvedchuk. There are also allegations that the Ukrainian security services have disrupted competition in the LNG gas market in favour of Medvedchuk. Earlier this year, the security services held a large assignment of fuel contracted by independent traders at the Ukrainian border for several months, as a result of which companies close to Medvedchuk managed to seize 40% of the market.
Repressive methods could become the main strategy of a president who is losing popularity, but Ukrainian society, together with its European partners, has to prevent this scenario from happening
Dmytro Firtash, another Ukrainian oligarch (and business partner to Arkady Rotenberg, a key Putin ally), also continues to successfully conduct business in Ukraine, having subjugated the government to his interests. Ukraine’s post-revolutionary authorities have created privileged conditions for Firtash in the nitrogen fertilizer market, which lead to significant profits at the expense of Ukraine’s growing agricultural sector.
Poroshenko has guaranteed conditions even for Alexander Babakov, the former Vice-Speaker of the Russian State Duma and a Special Presidential Representative. Babakov, who voted for the annexation of Crimea in 2014 and is under US and EU sanctions, not only controls electricity distribution in a third of Ukraine’s regions, but is developing a network of hotels by raiding other people’s businesses. The investigation into this raiding is being blocked by Yuri Lutsenko, Ukraine’s fourth General Prosecutor since 2014 and a presidential ally.
As we enter the fourth year of Poroshenko’s presidency, there’s little point in talking about major reforms. Trust in the head of state is exhausted, support in parliament is generated in exchange for new preferences for oligarchs, and society’s patience is approaching zero. The refusal of Leszek Balcerowicz, the author of Poland’s reforms, to continue his role as as a presidential advisor is telling.
In these conditions, Poroshenko is trying to create the right conditions for starting a second presidential term by changing the agenda in Ukraine. This scenario has several elements:
Firstly, an attempt to shift attention from corruption to security. Having failed to deliver on Ukrainian society’s demands for zero tolerance on corruption, Poroshenko decided to move national discourse in a different direction. Now pseudo-patriotism is in fashion, with the president, whose confectionary business paid taxes to the Russian Federation’s budget until April 2017, suddenly becoming the main defender of Ukraine against the influence of Russian propaganda. Hence, the closure of the highly popular social network VKontakte, the law on language quotas for television and radio, the renaming of streets as part of de-communisation and the new discussion on introducing a visa regime for Russian citizens.
May 2017: Ukrainian citizens rally against a presidential decree blocking the operation of Russian social networks in Ukraine. (c) NurPhoto/SIPA USA/PA Images. All rights reserved.Secondly, attacks on anti-corruption institutions and discrediting critics of the authorities. The latter are becoming targets of harassment not only online, but also in real life — the case of Mikheil Saakashvili, who lost his Ukrainian citizenship, is one example.
The persecution of anti-corruption activist Vitaly Shabunin is even more telling. Shabunin, who runs the Anti-Corruption Action Center, has been attacked from several sides. Pro-regime bloggers are creating a scandal around his construction of a single-storey house, the security services have organised fake protests against him, parliamentary deputies from the ruling coalition have accused him of not paying taxes, and military officials have visited his home to check if he is fit for military service. Similarly telling are comments by the General Prosecutor in December 2016 that Shabunin should protest in his underwear.
Another target for Poroshenko is the new National Anti-Corruption Bureau, created two years ago. The president now wants to find a source of pressure on the NABU, after a series of investigations were publishing concerning his group.
Finally come the latest attempts by the president to consolidate the power ministries in his own hands. The security services are gathering information on regime critics, and the General Prosecutor’s Office is pressuring them by opening criminal cases against them. More than a year ago, the Prosecutor’s Office opened a new department for investigating economic crimes — its staff were chosen personally by president’s circle. Together with the security services, they are now attacking small and mid-sized businesses, which were the main economic base for protest moods under Viktor Yanukovych.
Today, Ukraine’s democracy is entering a period of turbulence. The visa-free regime with the European Union was a means of forcing the country’s ruling group to pass necessary laws. Now that visa-free jis in the bag, it will be much harder to push through reforms under resistance from the authorities. And in the near future, there are no real goals that could move the country forward. In these conditions, the president is moving to more repressive methods. This approach is cynical but understandable — he can see that the Trump administration isn’t focused on Ukraine.
Ukraine’s European partners should warn Poroshenko about the potential of re-examining the visa-free regime if the attack on civil society and increase in corruption continues
The consolidation of the US and EU is now more important than ever to defend the institutional achievements of the Ukrainian revolution. The experience of the past three years has shown that the carrot and stick approach is the most effective.
The Ukrainian authorities are still dependent on aid from the International Monetary Fund, and the US government can still provide invaluable support for democratic change if it links further assistance to passing the law on the creation of an anti-corruption court and changing the electoral law, which is key to clearing politics from conflict of interest issues. These are the slogans that kicked off October’s protests, which brought together anti-corruption activists, parties such as Democratic Alliance and Saakashvili’s Movement of New Forces, as well as the nationalist Svoboda and conservative Samopomich parties.
Ukraine’s European partners should warn Poroshenko about the potential of re-examining the visa-free regime if the attack on civil society and increase in corruption continues. Repressive methods could become the main strategy of a president who is losing popularity, but Ukrainian society, together with its European partners, has to prevent this scenario from happening.