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Requiem for EuroMaidan

As Ukraine turns into an oligarch republic, civil society has few chances left to make itself the true victor of EuroMaidan.

 

Today, the significance of EuroMaidan for Ukrainian society lies in its intentions – to restore the Republic, establish the rule of law in economics and politics, and to secure control over elites via partnership with the European Union; a sizeable democratisation mechanism. And although Maidan enjoyed far from universal support, it spoke in the interests of all Ukraine's citizens.

Unfortunately, the results of our actions often diverge from the motivations behind them. The power elites that swept out the clans tied to the Party of Regions have not been able to consolidate the promises of EuroMaidan. This fiasco has several causes, but one of them merits particular discussion: the oligarchs' take-over of an unfinished autocracy.

Requiem for EuroMaidan

In recent days, Kyiv has found itself immersed in a new crisis. Ihor Kolomoisky, a pro-Maidan oligarch and governor of the eastern powerhouse of Dnipropetrovsk, allegedly used fighters from the Dnipro volunteer battalion to seize control of Ukraine's state-owned gas company, Ukrtransnafta.

One day prior, the Ukrainian government and parliament passed a law to take the management of Ukrtransnafta back under governmental control. Subsequently, President Petro Poroshenko accepted Kolomoisky's resignation as governor and now faces a challenge of possible civil unrest in Dnipropetrovsk. Local lawmakers in Dnipropetrovsk are already calling for a new Maidan.

Meanwhile, Prime Minister Arseny Yatsenyuk was accused of being involved in large-scale corruption by the former head of Ukraine's financial inspection service. The following day, the head of the Ministry of Emergency Services was arrested on corruption charges live on television during a cabinet meeting as Poroshenko and Yatsenyuk looked on.

Ihor Kolomoisky has recently been dismissed as head of Dnipropetrov'sk regional administration. (c) Inna Solokovska / Demotix.

For Ukrainian citizens who placed their hopes in a revolutionary president and prime minister, these events sound like a requiem for EuroMaidan. 

Creative oligarchy

In the post-Soviet space, it's worth remembering that an oligarch is not just a highly wealthy individual. An oligarch is someone who pursues their private interests (accumulating capital, receiving rents, monopolising certain sectors) with the help of public instruments.

Just as EuroMaidan defended the interests of all Ukrainian citizens, it also defended the oligarchs.

At the time of going to press, for instance, Ukrainian billionaire Rinat Akhmetov is no longer an oligarch, although he remains one of the richest people in Ukraine. Akhmetov no longer holds sway over Ukrainian public institutions, and he lives the life of a usual post-Soviet businessman – vulnerable to the police, tax inspection, fire inspections, and other agencies, which extort illegal payments.

The complex mechanisms of administrative and political safeguards comprise one such 'public instrument': an oligarch's private interests and property are guaranteed by parliamentary deputies, political parties, and functionaries in the executive and judiciary. Without recourse to exploitation of public institutions, an oligarch is merely a very rich individual, unable to defend his property under the majority of post-Soviet political regimes.

Just as EuroMaidan defended the interests of all Ukrainian citizens, it also defended the oligarchs. They too suffered from Viktor Yanukovych's autocratic tendencies, just like everyone else.

By November 2013, though, even the oligarch groups at the core of the Party of Regions had been isolated from most budget streams and influential government posts. But after Maidan, the oligarchs were able to acquire greater rights and opportunities than any other group in Ukraine. This acquisition was made possible by the fact that, as a group, oligarchs have been far more effective in the pursuit of their own interests when compared with any other group of post-Soviet society, formal or informal. At the same time, the conflicts emerging between the victors' political programmes, have also contributed to oligarchic acquisition.

To understand why oligarchs are so effective, one has to look at their creativity. Their ability to survive and expand their influence never fails to impress; their ability to corrupt any half-decent public initiative never fails to frighten. 

Consider the threat posed by the Privat group, headed by Ihor Kolomoisky. Today, this group owns one of Ukraine's biggest private banks (Privatbank), which has 19m customers, Ukraine's biggest TV Channel (1+1), as well as businesses in energy, retail, and many other sectors, dozens of Rada deputies, several governors and mayors. 

Having lost major holdings in Crimea and Donbas in 2014, the highly congenial Kolomoisky managed to retain and even enlarge his assets, all the while positioning himself as the saviour of Ukraine, creating a personal army in the form of volunteer battalions, and building his own fiefdom out of several regions in Ukraine's south east. Kolomoisky's creative potential is sizeable. And so is the danger he poses to the (as yet unborn) Third Ukrainian Republic.

Caught between the Maidan and war

For companies like Privat Group, the opportunity to grow and develop arose due to the conflict between the demands of Maidan and the demands of fighting a war in the East.

The Maidan programme is one of civil revolution, and is aimed at the restoration of the republic with its three branches of power, and distribution of authority between the centre and local communities; in other words, political pluralism. It entails a free economy with opportunities both for entrepreneurs and ordinary citizens. The Maidan programme is for fair and accessible justice, as well as high-quality healthcare, accessible to all. It is also about controlling the elites. 

The demands of war, on the other hand, require victory over separatists and foreign influence in Donbas, the restoration of national sovereignty, and territorial security. It requires the concentration of resources (economic and human), and involves autocratic rule, as well as unaccountable authorities. The programme of war requires that we limit not only the freedom of information, but personal freedoms, too.

Ukrainians bid farewell to fallen soldiers at Independence Square. (c) Nazar Furyk / Demotix.
The conflict between these demands is shaping Ukraine's future development. And the principles of oligarchic rule have crept into the gaps between them. 

The conflict between Maidan and the conflict in Donbas is shaping Ukraine's future development. 

Oligarch republic

Today, Ukraine is practically an oligarch republic. Several pro-Maidan businessmen (among them Arsen Avakov, now Interior Minister, and Serhiy Pashinsky, former head of the Presidential Administration) have taken charge of key power posts, and started building – what appears to be – their own oligarchic domains. But the oligarchic system remains incomplete. There are still people, whether in the parliament, executive, or the army, who don't see eye to eye with the oligarchs.

The recent law on shareholder groups demonstrates that these conflicting programmes can strengthen one another. The necessity of collecting taxes to defend the country can still force the parliament to pass a law, which increases economic transparency. The attempt to force Ukrtransnafta, Ukraine's largest state enterprise to pay taxes and dividends is an important first step in pushing back against the oligarchs in Ukraine.

This step reflects the fact that there is still a chance for reforms, to create a third republic. But for this we need to take key measures that would cut across the oligarchs' ability to control state enterprises, avoid paying taxes, and use the Rada and Cabinet of Ministers to further their own interests. The perspective of a new unprecedented wave of privatisation only increases the oligarch's appetite, as well as the risks for Ukrainian democracy. If the anti-corruption service currently under construction does not launch, the planned mass privatisation will once again lead to the hijacking of Ukraine's principal industries, and will benefit only a few families, who will later require political guarantees for their property. The prospect of oligarchic success becomes more and more likely every day. 

A clearer division between the private and public sector, or 'de-oligarchisation', is not the silver bullet to Ukraine's problems. But it will create the conditions for developing an effective and accountable government and parliament. Economic competition continues to grow, and the pressure on small businesses is receding. The current government has made several steps to make life simpler for small businessmen and the self-employed.

People's dependence on patron-client networks is also decreasing. Civic activism and the lack of funds in the state budget is already eroding the huge clientele of those Ukrainians who are dependent on the state budget. A new poverty has already arrived in Ukriane. And its impact is a shock for many households; a shock and a challenge to become more active and entrepreneurial. But the survival techniques of the 1990s are not only a sign of desperation, they are an opportunity to try and be free once again. In a time of economic crisis and military conflict, the government cannot dedicate up to 43% of its budget to state employees (the so-called byudzhetniki) any more. The citizenry is doomed to be free.

If the current chance is lost, a new Maidan is unavoidable. But now, just as Ukraine is acquiring more and more experience of conflict, a future political crisis could be even more terrifying.

Editor's note: a version of this article appeared first in Russian on Liga.net

Standfirst: Ukrainians pay tribute to fallen soldiers on Independence Square, Kyiv. (c) Nazar Furyk / Demotix. 

About the author

Mikhail Minakov is Associate Professor at Kyiv-Mohyla Academy and President of the Foundation for Good Politics, Kyiv. He is also visiting professor at the Institute for European Studies, Europa-Universitaet Viadrina and editor-in-chief of the journal Ideology and Politics


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