Help Ukrainians Stand Up for Western Values

19.12.2013 |
Vitaly Sych

Before Ukrainian President Viktor Yanukovych signed a deal to bail out our country’s economy this week, there was excitement among Western officials and analysts about the way some businessmen who have bankrolled the president’s rise to power appeared to be distancing themselves from him.

Many Ukrainians weren’t fooled. The country’s so-called oligarchs still supported Yanukovych. And now they will be prime beneficiaries of the $15 billion of bail-out loans and lower natural gas prices that he secured from Russian President Vladimir Putin.

We still don’t know what commitments Yanukovych made to Putin in exchange for his largesse. Protesters remain in the streets of Kiev, and this should be seen as the start, rather than the end, of their struggle to remove a corrupt regime and link their nation’s future to the values and norms of the European Union.

Yanukovych’s two main backers have been the country’s richest businessmen: Rinat Akhmetov, the metals magnate and owner of the Shakhtar Donetsk football club, and billionaire energy broker,  Dmitry Firtash.

In Ukraine, the division between big business and politics is blurred. Akhmetov is from Donetsk, where Yanukovych served as governor until 2002. The billionaire also served in parliament as a legislator for Yanukovych’s Party of Regions from 2006 until 2012. Firtash owns one of the largest TV channels, Inter, which has supported Yanukovych and criticized the opposition in its coverage.

Election spending in Ukraine is opaque, but both Akhmetov and Firtash are widely thought to have sponsored Yanukovych’s campaigns. Even as they have supported an increasingly authoritarian Yanukovych at home, however, Akhmetov and Firtash have invested heavily in building their reputations in the West.

Akhmetov’s System Capital Management JSC is a partner of the Swiss-based World Economic Forum. It has used the services of, or attracted financing from, Germany’sDeutsche Bank AG, the U.K.’s Royal Bank of Scotland Plc and Austria’s Raiffeisen Bank International AG. Firtash has made generous donations to the University of Cambridge. This year he started financing the Days of Ukraine festival in the U.K., held at prestigious sites in London, such as the Saatchi Gallery.

The two men have also hired prominent Western consulting companies, including McKinsey & Co. Inc., to develop an economic plan for Ukraine, while bolstering Yanukovych, who is the biggest obstacle to any reasonable economic policy.

In the last three years of Yanukovych’s presidency, many businesses have complained of coming under attack from government agencies such as the tax authorities, law enforcement and the judiciary. Corruption has become ubiquitous. The European Business Association, a union of foreign companies working in Ukraine, is expected on Dec. 19 to report that its rating of the investment climate reached a historical low of less than 2 on a scale of 5 for the last quarter.

At the same time, Yanukovych is living in a new mansion on an estate near Kiev that is the size of London’s Hyde Park. The cost of the project hasn’t been made public, but it is certainly incompatible with the president’s officially declared salary of $100, 000 last year. Local media have published photos of the mansion shot from the air, as well of the lavish interior, with its marble floors and elaborate chandeliers. The presidential press office has denied that the estate belongs to Yanukovych and says that he occupies only a part of it.

The president’s son Oleksandr has built a fortune from virtually zero over the last three years. With assets in finance and real estate worth $367 million, Oleksandr Yanukovych ranked 32nd on this year’s list of the richest Ukrainians, compiled annually by Korrespondent weekly magazine and investment bankers.

Yanukovych’s political agenda, meanwhile, has included a crackdown on the press -- much of the previously free media has fallen into the hands of businessmen loyal to him -- and jailing opposition leaders, including former Prime Minister Yulia Tymoshenko.

Despite putting out recent statements to the effect that the use of violence was unacceptable and that the the protests showed Ukraine is a free and democratic country, neither Akhmetov nor Firtash have used their power to restrain Yanukovych. Moreover, all of the pro-presidential members of parliament, including those aligned with Akhmetov and Firtash, supported the government in a no-confidence vote held after the security forces’ brutal attacks against peaceful demonstrators.

The reason for the two men’s hesitancy is simple: They have benefited from the government, buying state property at low prices in tenders with little or no competition. They wanted to hedge their bets during the recent protests and keep their reputations in Europe, but they weren’t ready to bite the hand that feeds them.

We are current and former journalists in Ukraine and we appreciate statements of support for the Ukrainian people that the EU and U.S. have made. More can be done.

International banks, reputable galleries and other institutions must make it clear to Akhmetov and Firtash that they will continue as their partners only if they stop supporting Yanukovych’s increasingly despotic regime. Corporate social responsibility policies shouldn’t exist only for glossy booklets distributed at investment conferences in luxury hotels. They must be applied in the real world.

European governments can also help. Targeted personal sanctions, including visa bans, should be applied to the leaders of Yanukovych’s government, especially to those implicated in the crackdowns that have inflamed the protests in Kiev. The first on the list could beAndriy Klyuev, Yanukovych’s long-term close associate and the head of the National Security and Defense Council.

Senior Ukrainian officials should endure the consequences of their policies by spending vacations in Minsk and Almaty, rather than in Milan and Sardinia, as they have become accustomed to doing. They should personally experience the results of full-scale reintegration with Russia, Kazakhstan and Belarus in the Eurasian Union that Putin wants us to join.

We don’t expect the rest of the world to ride to the rescue of Ukraine’s protesters right now. But governments, businesses and nongovernment organizations engaged with Ukraine must show they support the European values for which hundreds of thousands of Ukrainians have braved the winter cold and police brutality. Yanukovych’s financial backers must be held to the same account.

(Vitaly Sych was editor-in-chief of Korrespondent weekly magazine from 2003 to 2013. Also contributing to this article: Mikhail Gannitsky, editor-in-chief of UNIAN news agency,  Sergey Leschenko, deputy editor of Ukrainska Pravda, and Mustafa Nayem is co-founder of Hromadske TV.)

To contact the writer of this article: Vitaly Sych at [email protected]

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