Ukraine, domestic politics: elite unity, Jun 2022

In Ukraine, Russia's war generates elite unity, within limits

(for the EIU)

In late May, Rinat Akhmetov, a prominent Ukrainian business magnate, announced his intention to sue the Russian government for up to US$20bn in compensation for the physical damage and lost business at his Azovstal steel plant in Mariupol resulting from Russia's bombardment of the city, which it now controls.

Akhmetov is not the only figure from Ukraine’s economic elite to come out strongly in support of the country’s wartime authorities, while publicly condemning the Russian invasion.

By early May, according to Ekonomichna Pravda, a local business news website, 14 of Ukraine’s leading business figures had between them donated US120m in military and humanitarian aid since late February. Of this, Akhmetov alone is reported to have contributed just over US$70m, following his earlier payment of US$30m in taxes in advance to support government finances. Many of those listed as acting similarly—including Viktor Pinchuk, Dmytro Firtash, Yuriy Kosyuk, Vadym Novynskyi, Kostyantyn Zhevaho, Olexander Yaroslavskyi, Serhiy Tihypko and Petro Poroshenko—are among a tiny group of enduringly successful business figures usually described as “oligarchs”. Between them, oligarchs, as the heads of large conglomerates, own a large chunk of the Ukrainian economy. They tend to use their wealth politically—whether by funding election campaigns, or by influencing political debate through their media outlets—as a way of defending and supplementing their business holdings.

The show of elite unity contrasts with the situation both at the time of the last “hot” phase of the war with Russia, and in the months ahead of the current invasion. On the first, the difference between those eastern regions where Russian and “separatist” forces partially prevailed (Luhansk and Donetsk) in 2014-15, and those where they were thwarted (Kharkiv and Dnipropetrovsk), is partially explained by the alignment and actions of key regional oligarchs and their networks. On the second, in the run-up the latest military conflict, the relations of the president, Volodymyr Zelenskyi, with Akhmetov, but also with Poroshenko, his predecessor as Ukrainian president, had deteriorated badly, linked to an apparently selective application of the president’s “de-oligarchisation” laws.

Such a development is not surprising given that, in the war with Russia, Ukrainian oligarchs are also in a fight for their survival as oligarchs. At the same time, elite unity in Ukraine is not total, even in wartime. Despite his strong, highly publicised support for the war effort, in late May, Poroshenko is reported to have had problems leaving the country. In April, moreover, his TV channels—now owned indirectly, following the passage of the “de-oligarchisation” law late last year—were taken off air abruptly, apparently for straying too far from the government’s war-time messaging (a presidential adviser said this was because of Poroshenko’s “narcissism”—ie his claiming too central a role for himself in the country’s defensive efforts).

Alongside the demonstration of surprisingly effective central state institutions (primarily, the armed forces and Zelensky’s presidential administration), an increase in the unity of Ukrainian economic and political elites is one of the political transformations wrought by the war that could bode well for post-war construction and reform prospects. Conversely, unity among Ukrainian elites has been forged by a specific array of threats and incentives, so that the combination of a (so far) quite successful campaign by the Ukrainian army, backed by popular mobilisation at home, and arms and funding from abroad, it could be argued, simply made the shoring up of domestic alliances the best option for defence of oligarchs’ property against a serious threat from external, heavily armed rivals. If so, it is also possible that Ukrainian elites could revert to their established modes of behaviour once the immediate threat to their power, position and property has passed, as they have done following crises in the past.

Comments

Post a Comment

Popular posts from this blog

Ukraine: The politics of institutional reform: Zelenskyi’s “de-oligarchisation” drive, Dec 2021

The president's “de-oligarchisation” drive addresses issues vital for Ukraine’s development, but is unlikely to produce lasting change (December 2021, for the EIU) The president’s claim that a Russian-linked coup is being organised against him may be part of a wider domestic political struggle set off by his “de-oligarchisation” drive.  De-oligarchisation addresses the key developmental issue facing Ukraine. This is that, by restricting political and economic competition, the collusive, behind-the-scenes politics of Ukrainian elites has acted as a fetter on economic growth, helping to explain the country’s low living standards. Concerns have been raised that the policy could be applied selectively to damage the president’s political rivals.  The measures may be too limited to produce lasting change. Moreover, Zelenskyi appears to lack both the resources and the durable domestic political alliances that would be required to affect a long-term transformation of national governan...
Read more

Falling between two stools

A review of Marko Bojcun’s Towards a Political Economy of Ukraine: Selected Essays, 1990-2015; Ukrainian Voices, vol 3; Ibidem-Press, Stuttgart. A. The history of post-Soviet Ukraine could be written as that of a succession of self-serving political leaderships, and of inspiring but failed popular protests, resulting in chronic economic underperformance that has left the country’s dwindling population among the poorest in Europe. A glance at IMF data, for example, shows the country vying for bottom place in the European income rankings with Moldova. In these essays, written close on the events they analyse, Marko Bojcun reminds us that this need not have been the case, and that other trajectories at times seemed possible. One example is to be found in an article from 2001, in which the prospect of Russia’s European integration is still in the air, just about, whereas from the vantage point of today, this is almost unthinkable. B. The collection covers key waypoints in the politic...
Read more

Ukraine: EU begins to disburse next tranche of financial assistance, Oct 2022

In late September, EU bodies approved an additional €5bn in macro-financial assistance (MFA) to Ukraine, and in early October, Ursula von der Leyen, the president of the European Commission, announced that the first payment, of €2bn, would be made shortly, with the rest to follow by the end of 2022. This is the second instalment of a €9bn package first announced in May, and follows the delivery of €1bn in early August. It is designed to address the substantial budgetary shortfalls facing the Ukrainian government linked to the ongoing war with Russia, which has closed off access to capital markets, but led also to agreements with creditors for delays in debt repayments. The latest EU funding comes in the form of “highly concessionary” long-term loans—that is, at a low interest rate, but still adding to the stock of public debt. The form of the final €3bn of the facility—whether it will be offered as a loan or a grant—has yet to be decided among the 27 EU member states. As the EU Commiss...
Read more