Russia, goodbye!

Yuriy Kulikov
19:00, 02 April 2016
Politics
1449 0
Opinion

The recent meeting between the president of the warmongering Russia and his oligarchs has once again brought up the issue of the operation of Russian business in Ukraine. As you remember, Putin called for “patience” of the billionaires nurtured under his wing not to dispose of their Ukrainian assets, in order to understand how the events in Ukraine will develop and wait for a possible change of power in Kyiv. Putin’s desire to preserve the economic leverage against the unruly neighbor is anything but a revelation to Ukraine. Two years of war in Donbas with thousands of victims showed that the Kremlin will use all tools available to destabilize the situation and establish control over Ukraine. That’s what he has already done in Crimea and in the east of Donbas.

Russian legislation does not provide for "nationalization," but at the urging of the initiators of annexation, it made an exception for Crimea

The question is what Ukraine is to do with the penetrating Russian business chilling for now in idle expectations of Ukrainian prospects. Some hot shots might suggest that there is nothing to think about –the state must take over all Russian assets in its territory in a “Russian style": swiftly and extremely cynically. That’s what Russians did in the Ukrainian Crimea when the stealing of nearly 500 companies and two dozen gas fields worth billions of hryvnias was dubbed "nationalization." And it should be noted that Russian legislation does not provide for "nationalization," but at the urging of the initiators of annexation, it made an exception for Crimea.

In the Russian mainland, the remaining Ukrainian businesses faced various approaches: the business of unwanted Ukrainian citizens was blocked through endless raids of regulatory authorities, while the interests of Rinat Akhmetov and Dmytro Firtash were hardly affected. We could all witness how these two oligarchs paid for the mercy of the Russian czar. For example, Firtash addressed the Ukrainians pushing forward the idea that it’s the United States which should be blamed for poverty in Ukraine. Isn’t that ridiculous? So, is it not the kleptocratic authorities that he has been supporting so zealously for many years? Is it not the inefficient economic system, suffering from dictatorship of monopolies and dominance of corruption, set up with the active participation of several tycoons admitted to the trough? Is it not Russia, which has stolen from Ukraine 20% of its economic potential? Is it really the United States which “destroys everything both economically and politically"?

Ukrainians simply can’t swallow it, as neither the enemies, nor the allies will respect them. But how can they manage to act wisely, tackling blind anger? The best option for Ukraine in choosing a strategy regarding the Russian assets will be a mirrored action and prioritizing own benefit with the unremitting and careful monitoring of their activities.

Taught by bitter experience, Ukraine should understand that, while overseas business will always remain business for western democracies, for Putin's Russia – it’s a tool of influence. Russian leaders systematically remind us of this simple truth. Depending on their mood, they either threaten the Ukrainian companies with multi-billion dollar debts to their Russian counterparts, or recall some "good deeds" for the sake of the Ukrainian economy.

The choice between buying or not buying the products and services of the aggressor state should remain a private matter of the Ukrainians. One more thing: all of our actions in relation to the Russian business in Ukraine should improve the country’s positions in future property claims to the Russian Federation.

The sanctions have not yet affected the key elements of the system of Russia’s economic representation in Ukraine – banks and communications. And there are reasons for that.

Ukrainian authorities have been prudent and moderate in respect of the Russian assets in its territory. According to the Russian estimates, they are at the stage of active withdrawal at the moment. As of October 1, 2015, the balance of direct investments from Russia to the Ukrainian economy amounted to $2.2 billion, which is 2.8 times less than in a period before the imperial craze started in the neighbors’ house.

Kyiv’s only noticeable active step was the decision of the National Security and Defense Council of September 2015, providing for the imposition of sanctions against more than 400 individuals and more than 90 entities from the Russian Federation and other countries involved in the annexation of Crimea and aggression in Donbas.

The sanctions have not yet affected the key elements of the system of Russia’s economic representation in Ukraine – banks and communications. And there are reasons for that.

According to National Bank Governor Valeriya Gontareva, Ukraine cannot nationalize subsidiary Russian banks, including Prominvestbank, Sberbank of Russia and VTB Bank, because 15% of the assets of Ukraine’s banking system is concentrated in these financial institutions, while nearly UAH 50 billion of funds of the Ukrainian citizens has been deposited there. She added that these banks have been closely monitored, and curators of the NBU have been introduced.

According to National Bank Governor Valeriya Gontareva, Ukraine cannot nationalize subsidiary Russian banks, including Prominvestbank, Sberbank of Russia and VTB Bank

Too big to swiftly swallow are also the country's leading mobile operators Kyivstar (Alfa Group of Mikhail Fridman) and MTS-Ukraine (AFK Sistema of Vladimir Yevtushenko).

It is clear that the owners of Russian businesses in a country, which has become hostile territory due to the actions of president Putin and his army, are doing everything possible and impossible to provide a disguise for their assets. Mobile TeleSystems (MTS) after the purchase in 2003 of Ukraine’s UMC did not spare money on rebranding and termination of one of the most recognizable brands in Ukraine. But in the past year, in response to changes in public opinion, it once again shed its skin, now switching to a Vodafone brand. Sberbank of Russia has a “bright” idea to remove the references to the name of the aggressor  state from its name, but so far, the initiative has faced rough opposition from Ukraine’s Oschadbank.

According to the head of the National Bank of Ukraine Valeria Gontareva, Ukraine cannot nationalize subsidiary Russian banks, including Prominvestbank, Sberbank of Russia and VTB Bank

Among the favorite techniques of fouling the trail is registration by the businesses with the Russian roots of the parent companies in Europe – the region much favored in Ukraine. It’s as if to say: “You wanted Europe on Maidan? Here you go!”

Ukrainian employees of Russian institutions expectedly regard as attempts to deprive them of jobs the recurrent public initiatives on picketing or boycotting various offices of the Russian businesses, which some time take up extreme forms. However, most Ukrainians would gladly have given those businesses a different origin. But amid economic crisis, this problem cannot be solved in a year or two. Conditions need to be created for both domestic and foreign capital, and then the business of the aggressor state sooner or later will leave the land where it’s not welcome anymore.

The withdrawal of capital with the Russian roots is good for Ukraine in the long term. The thing is that the neighbors will have less interest in Ukraine and temptations to establish economic and political control under the guise of hypocritical fairy tales about "friendship" and "brotherhood."

Perhaps someone might remember how numerous investment forums five, ten, or fifteen years ago, were filled with Russian businessmen in expensive suits with "suitcases filled with petrodollars." They urged the Ukrainian colleagues that Ukraine is the same as Russia, only lagging 10-15 years behind in development. They said that in a little while, everything would be just like in Russia. And they showed their trademark style of doing Russian business. I admit that for many decades, we would have continues to develop according to this model, but Russian greed, the steal of Crimea and the start to the war in Donbas have changed everything. And now our countries are separated for decades and perhaps even centuries, each roaming in opposite directions with their own economic and political systems and worldviews. And the longer the period of Ukraine’s independent navigation, the less likely that the Ukrainian ship will be pulled into the port called "upgraded Russian empire" or whatever Vladimir Putin is dreaming of.

One thing can certainly be told to the Russian oligarchs about Ukraine. The authorities here, unlike Russia, are being changed regularly. But the civil society which will keep changing these authorities according to the democratic procedure remains in place. And the ashes of heroes who gave their lives for the freedom of their Homeland, will be knocking on the hearts of new generations of Ukrainians. And while heated discussions are continuing on a number of other strategic issues, everything is determined with the issue of the Russian business in Ukraine. It’s "Thank you and goodbye!"

Yuriy Kulikov

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