Oligarchs loom over Ukraine election

With the economy booming, the oligarchs recovered their poise - and enjoyed unprecedented increases in profits and asset values. Meanwhile, the political reforms gave MPs, many of them millionaire business people, greater access to power...

At the recent convention of Ukraine`s Regions party, the man at the centre of attention was not Viktor Yanukovich, prime minister and party leader, but Rinat Akhmetov, the country`s richest man.

Sitting in the front row, two seats from Mr Yanukovich, he attracted the biggest crowds of journalists, politicians and cameramen.

Meanwhile, Yulia Tymoshenko, the leader of the rival Bloc Yulia Tymoshenko, has been seen on the campaign trail riding in a helicopter with Kostyantin Zhevago, an iron ore billionaire.

And even President Viktor Yushchenko, who has often decried the political influence of Ukraine`s oligarchs, has allowed himself to get close to leading businessmen, who have donated money to Yushchenko-backed charities.

With all parties campaigning hard for the September 30 parliamentary elections, politicians are taking all the support they can. And some - though not all - of the country`s business oligarchs are ready to lend a hand.

But it is a delicate relationship. Mr Yushchenko has warned openly that the oligarchs are once again interfering in politics and gaining "the taste of power".

His remarks will strike a chord with those voters who believe businessmen have too big a say in politics. But his comments will be dismissed as electioneering by others, who claim the oligarchs` influence is exaggerated.

The oligarchs were formidable political players before the 2004 Orange Revolution, but they were generally obedient to ex-president Leonid Kuchma, currying favour to expand their businesses, often through privatisation deals.

When Mr Yushchenko came to power, supported by the firebrand Ms Tymoshenko, some businessmen feared the new leaders would seek to reverse a decade of privatisation.

But those concerns waned after Mr Yushchenko and Ms Tymoshenko fell out in 2005 and the privatisation review ended with the cancellation of just one big deal - the Kryvorizhstal steel mill.

The president then said he wanted to move on and work with business. That message was reinforced once Mr Yanukovich, the president`s arch-rival, returned to power as prime minister last year.

With the economy booming, the oligarchs recovered their poise - and enjoyed unprecedented increases in profits and asset values. Meanwhile, the political reforms that followed the Orange Revolution devolved power from the president to parliament - giving MPs, many of them millionaire business people, greater access to power.

With Mr Yushchenko and Mr Yanukovich at loggerheads, and both battling Ms Tymoshenko, the principal opposition leader, post-Orange Revolution politics has offered many openings for oligarchs. Mr Yushchenko called the elections early mainly because he was concerned about corruption in parliament.

The business oligarchs have broadly accepted the president`s plans to balance Ukraine`s longstanding ties with Russia with closer ties to the European Union. And with Europe becoming Ukraine`s main trading partner in recent years, they have increasingly supported Kiev`s EU-oriented policy.

"[They] understand the need to put their suit s on before entering world markets and the need to clean up their act, push reforms in the country and in their companies," says Kost Bondarenko, a political analyst.

Another analyst, Andriy Yermolaev, sees a divide between pro-Yanukovich businessmen, led by Mr Akhmetov, whose companies are based in east Ukrainian heavy industry, and those oligarchs supporting the president and Ms Tymoshenko, who tend to have more diversified financial and trading interests, such as Igor Kolomoisky, head of the Privat banking-based group.

The Yushchenko/Tymoshenko supporters favour rapid economic reform and liberalisation. The pro-Yanukovich businessmen are more conservative. "The rivalry between these two groups is quite damaging and ruthless," says Mr Yermolaev.

Mr Yushchenko is particularly worried about Mr Akhmetov, who stands out among oligarchs as the richest and most overt in his political involvement. An MP for the Regions party, the largest in parliament, he has long backed Mr Yanukovich and worked with him in managing rich, Russian-speaking eastern Ukraine.

The party recently infuriated the president by pushing for a referendum calling for official status for the Russian language and challenging Mr Yushchenko`s hopes of closer ties to Nato.

Ms Tymoshenko claims Mr Akhmetov profits from his loyalty to Mr Yanukovich, citing his recent acquisition of a stake in a big state-controlled power generator, Dniproenergo. Mr Akhmetov has denied that he benefited from preferential treatment.

Mr Kolomoisky and Mr Akhmetov did not respond to requests for comment about their political interests. Among several other business leaders, only Serhiy Taruta, co-owner of the leading steel producer ISD Group, agreed to answer questions about politics.

The business elite was generally "seeking to be apolitical, as playing in politics can unearth serious risks" for long-term business relations and reputations, he said.

That may be true for Mr Taruta, but clearly not for some of his big rivals.

THE OLIGARCHS

[1] Rinat Akhmetov, aged 41. Controls assets in steel, coal, energy, banking, hotels, telecoms, television and soccer. Estimated worth: $15.6bn (£7.7bn, Euro11.1bn). Backed Viktor Yanukovich in the 2004 presidential elections.

A dedicated member of the premier`s Regions party and, since March 2006, an MP, but has some discreet links with Viktor Yushchenko too. He backs the president`s EU membership bid but opposes his plans for speedy Nato accession. Backs making Russian official language.

[2] Viktor Pinchuk, aged 46. Controls assets in steel pipe production, railway wheels, media and banking. Estimated worth: $7bn. Son-in-law to former Ukrainian president Leonid Kuchma. Backed Mr Yanukovich in 2004 elections. Ex-MP, stepped down after the Orange Revolution.

Some close associates from his past have recently joined Mr Yanukovich`s Regions party as parliamentary candidates. Supports EU membership aspirations. Has not been vocal on Mr Yushchenko`s Nato plans or the Russian language issue.

[3] Igor Kolomoisky, aged 44. Controls assets in banking, ore mining, steel, energy, ferro alloys, hydrocarbons and media. Estimated worth: $3.5bn. Main co-owner of Ukraine`s Privat business group with Gennady Bogolyubov, aged 45.

Privat holds assets outside Ukraine, including factories in Russia, Romania, Poland and the US. Neither has served in parliament or government but according to analysts, both have backed various political parties. Neither has publicly expressed personal views on the EU, Nato or Russian language.

[4] Sergey Taruta, aged 62. Assets in steel, machine building, hotels, gas production. Estimated worth: $2.3bn. Co-owns Ukraine`s industrial ISD Group along with Vitali Gayduk, an ex-government official.

Like Mr Akhmetov`s empire, this group started in the industrial Donbass. ISD has invested outside Ukraine, including in steel mills in Hungary, Poland and the US. The group appears to try avoid intervening in politics but is viewed as pro-Yushchenko, even though it has not publicly support an EU membership bid.

[5] Kostyantin Zhevago, aged 32. Assets in ore mining, banking, truck manufacturing, hydrocarbons and real estate. Estimated worth: $2bn. Has served as legislator, switching between parties since the late 1990s. Currently member of Yulia Tymoshenko`s bloc. Supports EU integration, but has not expressed views on Nato or language.

[6] Dmitry Firtash, aged 42. Assets in gas and electricity trading, chemicals, media and real estate. Estimated worth: $1.4bn. Not publicly active in politics since an unsuccessful bid for parliament in 2002. Viewed as a backer of various parties and political projects.

Has strong relations in Moscow as a partner of Russia`s Gazprom in Swiss-registered gas trader RosUkrEnergo. Has not expressed his views onEU membership, Nato or the Russian language issue.

Source: Estimated wealth calculated by Kiev-based investment bank Dragon Capital and published by Ukraine`s Korrespondent magazine in a 2007 listing of the country`s wealthiest people.

This article was monitored by the Action Ukraine Monitoring Service for the Action Ukraine Report (AUR), Morgan Williams, SigmaBleyzer, Editor.

By Roman Olearchyk and Stefan Wagstyl

Financial Times, London, UK, Friday, Sep 21, 2007

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