Wednesday, January 1, 2014

An Olympic Primer: Ukraine's Oligarchy Next Door

Tim Judah, a graduate of the London School of Economics and of the Fletcher School of Law and Diplomacy at Tufts University is a correspondent for The Times and The Economist. This week he writes about the political situation in Ukraine in the New York Review of Books (Fighting for the Soul of Ukraine).

On December 8, 2013 "hundreds of thousands packed the city center (in Kiev), and a granite statute of Lenin was toppled in a scene recalling both europe's anti-Communist revolutions of 1989 and the symbolic fall of Saddam's statue in Baghdad in 2003." At stake is whether Ukraine will begin to align with the EU to its west, fall back under the political dominance of Russia, or continue to sit on the fence.  Also at stake is the nature of Ukraine's future leadership.  

Ukraine Basics

Ukraine is a country of 45.6 million, with a GDP of $340 billion (2012), less than a fifth that of California.  Hitler had his eyes on the vaunted bread-basket, which accounted for more than a quarter of Soviet Russia's agricultural production. Today, agriculture accounts for 10 percent of Ukraine's GDP (compare 1% for U.S.); manufacture 30 percent; and services 60 percent.  Steel is the top export.

Ukraine has no hope of joining the EU at the present time.  Russia wants to get Ukraine back under it's thumb. Ukraine would like to stay independent.  Interesting tidbit:  Ukraine pays more for Russian gas transported across it's territory to Europe than Europe pays.  Judah reports that this comes from a self-serving sweetheart deal between the former prime minister, the glamorous and rich Yulia Tymoshenko, and Russia's Gazprom.  She was jailed for it in 2011 but the prosecution was viewed as political by most observers.

Rule of Oligarchs

Ukraine's current president is Viktor Yanukovich (born 1950).  He spent two prison terms for robbery and assault in his youth.  After prison he started work as an electrician in a bus company and worked his way up, joining the Soviet Communist Party.  In 2004 he was almost elected president in a rigged election, which was overturned by the "Orange Revolution."  Despite this he was elected president in 2010.  

From a 2010 article in the Kiev Post
Yanukovych has never been seen as his own man. His critics view him largely as a subservient tool of the nation’s wealthiest billionaire, Rinat Akhmetov, and other patrons. Many also say that the Party of Regions – the largest faction in parliament with 172 out of 450 seats – serves mainly the interests of Ukraine’s wealthiest citizens.
From his Wikipedia entry: 
Anders ├ůslund, a Swedish economist and Ukraine analyst, has described the consolidation of Ukrainian economic power in the hands of a few elite industrial tycoons, the richest and most influential of whom has become President Yanukovych's own son Oleksandr Yanukovych. While the exact distribution of wealth and precise weight of influence are difficult to gauge, two things are evident: No one has been enriched more than the younger Yanukovych, and most of the country's richest men are afraid to cross the Yanukovich family, even in cases where their own economic interests favor an economically pro-EU Ukraine and even when forced to sell their companies to the Yanukovych family at heavy discounts. One notable exception to the Yanukovych family's grip on the country's oligarchs is Petro Poroshenko, who is described as "uncommonly courageous" and whose confectionery empire is less susceptible to ruin by the tremendous power the Yanukovych family wields, strongest in the heavy industry sectors located in Yanukovych's geographic power base, the traditionally pro-Russian eastern part of Ukraine.
Here is how one local journalist critical of the government described the issue of Yanukovich and oligarchy to Judah:  
Yanukovichis … is not interested in the EU or the customs union (with Russia) or European values, he just wants cheaper credits and foreign investment and the opening of markets for oligarchs.  But for Ukrainians, Europe is not about Yanukovich but about its 46 million people.  

What are the Choices?

There are three main opposition leaders who are all fiercely in favor of integration with western Europe.  The country's three former post Soviet presidents all have come out in favor of the protesters in early December, as has the Kiev patriarchate of the Russian Orthodox Church.  Here are the choices:

  • Oleh Tiahnybok, head of Svoboda (Freedom Party) which in the past has had links with neo-Nazi parties in other parts of Europe.  In a 2004 speech he railed against the Moscow-Jewish mafia that ruled Ukraine.  Svoboda supporters, with a reputation as the hard men of Ukrainian nationalism, led efforts in early December to occupy Kiev's city hall. 
  • Arseney Yatsenyuk, is head of the Fatherland Party.  He has been opposed to the EU's demands for a judciary independent of political influences.
  • Vitali Klitschko, an ex heavy weight boxing champion.  According to Judah he is the most interesting, having surrounded himself with smart advisers and may stand a chance in the 2015 presidential elections.   

Barring terrorist disruptions, the winter Olympics will take place this February 7-23, just to the East in the Black Sea port of Sochi.

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