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9 October, 2015  ▪  Denys Kazanskyi

Clan Wars

Why the Dnipropetrovsk clan lost to the Donetsk clan and the chances of a comeback

For a long time, Dnipropetrovsk claimed to be the political capital of Ukraine, just like Donetsk. At the time of independence, when the Donetsk clan was only beginning to emerge and take shape, the Dnipro clan took power into their hands and completely controlled the country for many years. As many renowned political figures as produced the Dnipro Valley, no other region of Ukraine came close. Oddly enough, neither Ukraine’s first nor its second capital, Kharkiv, ever produced a clan that might compete with the provincial upstarts. The only one to challenge the Dnipro clan was the Donetsk, although their success was short-lived and their fall disastrous.

When a one-time Red Director of the largest soviet missile plant called Leonid Kuchma won the presidential race in 1994, the Dnipropetrovsk star shone brightly in the political firmament. Still, the Dnipropetrovsk clan was not monolithic. By the end of the 1990s, it had split into several large rival groups. In Donetsk, they saw this kind of splintering as a fatal flaw in the Dnipropetrovsk clans. And in the end, it did cost them their place in power, but ultimately, it also made it possible for them to remain in big politics. Yulia Tymoshenko, Serhiy Tihipko, Ihor Kolomoyskiy, Viktor Pinchuk, and Oleksandr Turchynov may have lost some of their influence, but they are still major players both in politics and in business. The close-knit nature of the Donetsk clan helped them gain absolute power in the country for a short while, but when it fell, it was like a single long domino chain: a catastrophe that took everyone in the clan down, along with the region that it came from.

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There is nothing strange about the fact that it was the Dnipro clan that first established its hegemony in Ukraine. In fact, the Dnipro Valley, and not depressed, decrepit Donbas, was always the engine that drove the Ukrainian economy. In soviet times, Dnipropetrovsk grew to become the scientific and industrial heart of the union, where not only steel and heavy machinery were manufactured, but technology was king. This heavily influenced the quality of the local elite. Dnipro oligarchs and politicians were generally the offspring of wealthy families—by soviet standards—and had earned prestigious degrees in the USSR. The Donetsk clan, by contrast, was run by men from the impoverished and criminal underclass.

The peak of the stand-off between the Dnipropetrovsk and Donetsk clans was in 1996, manifesting itself in a brief but bloody gang-style war. The most high-profile of its victims was Donetsk politician Yevhen Shcherban, whose murder led to the short-lived success of the Dnipropetrovsk clan. The Dnipropetrovsk clan was in full bloom and had no trouble eliminating rivals. It seemed as though no one would be able to shake Dnipropetrovsk from its leaderboard position. Yet just one year later, Dnipro was falling apart from within and its members began to devour one another with considerable relish.

Enter the gas princess

Having become president, Leonid Kuchma strengthened and entrenched his power. Together with him, Pavlo Lazarenko moved to Kyiv from their home town and also began his rise in power. In 1995, he was appointed deputy premier and in 1996 became premier. Lazarenko’s ambitions were legend and unstoppable, turning power to gold at every opportunity. Moreover, most of his attention was directed at Donbas, where a local power clan was in the process of establishing itself.

In 1996, Lazarenko worked closely with Yulia Tymoshenko who was then in charge of Yedyni Energetychni Systemy Ukrainy (YESU), a natural gas monopoly as its name suggests. Taking advantage of its leverage within the Government, YESU soon became the biggest gas trader in Ukraine, with annual turnover of several billions of dollars. At that time, there were no dollar millionaires in Ukraine yet and this scale was considered enormous.

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Tymoshenko’s company was supplying natural gas to state enterprises. However, Donetsk Oblast had its own gas trader, the Industrial Union of Donbas (IUD), which had been set up by Yevhen Shcherban in 1995. The bosses of the largest companies in Donetsk Oblast persuaded the oblast state administration to sign a gas supply contract with IUD, pointing out that they should be buying fuel from their own, and not from Dnipro. The oblast became the only region in Ukraine that did not buy its natural gas from YES. Given that Donetsk consumed more energy than any other oblast in the country, this could only annoy Lazarenko.

Dnipro takes on Donbas

This divvying up of the gas market is generally seen as the reason for the gangland-style war that took place in Donetsk in 1996. On May 16, one of the founders of IUD and a powerful Donetsk businessman, Oleksandr Momot, was killed near the entrance to his building. In November 1996, an even more dramatic crime took place when Yevhen Shcherban and his wife were mowed down by killers dressed as airport workers in Donetsk Airport. At that time, he was recognized as the leader of the Donetsk clan and was considered the most influential politician in the region. His death effectively beheaded the Donetsk clan and put a halt to its ascendancy for several years. Now YESU became the only supplier of gas to enterprises in Donetsk Oblast as well.

Another regional boss who was against the Dnipropetrovsk expansion, Governor Volodymyr Shcherban—no relation to Yevhen—, was also hit. In the summer of 1996, a series of strikes hit the Donbas region, with miners blocking roads and demanded the removal of the governor, the premier and President Kuchma. In those days, massive demonstrations by coal industry workers were an annual event, but this particular strike provided a handy excuse to dismiss Volodymyr Shcherban and his people, which Lazarenko promptly did. And so, in less than a year, the hegemony of the two Shcherbans in Donetsk came to an end.

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Some even connect the assassination of criminal boss Akhat Bragin, known as Alik Grek, a year earlier, although the interpretation of this gangland killing are many and it’s possible that the bomb that killed Bragin and his two bodyguards at the Shakhtar Stadium was not related to the Dnipro-Donetsk wars at all. In any case, 1996 was a black year in the history of the Donetsk clan, which was completely shattered and crushed. Yet a hot spot never stays empty long and the bloodied arena soon had a new president: Rinat Akhmetov, whose “gang” included Viktor Yanukovych and Borys Kolesnikov. It’s hard to say how the Donetsk clan might have fared had Shcherban not been killed, but it’s certain that his death cleared the path upward for Yanukovych, then the little-known director of DonetskAvtoTrans, a small transportation company, who became Ukraine’s fourth president in 2010 and was to play a truly sinister role in the fate of his country.

Humpty Dumpty had a great fall

Strangely enough, the Dnipro clan did not enjoy the laurels of victory for long. Considered by many to have been behind the thrashing of the Donetsk clan, Premier Lazarenko seemed to lose touch with reality as he basked in glory of his own greatness and found himself on the wrong side of President Kuchma. By 1997, he had lost the premiership and soon afterwards fled Ukraine. As soon has he fell, YESU fell with him.

Interestingly, Lazarenko tried to establish his own party, Hromada or Community, and had circumstances been more favorable, might have become what Party of the Regions was later to be for many years. With immense administrative leverage[1] in Dnipropetrovsk Oblast, Hromada managed to break into the Verkhovna Rada in the 1998 elections. The only region where Hromada actually led, however, was Dnipropetrovsk Oblast. All the neighboring oblasts voted for the Communist Party.

The Donetsk clan began to gain force only at the end of the 1990s, when the Dnipro clan had split into several rival groupings. By 2000, an alliance emerged between the Kuchma family and Donetsk organized criminal groups who legitimated themselves through politics. During the 2002 elections, the Za Yedynu Ukrainu bloc made it into the Verkhovna Rada, with both Kuchma and Donetsk people in it. Like Hromada in 1998, this party made headway only in one region, Donetsk Oblast—and that thanks to administrative leverage. It was at this time that Dnipropetrovsk’s Yulia Tymoshenko joined the “enemy camp” that turned into the Orange team, becoming an opposition politician. Lucky for her, her bet paid off, and after Kuchma left politics, the role of the main representative of the Dnipropetrovsk clan fell to her.

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The confrontation between Tymoshenko and Yanukovych began in the mid 2000s, but it was far more than just a confrontation between the Dnipro and Donetsk clans. By 2010, both were already politicians at the national level who represented not just regional business interests but financial industrial groups that covered the entire country. What’s more, the Dnipro Valley was typically associated with southeastern Ukraine and typically supported the Donetsk-based Yanukovych in elections, while Dnipropetrovsk’s own Tymoshenko generally won Kyiv and the western oblasts. During the 2010 presidential race, third place went to another Dnipro man, Serhiy Tihipko. Still, he failed to establish himself as his own man and was soon absorbed into the Donetsk team and that was that for his political career.

Fugue in D minor

It’s hard to say how things would have gone for Ukraine had the Dnipropetrovsk clan been able to establish a monolithic clan like Donetsk did. Quite possibly they would have remained in power to this day and the country would have gone down an entirely different path. But the Dnipro Valley boys who made money in the early 1990s were too varied and too ambitious to be able to work in a single team.

At one point, after Yanukovych won and Tymoshenko was arrested, it looked like the Dnipropetrovsk clan was well and truly finished, and would soon stop having any serious role in Ukrainian politics. But history has shown that Dnipropetrovsk is not that easy to break.

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The growing rating of Ukraine’s own “energizer bunny” Tymoshenko and the crazy intrigues of Ihor Kolomoyskiy promise to keep Ukrainians glued to their TV sets to watch the unfolding Dnipro saga. Who knows, maybe Dnipropetrovsk will once again become the political center of Ukraine now that their eternal foes, the Donetsk boys, appear to be broken and no longer stand in their way.

 

[1] Administrative leverage is a corrupt practice referring to both access to public resources, including money and goods, and the power to coerce public sector employees into voting a particular way.

 


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