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15 September, 2012

Who Really Controls the Donbas?

In their struggle for power, Ukraine’s oligarchs formed a fraternity of common political interests, joining forces rather than promoting personal ambitions. Once the ultimate political goal was reached, their egoistic motivations became the priority.

What was previously a team of ruling oligarchs is now splitting into rival groups. The once solid political kingdom is losing some sections of its electorate that stand behind business tycoons.

The discrepancies between different oligarchs within the Party of Regions had been plain to see even before Yanukovych was elected president. They grew stronger after the 2010 presidential election – and for good reason. The fact that Yanukovych decided it was high time to catch up with his oligarch sponsors and began actively increasing the influence of his own group, known as “the Family,” shortly after being elected president fuelled the irritation. This was something the oligarchs should have expected: the “leader” could not possibly tolerate having no real power –money power– while being in a position this high.

Over the past two years, the president’s older son Oleksandr Yanukovych has been intensely implementing his business talents. As the Family’s business appetites grasped for new territory and industries, they inevitably stepped on the toes of SCM, Rinat Akhmetov’s financial and industrial group. The open battle started last year when, surprisingly, the All-Ukrainian Bank of Development owned by Yanukovych Jr. won its first public tender to open a credit line for the Mariupol Production Department of the Water and Sewerage Service. Its only competitor was Akhmetov’s PUMB bank.

Recent staff changes at SCM may signal Rinat Akhmetov’s waning confidence in the people running his business empire as his group’s rivalry with Yanukovych’s Family mounts. This might explain the recent replacement of Oleh Popov, Supervisory Board Chair, with Amir Aisautov at MetInvest, a group of mines and steelworks of which SCM is a major stakeholder. In April, Akhmetov’s son Damir replaced Ihor Syryi on the Supervisory Board.

For years now, Rinat Akhmetov has been trying to walk away from Yanukovych and his Party of Regions. Whenever the current regime makes a fool of itself in politics, it casts a shadow on Akmetov in the eyes of Ukrainians and the international community. Therefore, it makes sense for Akhmetov to distance himself from the Donetsk-born president.

The cooling relations with the richest man in Ukraine may steal a large portion of the electorate from Yanukovych and the Party of Regions. Their regular victories in the Donbas have mostly been due to the administrative leverage of oligarchs who support them rather than the local patriotism of the voters. SCM’s managers have already banned politics at their child companies; no campaigns or meetings of candidates with the staff during working hours are allowed. Managers may run for public office, but they cannot use company resources for their campaign. Any attempt by employees to “join” the ruling party will get them fired immediately.

This is likely to hit the Party of Regions hard. The damage may be worse than it seems at first sight. In Donetsk Oblast, voters trust Akhmetov more than Yanukovych, while some respect both leaders equally. Yet voters who prefer Yanukovych over Akhmetov are rare. Moreover, Akhmetov, not Yanukovych, was dubbed the most powerful man in Donetsk Oblast in 2009.

Why do people trust Akhmetov more than they trust Yanukovych? Firstly, the richer someone is, the cooler. Secondly, winning public affection in Donetsk Oblast is much easier for a successful businessman than it is for a statesman. The locals praise talented businessmen while distrusting bureaucrats of any rank. They believe that they would respect Viktor Yanukovych more if he were the richest man in Ukraine, and Rinat Akhmetov were the president. And more people would support Akhmetov if he walked away from Yanukovych entirely because he has failed to meet their expectations, while Akhmetov seems to have “nothing to do” with politics. Also, some believe that Akhmetov contributes more to Donetsk more than Yanukovych. Regional football patriotism and cheers for the local FC Shakhtar (Miners) fuel this sentiment. However, most Donetsk voters avoid discussing their attitudes toward Yanukovych and oligarch No. 1 in public. This is Donetsk’s typical fear of the government, a fear that will take many generations to overcome. 

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