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22 January, 2013  ▪  Oleksandr Kramar

The Battle for Inheritance

The trend of the past two years whereby the Family has been increasing its weight in the conglomerate in power turned into a dominating objective in 2012. Reshuffles in the conglomerate in power fuels conflicts within oligarchic groups.

In early 2012, the group of “Family managers” was expanded with Ihor Kalinin as SBU Chief, Dmytro Salamatin as Defence Minister and Yuriy Kolobov as Finance Minister. At this stage, the Family mostly reinforced itself with its “old Donetsk” administrators, including those linked to Premier Mykola Azarov. The losses of the nominal Firtash-Liovochkin group have become less visible: removed from the office of SBU Chief at the beginning of the year, Valeriy Khoroshkovsky became a decorative Vice Premier with no real powers, and was ultimately kicked out of government. In summer, tension with the Family appeared in the form of tax raids against Firtash’s entities by the Tax Administration headed by Oleksandr Klymenko who is linked to Yanukovych’s older son. The parliamentary election showed that Firtash-Liovochkin’s people did not get on the Party of Regions’ party list, which would have given them the opportunity to make it into parliament. Virtually all of them ran in first-past-the-post districts or, as rumour has it, on opposition party lists. In winter, Andriy Kliuyev was removed from the Vice Premier position. After the parliamentary election, the conflict became even more visible as the internal struggle within the party in power escalated in the expectation of a reshuffle in the government.

Reshuffles in the conglomerate in power proved that Yanukovych’s satellites have been sidelined: Serhiy Tihipko and Volodymyr Lytvyn with their people from the Strong Ukraine and People’s Party ended up with insignificant positions in parliament. The same applies to the Communist Party of Ukraine (CPU), for which the position of first vice-speaker actually became a compensation for the removal from the hierarchy and denial of access to significant financial resources. At the same time, the trend towards the strengthening of the “new Donetsk” contingent and the Family by squeezing out old Donetsk administrators, Firtash’s people and former satellites, will continue within the hierarchy. In addition, a notable index of the consequence of personnel reshuffles was not only the strengthening of the Family’s position and that of the nominal Akhmetov group, but also the fact that little-known people have been appointed to most positions, rather than independent well-known politicians, who, given the choice between the government and parliament, gave preference to the MP’s mandate. Among other things, this could also be evidence of the fear of a repeat of the fate of Yulia Tymoshenko and Yuriy Lutsenko, being without the MPs immunity at an awkward time. If this is the case, there is a clear signal that the major players of the ruling conglomerate do not believe in the longevity of the current regime or their own prospects in it. At the same time, against this background, the abundance of “family members” is evidence that Yanukovych is continuing to move towards the absolute concentration of power in the Family’s hands, using the “either win the horse or lose the saddle” principle. He cannot but fail to be aware of the growing potential of the opposition in parliament, but clearly, he is preparing to evade such risk from the position of power. For example, by means of conducting a scheduled referendum, which would deprive MPs of their immunity, as well as other methods of “persuasion”, in view of the necessity to gain approval for any initiative of the Presidential Administration.


On the one hand, even after the transformation of the PR into a quasi-bloc of groups with varied agendas, it still does not have a parliamentary majority and issues will be decided via situational coalitions under individual voting, first and foremost, with the CPU. On the other – it is because of the necessity to approve decisions with the Communists, that it will be more difficult to reach a consensus with the different groups of influence in the PR itself. Every time, the government will be forced to search for arguments for potential situational allies in parliament. It is one thing to allocate positions and select a Premier, which is a necessary pre-condition for the certain predictability for all players, and something to vote for specific legislative initiatives, authored by an antagonistic group, often directed if not against, then at least not in the interests of other conglomerate members.

Against this background, the Yanukovych regime is gradually being drawn into a conflict with big business and oligarchs of the second echelon, for whom the consequences of a pyramid system of relations, in which rights and security depend on the good will of the ruler and the appetites of his circle, is becoming ever more noticeable. Viktor Baloha, ex-Minister of Emergencies in the Azarov government, who did not become part of the PR group, then pulled his brother, Pavlo, out of it, characterized the situation that he is guided by and distancing himself from the regime as follows: “The taking away of that which has been earned, which, in essence, is the tax policy, strengthened by corruptive extortion, has been supplemented in recent years by the “seizing” of property. And this is already an indicator of the verge of a foul. Business has something to lose, as well as means of protection. It appears that the government is not paying attention to this”. What was notable in this context was the conflict between Kharkiv Mayor Hennadiy Kernes and Oleksandr Yaroslavskiy regarding the Metalist stadium, which is controlled by the latter. Yaroslavskiy stated that “some obscure individual crawls in and starts to stir up the whole country” and actually performed a demarche, demonstratively selling the Metalist football club, into which he had already invested almost EUR 500mn. In addition, information has been circling on the refusal of Valeriy Khoroshkovsky to “amicably” sell his majority share in the Inter TV channel to the Family, which is currently working actively on the establishment of its own media-holding, obviously preparing for the presidential election. The situation with the bankruptcy of a range of airline companies owned by oligarch Ihor Kolomoisky, which some observers connect with the conflict between him and the structures of Mr Yanukovych’s older son, Yanukovych, remains unclear.


Under such conditions, ambitious politicians from the conglomerate in power, such as Valeriy Khoroshkovsky and Serhiy Tihipko, who worked for a long time on their liberal-reform and pro-European image, have already begun to prepare for  their own political projects. The further increase in the number of disgruntled people in the pro-government camp and the rapid increase in the ranks of disenchanted people who voted for Yanukovych in the South East, who have not yet found an alternative among the available opposition forces, could be a significant electoral reserve for them. After all, in the case of the anaemia or self-discreditation of the current opposition leaders and the permanent demand in Ukrainian society for “new” (even though they are actually old) faces in politics, Tihipko, Khoroshkovsky or some other minion of Firtash can also try to compete for part of the Batkivshchyna (Fatherland) and UDAR electoral field, particularly in the South East and Centre of Ukraine.

If the Firtash group continues to suffer losses from the results of the further reformatting of the government hierarchy and the allocation of state property, then MPs connected to it could shortly transfer to the undisguised opposition against the premier, but more likely than not, they could, to a certain extent, demonstrate loyalty towards the president, “who has fallen under the wrong influence”. But even if the whole of the Firtash group doesn’t do this, it’s doubtful whether this will hinder the realization of the Khoroshkovsky project. In the modern Ukraine, there is a very significant potential for media manipulation, since there is a lack of civil society and classic political structuring of society, the low political culture of voters, added to which most Ukrainians are not picky when it comes to sources of information. Inter is the channel to which Arseniy Yatseniuk should be grateful for his high ratings in the past. Khoroshkovsky’s potential is actually also quite high. With his ability to have the full weight of Inter’s media resource behind him, he could very well try to become a sort of Ukrainian Berlusconi, a kind Italian oligarch, who built his political popularity on the basis of the media empire he controls.

Serhiy Tihipko is currently trying to act within the framework of “inheriting the PR”. Having refused the nominal position with no real powers in the government, he explained that he was going into parliament, “after an analysis of the election results”, noting a “demand for ideology”. At the same time, the politician is attempting to propose a certain re-branding for the Party of Regions or part thereof, focusing on the priority of European integration and a “well thought out” approach towards language-identification issues. He has already registered a draft statement “On Support of European Integration Aspirations by Ukrainians and the Conclusion of the Association Agreement between Ukraine and the EU”, stating that “if we had started to move towards the Customs Union, we would have had colossal problems within the country”, also that although he does not support “coercive Ukrainianization”, he does not oppose one, which occurs on the basis of “the encouragement of parents, children, including politicians”. The Ukrainian Week has already written that Tihipko went into the PR, counting on winning it over from within. The expectation of Azarov’s resignation from the position of Premier would have pleased Serhiy Tihipko because it could have been accompanied by his appointment as party head. But if these expectations are not met, it is very possible that he could form his own political project, made up of some PoR’s MPs. After all, the current PoR has long been a pro-presidential conglomerate, for which, as the Ukrainian presidential election draws closer, it is completely natural to become polarized, creating different groups.

The possible emergence of a “new opposition”, made up of disgruntled representatives of the ruling environment, at first glance, poses a threat to the prospects of Viktor Yanukovych (or his successor, who will undoubtedly be from the Family’s circle) in the presidential election. This could help the government to avoid a repeat of the 2004 black and white scenario in 2015, and the 1999 model would come into play. In this case, in contrast to 2004, previously determined favourites were not manifested, and voter sympathies were much divided in the first round. In 2015, representatives of the ruling conglomerate, who are currently playing at opposition (Symonenko, Tihipko, Khoroshkovsky and Poroshenko), as well as the current opposition (Yatseniuk, Klitschko, Tiahnybok and Hrytsenko), could take part in the first round. Such a scenario would give the government the opportunity to apply the technology of one majority constituency, blurring the “government – opposition” line as much as possible, then applying the potential of the administrative resource to its full extent. Should this happen, Yanukovych will win. But if one of the most successful “new opposition” flirts with being an opponent and the Family sees in him a potential threat, Ukraine could end up with its own equivalent of Khodorkovsky.

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