Akhmetov’s Losing Bet

18 May 2015, 17:42

One of Ukraine’s most influential oligarchs, Rinat Akhmetov is beginning to lose his position today. Placing his bets on Viktor Yanukovych, who became drunk with power and made a number of fatal mistakes, has turned out, ultimately, to have been a mistake. His next bet, on the ‘separatists,’ which he made immediately after Yanukovych fled Ukraine, has only brought him greater losses. Still, this does not mean that the powerful Donetsk billionaire is broken or defeated. Akhmetov is not the kind to give up and he is more than ready to defend his interests. As in 2004, the Donetsk clan is counting on a comeback.

An explosive rise

Rinat Akhmetov’s thorny life differs considerably from the success stories of other Ukrainian oligarchs. While Andriy Kliuyev was doing his Masters, Hryhoriy Surkis worked as a foreman for a building trust, and Viktor Pinchuk defended his dissertation on manufacturing steel pipes, Akhmetov was studying at a completely different “university.” People who knew him when he was growing up in the village of Oktiabrske say that he earned his living playing cards and hung out with criminals. His tight relationship with Donetsk mafia boss Akhat “Alik the Greek” Bragin makes it very clear what Akhmetov did prior to becoming a bigwig businessman and politician.

Rinat Akhmetov’s star began to rise after Bragin was assassinated during an underworld war. Rumors that Akhmetov himself was behind the explosion that killed Bragin and his six bodyguards at the Shakhtar Stadium in Donetsk in October 1995 persist to this day and the incident certainly cleared the path to Akhmetov’s rise in the criminal world. Needless to say, no evidence has been found linking him—just as none has been found to link Akhmetov to any number of other high-profile murders in Donetsk. One piece of evidence is quite indisputable, however: all the assets belonging to murdered businessmen and criminal bosses ended up becoming part of Akhmetov’s business empire upon their deaths. One way or another, all those deaths around Akhmetov certainly proved profitable for him.

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In fact, most contract killings in Donetsk in the 1990s were never exposed and, at this point, are highly unlikely to be so, given how much time has gone by. After the gangland-style slaying of Donetsk’s most influential MP, Yevhen Shcherban, in 1996, an obscure local by the name of Viktor Yanukovych was appointed governor of the oblast, something that would never have happened while Shcherban was alive. This is the point at which the swift rise of the Donetsk clan to the very top of political power in Ukraine began.

Steering the ship

For a long time, Viktor Yanukovych was seen as Akhmetov’s man and was completely dependent on him. This only changed in 2010, when Yanukovych finally won the presidency. The fourth president of Ukraine was, in fact, Akhmetov’s longest and costliest investment project. But catastrophe struck just when everyone was least expecting it. Yanukovych was merely acting the way one might expect of a small-town bumpkin who had come to enormous power: intoxicated with an excess of permissiveness, he began to make one mistake after another. When the crash came to the president, it also hit his partners. Akhmetov continued to support Yanukovych to the very end, but that could not save a sinking ship.

With Yanukovych gone and the change of government in Kyiv, Akhmetov could see which way the wind was blowing—and chose to dive headlong into a new game. There’s little doubt that he was one of the architects of "DNR", the "Donetsk People’s Republic", and was close to the source of the separatist putsch in Donbas in Spring 2014. Although any number of facts point to this, it’s quite unlikely that he will ever face criminal charges for sponsoring separatism. Clearly, the Donetsk oligarch did not personally marshal the militants from the barricades. His involvement was much more subtle, more a matter of pulling the strings backstage.

Those who have only a vague idea of how things work in the Donbas might think that the situation in Spring 2014 evolved quite naturally. But Donetsk residents themselves don’t need anyone to tell them that things could never have evolved the way they did spontaneously. Local clans have tightly controlled the region since the 1990s and there have never been any “surprises” without their approval. So that when it became obvious that Akhmetov was doing nothing to stop the “chaos” but was pretending that the situation was out of his control, there could be no doubt at all that, in fact, he failed to act, not because he had no power to stop the unrest, but because he had no desire to.

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Rinat Akhmetov has always had complete control over the situation in Donetsk Oblast and it’s a fairly open secret that all officials of any real significance in the oblast were generally appointed with his approval. This was even the case in the last few years, when Yanukovych was president and had taken virtually unlimited power into his own hands.

Andriy Shyshatskiy was also an Akhmetov man: he was appointed Governor of Donetsk in 2011 and remained in his post until early 2014. Another Akhmetov henchman was Donetsk Mayor Oleksandr Lukianchenko, who held his post for many years, always granted easy victory at every election. Many deputies on both the city and oblast councils represented Akhmetov’s interests, as did the mayors of several other Donetsk Oblast cities, including the second largest, the port city of Mariupol. Akhmetov also controlled the police.

The fine art of placing a bet

As one of the pillars of the Yanukovych regime, Rinat Akhmetov had unlimited power and could easily have suppressed the unrest that began in the Donbas in Spring 2014. Did the oligarch really have the power to stop the conflict? Absolutely yes. For one thing, Akhmetov could have done in Donetsk exactly the same as Ihor Kolomoyskiy did in Dnipropetrovsk: set up a defensive territorial battalion, and order local officials and the police to work in emergency mode and not allow illegal actions.

Every single Ukrainian oligarch has always had something akin to a small private army that, if necessary, could be called on to protect their interests. The fighters in these “armies” typically worked for different security agencies or trained in sports clubs that were funded by one moneybag or another. When the time came, these fighters came to the side of their boss. During the Maidan in Winter 2013-4, they played the role of titushky. Prior to that, they had formed the ranks in raider attacks.

All Akhmetov had to do was to issue a few orders, talk to the leaders of any separatist groups, engage the forces under his control—and the March 2014 putsch in the Donbas would have been over just as soon as it started. The people of Donetsk remember very well with what speed local officials crushed any rallies by those in opposition to Party of the Regions over 2011-2014, when Yanukovych and Akhmetov wanted it.

In November 2011, the police violently dispersed a protest rally by Chornobyl liquidators in downtown Donetsk, even killing one of the demonstrators. To prevent locals from joining an opposition rally in 2012, Horlivka officials had the Donetsk-Horlivka highway blocked off, stopping all traffic on this major artery for over an hour. In early 2014, local officials did everything they could to stop the Donetsk Euromaidan from spreading

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Yet the organizers of anti-Ukrainian rallies and riots in Donetsk in the spring of 2014 were given the green light at every step. No one stopped them from bussing people in, blocking roads with checkpoints, or setting up barricades on the highways. In early spring 2014, when the anti-Ukrainian putsch had relatively few supporters, this could have been done fairly easily. Later on, of course, the situation went out of control.

So what did Rinat Akhmetov need all this for? Perhaps, like most Ukrainians, the billionaire assumed at first that the unrest would never turn into anything more serious and figured he would make use of the situation to keep the pressure on Kyiv. Once Yanukovych fled, however, the Donetsk clan scrambled to at least maintain control in its home region. According to various reports, Akhmetov, Boris Kolesnikov, Yukhym Zviahilskiy and other representatives of Donetsk clans initially paid off the militants, persuading themselves in this way that they would continue to manage the anti-Ukrainian insurgency. But by Summer 2014, when control over the militant groups had clearly been established by diversionary groups from Russia, the Donetsk oligarchs understood that they had lost any possible leverage against the anti-Ukrainian movement. And it was too late to do anything about it.

Lockstep with the proxies

Today, relations between Rinat Akhmetov and the "DNR" are based on mutually beneficial cooperation. The oligarch doesn’t control the terrorists, but coexists with them symbiotically. Not long ago, the one-time leader of "DNR", Aleksandr Borodai, explained this situation in great detail at a meeting with Russian nationalists in Moscow.

“Let’s imagine that we nationalized Mr. Akhmetov,” said Borodai. “Companies belonging to him that are located on "DNR" territory have continued to function with miraculous normalcy this entire time. Given that all this time Mr. Akhmetov was the root and branch of Ukrainian politics, that is, the person who has informally but effectively ‘controlled Ukraine,’ the current situation is very convenient. Let me explain why.

“He has too many enemies among the current administration in Kyiv, the Ukrainian establishment…” Borodai claimed. “And chief among these is a certain Kolomoyskiy. So, for Akhmetov, it’s convenient that his enterprises are located on "DNR" territory and continue to manufacture products. It’s also convenient for him that these products are exported and they need to be shipped. Where? To Italy. How can they be shipped there? Through ports. Which ports? The only port he has access to is Mariupol.”

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Borodai quite explicitly stated that Mariupol was not taken by the militants only because a deal was basically cut between them and Akhmetov. The Russian proxies left the oligarch a Ukrainian port so that he could ship his companies’ products from the occupied territories in return for supplying them with food.

“So, guess why we didn’t take Mariupol in September, although the opportunities were there,” Borodai went on. “Because how is he supposed to get his production from the territory occupied by "DNR" terrorists—as the western world sees it—to Italy? There’s no way. He can’t get it out of there. He has to be exporting it from Ukrainian territory and the only port he has access to is Mariupol. Odesa is not available. Kolomoyskiy controls it and he will never allow Akhmetov in there. So the only way for Akhmetov’s businesses to continue to function successfully is for Mariupol to remain under the blue and yellow flag of Ukraine.”

In return for this supposed favor from the "DNR" militants, Borodai explained, Akhmetov promised to supply food to the Russian proxies. That’s what his humanitarian convoys to the self-proclaimed republic are all about.

Borodai’s revelations did not create much of a stir. After all, the arrangement between Akhmetov and the terrorists was a bit too obvious not to be noticed. Still, this bold admission once again raised the question of the Donetsk don’s role in assisting the militants.

The billionaire’s assistance to "DNR" recalls what Ostap Bender once called “a relatively honest way of taking money from people.” Officially, Akhmetov is shipping food to local civilians in occupied Donetsk Oblast, not to the militants. But this aid allows the terrorists to save on salaries and pensions, and to use the tithes they collect from Donetsk business to buy arms and ammunition. Every package of buckwheat Akhmetov brings to "DNR" is transformed into a bullet that, sooner or later, is aimed at Ukrainian troops.

Playing both sides against the middle…

At the same time, Akhmetov is not keen to lose his positions in Ukraine, either. And so he continues to support his much-reduced faction in the Verkhovna Rada—and makes plans for their comeback. The current situation does little to encourage optimism: too many sharks are circling the oligarch these days, all of them with an eye to his assets and chief among them Ihor Kolomoyskiy, the Dnipropetrovsk oligarch. Still, poor economic conditions do suggest that a comeback might be possible. All that is necessary is to survive until the next elections.

Clearly, Rinat Akhmetov is preparing very carefully for this eventuality. The Ukraina television channel has turned into a 24/7 broadcaster of infomercials about the achievements of the Donetsk oligarch and his satellites. Live broadcasts regularly feature deputies from the Opposition Bloc, the rump Party of the Regions group, giving prepared answers to prepared questions. Every news program includes commercials for the Rinat Akhmetov Foundation, which helps the "DNR" terrorists not to starve the residents of occupied Donbas to death. This flow of information is intended to get the masses to once again trust the Donetsk clan, to support it in elections, and to save Akhmetov’s business empire.

The next elections will be the decisive game for the once-powerful Donetsk oligarch. And how well he places his bet will determine whether his empire dies or he succeeds in multiplying his power bases once more and regaining control over the country. This time, Akhmetov’s main ally is the Russian Federation, which is also keen to see the Donetsk mafia, its familiar old partner, return to power.

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Russia needs a fifth column in Ukraine to keep the country in its thrall. And Ukraine’s fifth column obviously needs Russia, without whose support success would be hard to imagine. So even if Akhmetov himself is no fan of Putin or the Kremlin, he has no other powerful partners. For the time being, Akhmetov’s interests and those of Russia coincide.

In short, it’s early to celebrate victory over the Donetsk clan. Its comeback is still quite possible and will depend primarily on how powerful Akhmetov remains. For Ukraine, the only way to eliminate the threat posed by internal enemies is to finally punish the Donetsk clan for its many crimes. There’s no question that punishment has been merited. All that is needed is political will—and that’s where the real problem lies. We may not be privy to the deals cut between the Poroshenko Administration and Rinat Akhmetov, but there’s hardly doubt at all that deals have been cut.

At one time, Viktor Yushchenko also cut a deal with the Donetsk clan, as a result of which he became a political corpse and a laughing stock. We can only hope that the current President of Ukraine has not forgotten this mistake.

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