The future of big business directly depends on the development of democracy
Under President Viktor Yanukovych, the interests of big business remain Ukraine’s primary concern. This may explain why Cyprus was neglected from the recent Cabinet of Ministers list of offshore taxation clampdowns; Cyprus is a primary route for capital outflow from Ukraine. The president’s Party of Regions and the current government continue to repay their debt to the oligarchs who pushed them through the 2010 elections. To some, the gas seized by the previous prime minister is being returned. Others receive export monopolies or an opportunity to privatize grossly undervalued strategic state assets. The most attractive way to settle scores now is to involve the services of the “blind” justice. Not far behind is Russian capital which receives preferential treatment and access to the Ukrainian asset market.
With strengthening of his authority and the broadening of his powers, it is projected that the president will want to substantially decrease his obligations to the oligarchy. What is the future of Ukrainian big business? The conflict between Ukrainian and Russian oligarchs is already visible through contradictory privatisation decisions, an example being "Luganskteplovoz" or “Ukrtelecom”. Initiatives to insulate Ukraine from the penetration of Russian capital will only increase in number and potency, adding further tension to the relationship between Yanukovych and the Putin – Medvedev tandem. The Ukrainian authorities’ struggle against the Kremlins appetite may prove to be inhibited as the Oligarchy attempts to increase their power over the President, ensuring protection of their influence.
Ukrainian foreign policy is likely to remain Europe-oriented as the route through Cyprus ultimately settles in European financial establishments. Ukrainian oligarchs should consider the protection of such interests worth the cost of lessening pressure on democratic freedoms in Ukraine.
People First Comment: The problem for the oligarchy of Ukraine today is that they are all becoming fish that are too big for this rather murky pond. While they had little choice but to support Victor Yanukovich in his election bid, as many considered Tymoshenko to be the greater of the two evils, they now recognise that the publicity surrounding this government and administration is seriously damaging their prospects to expand and legitimise their earnings. Reputation today is as important as financial strength and power. People simply do not invest in companies they do not trust and it is becoming extremely difficult to be associated with companies originating from Ukraine simply because of the negative smell attached to the national reputation. Donetsk businessmen have already lost patience taking the matter into their own hands by successfully using services of leading international PR firms in Brussels to lobby on behalf of their energy interests. The gas conglomerate “RosUkrEnergo” has sought to clean up its name via the English courts rather than using the route of good PR. Others have used philanthropy to great effect in building their personal reputations and Yulia Tymoshenko has used international PR for years, unfortunately she does not have the track record to back up her PR claims. It is very likely that more oligarchs will start to go it alone and will invest millions in trying to convince the world that they are not as greedy as they seem. It would be much cheaper for them to convince the government to change course so that the government spin doctors had something real to promote.
www.peoplefirst.org.ua and the e-mail address is: [email protected]
Viktor Tkachuk is chief executive officer of the People First Foundation, which seeks to strengthen Ukrainian democracy. The organization’s website is: www.peoplefirst.org.ua and the e-mail address is: [email protected]
