When Volodymyr Zelensky ran for president last year, he dreamed about going down in history, as he hoped for an economic miracle and a restoration of justice. But the global financial crisis, the coronavirus pandemic, the fatigue of reforms in society and misunderstanding inside his team are jeopardizing his aspirations. The chance is not yet lost, but the situation requires decisive action to curb the unusual coalition of populists, oligarchs and pro-Russian forces that is pulling Ukraine into the abyss of default.
When ex-Prime Minister Oleksiy Honcharuk resigned in early March, he did not look happy. His career has been brought to the sacrificial altar of public discontent with the slow growth of the economy. But now Honcharuk may rejoice: Fate has kept him from boarding the Titanic. In March, Ukraine was plunged into several crises for which it was not prepared. And the fate of the new Prime Minister, Denys Shmygal, is determined in advance — the country will not struggle to grow the economy, but rather to reduce the depth of decline.
‘Minions of Soros’
In addition to the coronavirus, part of Ukrainian society has been infected with political lies produced by TV channels. The best example is the legend about the so-called “sorosyata,” minions of American investor and philanthropist George Soros.
This fake narrative implies that Soros’ agents of influence came to power in Ukraine in 2019 just to give the American philanthropist the entire Ukrainian economy.
Pro-Western, liberal politicians and activists are called “sorosyata.” I was called an agent of Soros, too. Ex-Prime Minister Honcharuk and his young ministers have also been targeted. Their resignation was a result of this narrative becoming popular.
This myth was adopted and amplified by the allegedly polar political camps of ex-Prime Minister Yulia Tymoshenko and tycoon Viktor Medvedchuk, with huge support from billionaire Ihor Kolomoisky’s clan.
The “sorosyata” of Honcharuk’s Cabinet were blamed for all the economic troubles and thrown away as a ballast. Now when there are no “minions of Soros” in the government, another scapegoat should be found.
The “sorosyata” myth came to us from Russia. It reflects the Russian mythology of “agents of foreign influence.” Previously, the Russian propaganda machine used another antagonist — one might remember that 20 years ago it was the late Zbigniew Brzezinski whom propaganda painted as the evil foreign puppeteer.
Ten years ago, U. S. President Barack Obama used to be portrayed as that, as well as his administration members Joe Biden, Michael McFaul and Victoria Nuland. And now the 89-year-old Soros has been chosen to play the role of global villain.
The authors of the sorosyata myth had a detailed plan. First, they used this cliché with politicians who advocate for a liberal model and cooperation with international financial institutions. Then they got rid of them from power while destroying relations with the International Monetary Fund. The third stage was for Ukraine to reject the IMF money. After all, if there is no IMF program, then it is not necessary to fulfill the conditions for receiving money, to introduce reforms. The main beneficiary of this was Kolomoisky, as a key condition for cooperation with the IMF is adopting a special law that will make it impossible for the oligarch to regain control of state-owned PrivatBank, which he owned before its nationalization in 2016.
But unexpectedly, the coronavirus prevented this scenario. The pandemic has caused a quarantine in Ukraine, which was extended until at least April 24. Former Economy Minister Tymofiy Mylovanov estimates that half a million people may lose their jobs. It means that the need for IMF money has grown dramatically.
Zelensky has held talks with IMF Managing Director Kristalina Georgieva, and Ukraine is no longer simply asking to resume negotiations, but to increase the expected loan from $5.5 to $8.5–9 billion. The IMF program may be a signal to other lenders and debt holders that Ukraine may be worth dealing with.
Kolomoisky
But even in the midst of the coronavirus crisis, some individuals in Ukraine continue calling for a national default. The two political camps, those of oligarch Kolomoisky and Interior Minister Arsen Avakov have united, calling for Ukraine to halt its obligations to Western partners.
“Suspension of payments on debts of the state and commercial structures abroad. A ban on the withdrawal of capital from the country, including dividends.” Those are Kolomoisky’s ideas voiced by his ally, lawmaker Oleksandr Dubinsky.
“Immediately, and in the shortest possible time, (we need to) restructure Ukraine’s foreign debt, significantly reducing the burden of interest and principal payments in the coming years,” Avakov wrote later.
Basically, what he offers is a default, just phrased differently.
Billionaire oligarch Ihor Kolomoisky attends the Yalta European Strategy conference in Kyiv on Sept. 13, 2019. (Sergei Illin/YES)
It is symbolic that for a long time this Kolomoisky-Avakov coalition has dominated the information space, controlling several popular television, YouTube and Telegram channels, including anonymous ones.
But now, finally, a coalition has been formed within the president’s Servant of People party which is called Democratic Platform. There are about 60 lawmakers who came together to oppose branding Russia’s war against Ukraine as the country’s internal conflict. They now oppose the Kolomoisky scenario and demand that Rada adopt a bill that will ban the return of nationalized banks to their former owners and will effectively shut down billionaire oligarch Kolomoisky’s attempts to reclaim PrivatBank, which was nationalized after auditors discovered at $5.5-billion gap in its balance sheets.
Kolomoisky could benefit from a default because this scenario will destroy cooperation with the IMF and remove from the agenda the bill on prohibiting the reprivatization of nationalized banks. In addition to this law, in order to fully cooperate with the IMF, Ukraine needs to adopt a land market law.
At the same time, the IMF requires not just commitments, but concrete steps.
They stopped trusting Ukraine’s word 12 years ago, when Tymoshenko signed off on both the introduction of the land market and an increase in gas prices, but, after receiving IMF funding, failed to fulfill these promises.
In addition to this, the IMF requires Ukraine to adhere to two rules:
The first is not to adopt a law that would simplify the procedure for changing the head of the National Anti-Corruption Bureau, or NABU. Kolomoisky’s lobby, headed by lawmaker Dubinsky, is also active here. The reason is known: A few months ago, the NABU started investigating the case of PrivatBank, which had been fleeced by Kolomoisky. In addition, there is a suspicion that Ukrnafta (an oil and natural gas extracting company) was being robbed when it was headed by Kolomoisky’s people. Clearly, he does not want to be held responsible for these actions. So it is necessary for him to destabilize the NABU by removing the leadership.
The second is not to make any changes to the central bank’s leadership, which should be independent of the government. Yakiv Smoly’s (the chief of the National Bank) dismissal would also automatically make it impossible to conclude a contract with the IMF, as the head of the National Bank must secure it with his signature. And under the current conditions, the parliament may not physically convene for the meeting. After lawmaker Serhiy Shakhov tested positive for COVID‑19, a chain reaction began — the number of affected lawmakers is unknown, and they are afraid to go to work out of fear of being infected.
Avakov
If Kolomoisky was a historical ally of Zelensky who supported him during the presidential election, it is difficult to understand why Avakov is irreplaceable.
He’s been heading the Interior Ministry for the seventh year. During this time, five prime ministers have changed, but Avakov remained the head of the main law enforcement agency, and has concentrated enormous resources in his hands. Now the State Emergency Service, the Migration Service and the Border Guard Service are all under the rule of the Interior Ministry, as well as the National Guard.
Interior Minister Arsen Avakov at the Meeting of President Volodymyr Zelensky with the leadership of the Ukrainian parliament, the Verkhovna Rada, the Cabinet of Ministers and law enforcement authorities on Sept. 2, 2019. (Volodymyr Petrov)
Avakov’s appointment to the Honcharuk government caused the first protests within the Servant of the People faction. Some lawmakers refused to vote for the Cabinet if his name was on the list of the ministers. Eventually, in order to quell the rebellion, it was promised that Avakov would only become interim minister for several months.
This was explained by the need to preserve the controllability of the authorities and prevent a possible uprising by former President Petro Poroshenko, which some claimed was planned for December. But as of the middle of spring, no coup has happened, and Avakov has only strengthened his position due to the various crises that arose in Ukraine.
Avakov and Kolomoisky became close during Poroshenko’s rule. At that time, the interior minister played along with the oligarch and was in no hurry to place Kolomoisky’s associates suspected of criminal activities on the wanted list — such as Oleksandr Lazorko, ex-head of the state-owned company UkrTransNafta, who was placed on the wanted list in 2015 but removed from it in 2019.
Once, the main mouthpiece of the oligarch, lawmaker Oleksandr Dubinsky (formerly a journalist), was accusing Avakov of protecting the shadow business. And now Dubinsky provides PR support for Avakov, participates in the Interior Ministry’s meetings, personally interviews Avakov and claims that Avakov will be the next prime minister.
In addition, Avakov has his own group of influence in parliament, which includes lawmakers Dariya Volodina and Oleksandr Bakumov in the Servant of the People faction, Dmytro Lubinets in the Kolomoisky-controlled group For The Future, and Ilya Kiva with Hryhory Mamka in Medvedchuk and Serhiy Lovochkin’s Opposition Platform — For Life.
Moreover, Avakov is now seeking to strengthen his influence in the international arena. As per parliament’s request, Avakov is responsible for contacts at the intergovernmental level with France, which is Ukraine’s key partner in the Normandy Format peace talks. Avakov builds himself up vis-à-vis the French elites by ordering helicopters and patrol boats manufactured in France for his subordinate government structures.
All this indicates that Avakov definitely does not want to lose power, but merely seeks to strengthen his influence and tries to make Zelensky hostage to his presence in the government. The longer he heads the Interior Ministry, the more difficult it will be to remove him from office. And the strengthening of the Avakov-Kolomoisky alliance is becoming a time bomb for the state.
Therefore, Ukraine will soon face a tough decision. The state will either play according to the rules set by the Avakov-Kolomoisky alliance or go the other way: pass two laws on the land market and banks, leave the NABU and the National Bank of Ukraine alone and then receive billions of aid that are critical for Ukraine’s survival in the global crisis.
Sergii Leshchenko is a Kyiv Post columnist, investigative journalist and former member of the Verkhovna Rada. This op-ed was translated into English by Kyiv Post staff writer Olena Goncharova.
