Ukraine’s most powerful business moguls have begun to drop more cash on Washington, D.C., lobbyists in recent months, pushing to gain influence in the U.S. at a time when their fortunes are growing more and more tied to American policy.
Since the start of 2018, Ukrainian companies have signed at least $1.1 million in new contracts with Washington D.C. lobbyists, public filings show, reflecting a need for political clout among Ukrainian businesses.
Different oligarchs are demanding different things.
Geneva-bound Ihor Kolomoisky has been trying to get a U.S. visa for more than a year, while a number of top businesspeople in Ukraine’s steel sector have banded together to fight a 25 percent tariff on Ukrainian steel imports to the United States.
Others are using U.S. influence as a lever in the country’s battle with Russia, as Naftogaz’s push against Nordstream two shows.
Ukrainians spent at least $2.4 million on D.C. lobbyists in 2017, with 2018 looking to have the potential to rake in bigger bucks for Washington influence peddlers.
Adjusting to Trump
Since President Donald J. Trump took office on Jan. 20, 2017, Ukraine’s relationship with the United States has been partly defined by headline-grabbing business deals that appeal to Trump’s domestic political appeal.
July 2017 saw a Pennsylvania coal mining firm agree to deliver 700,000 tons of heating coal to Ukraine’s Centrenergo in what was seen as a win for relations between Bankova and the White House.
At the time of the deal, U.S. Commerce Secretary Wilbur Ross said that the deal would help towards “promoting robust economic growth” and had “brought enormous benefit to our nation’s coal communities.”
Other recent top deals between Ukrainian state-owned enterprises and American companies include a $1 billion agreement in which General Electric will sell 30 locomotives to railway company Ukrzaliznytsia, and Westinghouse agreeing with Energoatom to expand its nuclear fuel supplying business to seven of Ukraine’s 15 nuclear reactors.
Viktor Chumak, a member of parliament who who co-chairs the Rada’s U.S. caucus, told the Kyiv Post that Ukrainian companies sensed that they needed better awareness and a better presence in Washington to adapt to shifting international politics.
“Having good contacts with the U.S. is quite important now,” Chumak said.
Steel
UkrMettalurgProm, which represents Rinat Akhmetov’s Metinvest, Victor Pinchuk’s Interpipe, and Kostyantyn Zhevago’s Ferrexpo, agreed to pay the Livingston Group lobbying firm $20,000 for a three month lobbying stint from April to July.
According to Oleksandr Kalenkov, head of the association, the move came in response to a 25 percent tariff on Ukrainian steel imports to the US, signed on March 22 by President Trump.
The organization is lobbying to have the tariffs on Ukraine removed.
“It’s a big problem for us,” Oleksandr Kalenkov, head of UkrMettalurgProm said in an interview.
Kalenkov explained that the move cuts significantly into some of the company’s added-value products. Pinchuk’s Interpipe exports 15 percent of its products to the USA, and had been targeting the American market for increased exports.
“The main Ukrainian victim of these tariffs will be Interpipe,” wrote Concorde Capital analyst Dmytro Khoroshun in a March research note.
Overall, steel accounts for 12.8 percent of the $1 billion that Ukraine exports to America.
“It was one of the arguments made by Donald Trump, that this is a defense measure, but we’re not a threat,” Kalenkov said, emphasizing that Ukraine accounts for only 0.3 percent of all steel imports to the United States.
In addition to Livingston, Kalenkov has enlisted Trade Representative Nataliya Mykolska to lobby for the tariffs’ removal. Mykolska is set to travel to Washington next week for meetings on the issue, in part arranged thanks to the lobbyists.
Battle over Nord Stream
Naftogaz is attempting to fight off the construction of the Nord Stream 2 pipeline, which would deprive Ukraine of its role as a gas intermediary in favor of a route in the North Sea.
Blocking the pipeline’s construction has been a priority for Ukraine, which would lose billions of dollars in fees if it goes forward.
“This is not an economic project, but a political one,” said Chumak said.
Naftogaz and a subsidiary – the Kyiv City Organization of Employers of the Oil and Gas Industry – have both hired lobbyist Daniel Vajdich of Yorktown Solutions. Vajdich, a senior fellow at the Atlantic Council, has worked as an adviser to numerous Republican politicians.
Between the two hirings, Naftogaz is set to spend a minimum of $809,000 on the lobbyist throughout the year, regulatory filings show.
Contracts with Yorktown show the firm charged with “engaging with relevant stakeholders in the United States regarding risks to the foreign principal’s interests posed by diversionary gas pipeline projects” as well as “efficiently addressing threats posed by the Nord Stream 2 project.”
“Naftogaz did the right thing by hiring a lobbyist,” Chumak said.
Other aims include working on integrating Ukraine’s gas market with the rest of Europe, which would involve policy changes detrimental to oligarch Dmytro Firtash.
“[Yorktown] advises us on issues important to Naftogaz strategy and keeps us informed about relevant news and events in the US,” said Naftogaz Corporate Communications Chief Aliona Osmolovska. “It is difficult to understand current developments in the US for an outsider, and we believe [Yorktown]’s support to us has been useful so far.”
Gunning for a better image
Two subsidiaries of the scandal-ridden UkrOboronProm, the country’s main weapons producer, also hired Yorktown.
They are SpetsTekhnoExport, an UkrObonProm subsidiary that regulates weapons exports from Ukraine; and Ukrinmash, another UkrOboronProm outfit that exports domestically produced weaponry.
The hiring comes after muckraking investigations into corruption and illegal arms trading at Ukroboronprom.
In Ukrinmash’s case, Amnesty International published a report alleging that the company had illegally supplied small arms and mortars to South Sudan, which is under a U.N. embargo.
The company’s lobbying contract specifies that Yorktown will handle “public relations” for Ukrinmash, as well as “maintenance and extension of relations between [Ukrinmash] and the USA Defense authorities.”
SpetsTekhnoExport has managed to avoid international corruption allegations, and has been hawking Ukraine-made weaponry on a worldwide roadshow over the past few years. The firm’s contract with Yorktown offers fewer details than Ukrinmash’s, other than to say that it is providing “government affairs services.”
Chumak said that U.S. business approaches Ukraine with a good amount of trepidation largely due to corruption concerns.
“American businesses say that they want to invest, but don’t believe that their investments will be protected,” he said. “It’s a problem that they’re putting before us: to make good government.”
Kolomoisky
Kolomoisky, the billionaire oligarch, meanwhile spent at least $90,000 on U.S. lobbyists last year, documents show.
The Dnipro-born businessman spent the first few months of 2017 attempting to receive a U.S. visa by lobbying the State Department for an E-2 Investor Visa.
Under that scheme, non-U.S. citizens can enter the country provided they have a significant investment in the United States.
The law does not specify how U.S. officials determine what qualifies as a “significant investment”. But at the time Kolomoisky was applying, his U.S. business conglomerate Optima Specialty Steel had declared bankruptcy.
His company – which owns steel mills across the United States – had faced years of declining prices in the U.S. while appearing to be a part of a network of companies between which Kolomoisky was shifting money.
