How powerful are Ukrainian oligarchs still?

The assumption of Ukraine's integration into the European Union is to suppress corruption and reduce the influence of oligarchs on politics. The war is now destroying their property. How will they behave in the future?

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Illustration, Photo: Shutterstock
Illustration, Photo: Shutterstock
Disclaimer: The translations are mostly done through AI translator and might not be 100% accurate.

During his visit to Brussels on February 9, Ukrainian President Volodymyr Zelensky said that he expects the accession negotiations to begin this year. And the European Union emphasizes that Ukraine's path to membership leads through reforms, including the fight against corruption. In addition, the influence of oligarchs on Ukrainian politics must be reduced.

In 2021, Ukraine passed the "Law against oligarchs" which is being reviewed by the Venice Commission of the Council of Europe. The results are expected in March.

Law against oligarchs

According to that law in Ukraine, people who meet three out of four criteria qualify as oligarchs: they own property worth at least 80 million dollars, have political influence, control the media and have a monopoly in some economic branch. Those who are included in the register of oligarchs are not allowed to finance parties, are prohibited from participating in large privatizations and must submit a special income tax return.

Based on the new law, billionaire Rinat Ahmetov gave up the licenses for his media group last summer. And the leader of the European Solidarity party, former Ukrainian president Petro Poroshenko, has officially lost control of his television. And the billionaire Vadim Novinsky returned his parliamentary mandate.

Akhmetov lost a lot

During the Russian invasion and the destruction of the war, the wealth of the oligarchs melted away. The independent Kyiv-based Center for Economic Strategy (CES) stated in a study published at the end of last year that the losses of Ukrainian oligarchs amount to 4,5 billion dollars. Rinat Ahmetov suffered the greatest damage. With the Russian conquest of Marijupol, his holding lost the important Azov steel plant and another combine.

The total value of those industrial plants in the research was estimated at 3,5 billion dollars. In addition, Akhmatov's $150 million coking plant in Avdiyivka halted production amid disruptions caused by Russian attacks. Many energy plants, especially heating plants owned by Ahmetov, were destroyed by Russian missile attacks.

Experts from the Ukrainian edition of "Forbes" magazine estimated Akhmatov's losses at nine billion dollars. Nevertheless, he is still the richest Ukrainian with assets worth four billion dollars. "Forbes" estimates the losses of Akhmatov's smaller partner in the holding, Vadim Novinsky, at two billion dollars. Before the war, his fortune was estimated at three billion dollars.

Kolomoysky lost his Ukrainian passport and refinery

Igor Kolomojski's assets were also significantly reduced. His refinery in Kremenchug was destroyed in Russian attacks last year. CES estimates the damage at $400 million. Before the war, Kolomojski and his partner Gennadi Bogoljubov controlled a large part of the fuel market. They owned the largest network of gas stations in the country.

Through his political connections, Kolomoisky had a decisive influence on the management of the state oil company Ukrnafta for years, even though he was only a minority shareholder. Thus he provided himself with a large profit.

Now his refinery has been destroyed, and under martial law the state has taken over all the shares of the oil company. Since Kolomoisky held the citizenships of Israel and Cyprus, and only one passport is allowed under the new law, his Ukrainian citizenship was revoked. Court proceedings were initiated against him due to the alleged fraud in Ukrnafta, which, according to the accusations, brought him billions of dollars in illegal benefits.

Write off the oligarch?

Dmytro Horyunov, an expert at the Center for Economic Strategy, believes that oligarchs have lost important resources for influencing Ukrainian politics: "Investments in politics are becoming less relevant," he says, adding that he hopes the "Law against oligarchs" will force large companies to give up their media and role in politics.

However, Horyunov is not fooled: still too little has been done to completely remove the influence of the oligarchs. "As long as they have wealth, they will do everything to protect and increase it." He adds that oligarchs defend their interests mainly through the legal system. Since 2014, Ukraine's anti-monopoly institution has issued fines for the companies of Rinat Akhmetov and another oligarch, Dmytro Firtash. in the amount of 200 million dollars, and the fines for Igor Kolomojski were summed up to XNUMX million dollars.

Lobbying, parties, television

Dmitro Horyunov believes that in the future, the most important issue for Akhmetov will be the issue of subsidizing the mining of iron ore. "Ahmetov still has two large plants for extracting and processing ore. They are reported to have brought him multi-billion dollars in net profit in 2021."

In early January, the ruling party presented a draft law in parliament that foresees a reduction in subsidies for iron ore mining during the war. The International Monetary Fund is critical of the law. Politicians of the "Chasno" movement believe that Rinat Akhmetov could still influence politicians. Previously, he provided them with access to the programs of his television. And they would pay off with railroad tariffs that benefit the oligarchs.

Despite everything, the "Honorable" movement does not believe that big business will stay away from the elections after the war - they will establish new television channels and parties. It is crucial to implement the law on the financing of political parties. CES experts hope that in the process of European integration, large foreign investors will replace domestic oligarchs.

International financial institutions, on whose help Kiev depends, suggest that the further inflow of financial resources is conditioned by the successful suppression of the influence of the oligarchs and the support of companies that will compete with the oligarchs.

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