The Real Oligarchs of Donetsk

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1 The Real Oligarchs of Donetsk TRINAT Akhmetov is the richest, most powerful oligarch in Ukraine. He has significant assets in Donetsk region where ousted president Viktor Yanukovych was governor from 1997 to Is it a coincidence that Donetsk has become a hotbed for separatism? A GlobalSource Country Risk Analysis GlobalSource Ltd. 03 May All rights reserved. International business intelligence Investigations Research Information

2 UKRAINE had two revolutions in ten years: the 2004 Orange Revolution and so called Euromaidan Revolution. During the Orange Revolution, pro-russian sentiment was barely visible and there were no rebellions in Crimea or Eastern Ukraine. So what changed in those years? Did the linguistic, ethnic or religious divisions become bigger in such a short space of time? Or did policies initiated by the post-revolutionary Kiev government suddenly oppress the Russian-speaking population in the East? The ethno-linguistic divide has not changed in the past ten years. Traditionally, Eastern regions including Lugansk, Donetsk, Kharkiv and Zaporizhya have been mostly Russian-speaking with significant ethnic Russian population (shown on the map as yellow with brown stripes.) In addition, Dnipropetrovsk, Kherson and Nikolaev are also predominantly Russian-speaking regions. While there are several Russian-speaking regions in the east of Ukraine, the separatist movement became localized localized only in one Donetsk. In a recent survey, 85 percent of Russianspeaking Ukrainians said they felt no pressure or threats because of their language. In addition, 81 percent of all Ukrainians were opposed to Russia sending the army to protect Russian-speaking citizens. (By contrast, 61 percent in Eastern Ukraine opposed intervention by Russia). Most importantly, 64 percent percent of Ukrainians support a unitary Ukrainian state and only 14 percent prefer a federation which would give greater autonomy to the regions. Separatists for hire Wikipedia Commons map Pro- Russian sentiment actually has less to do with the ethno-linguistic divisions and more with financial interests of the local oligarchs. In Donetsk, these interests collide with the desire of outside forces to destabilize the situation in Ukraine. Notably, the cities most hit most by separatist activity are all in the Donetsk region, including Slavyansk, Kramatorsk, Gorlivka and Makiivka. 2 of 5

3 AFP map Donetsk is the heartland of Yanukovych and Rinat Akhmetov, Ukraine s richest man who has significant metallurgical assets in the region. Akhmetov, an ethnic Tatar, has a net worth of $15.4 billion. In Donetsk, there is a clear convergence of interests between Russia and the local oligarchs and members of Yanukovych s inner circle ("the family"), who mobilize locals and rely on organized crime groups to help destabilize the region. Russian special forces, the so-called green men who are in several regions in Ukraine, do have limited support from those elderly segments of the population still nostalgic for the old Soviet Union. However, the Kremlin s plans could not be implemented without support from Akhmetov, who is known as the Donbas Director the Donbas region includes Donetsk and Lugansk and local organized crime groups. There is a nexus between the separatist movement and organized crime in the Donbas region where separatist leaders are being directed and financed by local oligarchs. For example, the head of the separatist movement in Gorlivka, who orchestrated the seizure of local government buildings is the criminal avroritet Armen Sarkisyan, a mobster affiliated with the ousted president and the family. He was involved is sending so called titushkas to Kiev and his people were involved in tortures and assassinations. The Dnipropetrovsk region which borders Donetsk is also predominantly Russian-speaking; however, the situation there has been completely different. Dnipropetrovsk is now under the control of another Ukrainian billionaire Igor Kolomoisky (net worth $3 billion) who was recently appointed governor. Unlike Akhmetov, Kolomoisky did not side with Russian separatists indeed he has been actively opposed to them. In an unprecedented move, Kolomoiskiy offered a reward of 3 of 5

4 $10,000 from his own money for the capture of anyone taking part in separatist movements. Kolomoisky also offered rewards for handing in weapons belonging to insurgents: $1,000 for each machine-gun, $1,500 for a heavy machine-gun and $2,000 for a grenade launcher handed over to his authorities. His administration says more than $100,000 in rewards has already been paid. A tale of two regions Political corruption is interwoven with the Ukrainian government right across the country but is most prevalent in the two regions with the strongest support for separatism. The Crimea and Donbas regions have been well known for the close ties between mafia, oligarchs and politicians. In Crimea, the former gang leader Sergei Aksyonov (the self-proclaimed Prime Minister) was essentially used by the Kremlin to carry out the annexation. The Ukrainian press reported Aksyonov s alleged past involvement in contract killings. In 1996 Aksyonov himself was almost killed when his car overturned during a shootout. In Crimea, organized crime worked hand in hand with the Russians and now a similar scenario is unfolding in Donbas, where oligarchs mobilize activists by scare tactics and disinformation campaigns. Godfather of Donetsk The overthrown president Yanukovych entered the Donetsk political scene to campaign for governor in 1996 with the support of the Donetsk mafia. It's no secret that he served two prison terms and was a member of local organized crime groups. As governor, Yanukovych integrated former and existing organized-crime leaders into his Party of Regions. According to a 2006 US Embassy cable, Yanukovych s Party of Regions was a haven for Donetskbased mobsters and oligarchs and the former President was tapping the deep pockets of Donetsk clan godfather Rinat Akhmetov. Rinat Akhmetov has long been considered as the main influence behind Yanukovych s rise to power. According to political analyst Volodymyr Fesenko, "for years Akhmetov was the business director of the Donbas and Yanukovych was the political director. Rinat Akhmetov and Victor Yanukovych Akhmetov is the owner of the Shakhtar Donetsk football club and is the biggest player in the Donbas mining industry. he controls 50 members (out of 450) in the Ukrainian parliament and controls the Donbas region through local governors, mayors and law enforcement units. The current presidential candidate from the Party of Regions is Rinat Akhmetov's representative Mikhail Dobkin, who openly appeals to separatists. With Yanukovych in exile, the Donetsk political and business elite seems to have initiated a Plan-B to protect their business interests and assets in the region. Fearful of corruption investigations by the new Kiev government, Donetsk oligarchs are trying to get a federal plan implemented with outside help from Moscow. Rinat Akhmetov (left) and Victor Yanukovych. A few months ago Akhmetov s partner and fellow oligarch Dimytro Firtash was arrested in Austria on corruption charges and is now waiting extradition to the United States. Firtash and Akhmetov were for long seen as the main beneficiaries of the Yanukovych regime. Local oligarchs view destabilization and federation as their only viable option. Russian Special Forces could not have 4 of 5

5 entered the region without their approval and the propaganda campaign also serves their interests well. It is clear that the separatism movement in Donetsk does not truly reflect the mood of the Russianspeaking population. It simply would not be possible without the backing of the local oligarchs. * * * * * * 5 of 5