Steinmeier and the Oligarchs

Facing Collapse

In his talks with Ukrainian heads of state last weekend, Foreign Minister Frank-Walter Steinmeier has again pressed for compliance with the Minsk cease-fire agreements. Kiev's armed forces are currently unable to win this civil war in the east of the country. If the civil war continues, Kiev risks loosing Mariupol, which is of considerable importance to Ukraine both because of its industry and particularly because of its port. It is also not clear how the urgently needed stabilization of Ukraine's economy can be achieved under conditions of a civil war. For months, Kiev has been teetering on the brink of national bankruptcy. The economic output had dropped by 14.8 percent in the fourth quarter of 2014 and by another 17.6 percent in the first quarter of 2015. Predictions that the economic decline could be halted at 8.5 percent in the course of this year appear almost optimistic. Protests have also been growing against price increases for water and energy, which were imposed by the International Monetary Fund (IMF) on behalf of western creditors. Following last year's partial double-digit increase in prices, they have recently again been increased - natural gas by 40 percent, water by 55 percent and electricity by 67 percent, while real wages are falling.[1] Berlin considers "Minsk II" to possibly be the last opportunity to somewhat stabilize a pro-western Ukraine and prevent its collapse.

Outpost Dnepropetrovsk

This has become even more complicated by the fact that - despite all its efforts - Kiev does not have control of the voluntary militia units fighting in eastern Ukraine. These militias are extremely nationalistic, some even openly fascist, who strictly reject the cease-fire and are repeatedly violating it. Therefore, Kiev cannot guarantee compliance with "Minsk II." This is why German Foreign Minister Steinmeier went to Kiev and Dnepropetrovsk on Saturday, to use his personal influence. Following the February 2014 coup, Dnepropetrovsk was quickly and systematically turned into the pro-western government's outpost in its struggle against the anti-Maidan opposition. Located relatively close to the Donbass region, Dnepropetrovsk became the scene of anti-Maidan protests in late 2013 and early 2014, and was therefore considered "at risk" by the new authorities in Kiev. On March 2, billionaire Ihor Kolomoyskyi was appointed governor of Dnepropetrovsk Oblast. Kolomoyskyi has the reputation of being one of Ukraine's richest and most ruthless oligarchs. The ramifications of his reign over Dnepropetrovsk can still be seen today.

"Illegal but Effective"

Kolomoyskyi has actually succeeded in largely neutralizing the anti-Maidan opposition. "The regional political forces in and around Dnepropetrovsk" had "already very early decided to move against the separatist and pro-Russian movement," retrospectively reports the German Green Party affiliated Heinrich Boell Foundation.[2] Already last year, critical observers had vividly described Kolomoyskyi's "resolute line of action" against dissidents. His deputy was quoted saying, "we reached an agreement with some and instilled fear in the others."[3] "The job was taken care of by the thugs of the Right Sector, as Kolomoyskyi had offered them Dnepropetrovsk as their field of operation, as well as financial backing," reports the Ukraine expert Reinhard Lauterbach. In the Oblast's administration, the methods of the Right Sector, which, in April 2014, had set up its headquarters in Dnepropetrovsk, are euphemistically described as "not always completely legal, but effective."[4] Kolomoyskyi set a bounty for the dissidents ("saboteurs"), who were caught and he provided finances for the creation of a voluntary battalion of fascists. In last October's parliamentary elections, Dmytro Yarosh, leader of the "Right Sector," was able to win a direct mandate to the Verkhovna Rada (Ukrainian national parliament) in Dnepropetrovsk.

Maidan's Main Beneficiary

Kolomoyskyi still wields an enormous amount of political influence in Dnepropetrovsk. Of the Ukrainian oligarchs, it was he, who has benefitted most from the February 2014 putsch, according to a study published by Warsaw's "Centre for Eastern Studies" (OSW), early this year.[5] In fact, precisely because of his decisive influence on various voluntary battalions, Kolomoyskyi had become so powerful that, by the end of March, President Petro Poroshenko felt compelled to remove him from office in an unprecedented power struggle. (german-foreign-policy.com reported.[6]) Although Kolomoyskyi no longer holds political office, he has lost none of his influence. Alongside his business dynasty, he controls numerous parliamentarians in various caucuses of the national parliament. Whoever wants to impose a cease-fire on the East Ukrainian militias, can achieve this quicker by going through Dnepropetrovsk than through Kiev. This is why Foreign Minister Steinmeier arrived there last Saturday. The Foreign Ministry stresses the fact that the minister did not meet personally with Kolomoyskyi, while politely mentioning that his successor in office, Valentyn Reznichenko, certainly "cannot oppose" the oligarch.[7] Saturday, Steinmeier had negotiations with Reznichenko.

The Oligarch System

Since the putsch, Berlin has repeatedly directly and indirectly cooperated with Ukrainian Oligarchs, against whose arbitrary rule the Maidan protests had been directed. "The Maidan revolution has left the Ukrainian oligarchic system unshaken," concludes Warsaw's OSW study, even though a sort of reshuffle has occurred. The oligarchs affiliated with former President Viktor Yanukovych have been weakened or entirely neutralized, while others, such as Kolomoyskyi, have become more influencial. In general, the oligarchs have possibly become even more powerful. The civil war in Donbass and the escalating economic crisis have weakened the state further and possibly assured the billionaires even more political clout. It could be expected that they will fortify this position of power, in the near future.[8]

Power and Influence

At the occasion of his visits in Ukraine, the German Foreign Minister has either repeatedly met with oligarchs or, at least, travelled to their hometowns for talks with politicians under their control. In March and Mai 2014, Steinmeier personally met Rinat Akhmetov, Ukraine's richest man who has widely been criticised for his oligarchic practices.[9] Steinmeier sought to bring Akhmetov's influence to bear in Donbass to weaken local anti-Maidan opposition.[10] The plan failed. In Mai 2014, Steinmeier also met Ihor Palitsa, the new governor of the Odessa Oblast. Their talks had focused on possibilities for avoiding upheavals. Following the massacre of regime opponents by fascists on May 2, 2014, Palitsa successfully prevented an upheaval in Odessa. President Petro Poroshenko, candy and arms producer and known oligarch, is Berlin's most important contact person.[11] With Steinmeier's recent talks in Dnepropetrovsk, Berlin is continuing its cooperation with Ukrainian oligarchs and the entourage under their control.

Other reports and background information on Germany's policy toward Ukraine can be found here: The Kiev Escalation Strategy, The Free World, A Fatal Taboo Violation, The Europeanization of Ukraine, "Fascist Freedom Fighters", The Restoration of the Oligarchs (IV), For Peace and Freedom, The Finnish Model, Second-Class Stakeholders, Establish Facts, Ukrainian Patriots, Ukrainian Maneuvers, A Lesson Learned, Under Tutelage, Nationalist Upsurge, Out of Control, The Usefulness of a Ceasefire, From Račak to Maidan and Moving West.

[1] Nina Jeglinski: Mit Galgenhumor gegen hohe Energiepreise. www.tagesspiegel.de 16.05.2015.
[2] Donata Hasselmann, Miriam Kruse: Eindrücke aus Dnipropetrovsk. www.boell.de 27.05.2015.
[3], [4] Reinhard Lauterbach: Im Reich des Condottiere. junge Welt 12.09.2014.
[5] Wojciech Konończuk: Oligarchs After The Maidan: The Old System In A "New" Ukraine. OSW Commentary Number 162, 16.02.2015.
[6] See Moving West.
[7] Majid Sattar: Steinmeier und der Pate von Dnipropetrowsk. www.faz.net 30.05.2015.
[8] Wojciech Konończuk: Oligarchs After The Maidan: The Old System In A "New" Ukraine. OSW Commentary Number 162, 16.02.2015.
[9] Carsten Eberts, Jürgen Schmieder: Glossar zur Fußball-EM. www.sueddeutsche.de 07.06.2012.
[10] See Die Restauration der Oligarchen (III).
[11] See The Restoration of the Oligarchs (IV).