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Ukrainian oligarchs in wartime: adaptation to new realities

The predominance of the oligarchs was a “traditional” element of the political and economic system.

But Russian aggression has radically changed Ukraine’s economic and political landscape – the environment in which the oligarchs operate.

First, war requires clear political self-definition. Most of the prominent figures of big Ukrainian business (in particular, Rinat Akhmetov, Petro Poroshenko, Vadym Novinsky, Dmytro Firtash, Viktor Pinchuk, Kostyantyn Zhevago, Serhii Tihipko, Oleksandr and Galina Geregy) clearly stated that Russia is an aggressor, Putin is a war criminal.

Secondly, the consolidation of politicians and society to fight Russian aggression in many ways has changed the political processes in the country, particularly in the area of lobbying.

Thirdly, sanctions against Russia and Belarus require a review of the business’s production and commercial strategies.

Fourth, the President and his office have become the center of policy formation.

Fifth, the information policy of leading television mass media was “unified” in connection with wartime requirements.

Sixth, the anti-oligarchic policy acquired the status of an EU recommendation as a prerequisite for negotiations on Ukraine’s accession to the European Union.

According to Forbes Ukraine, the primary sources of income of the 100 richest Ukrainians in 2021 were metallurgy (17%), energy (15%), real estate (12%), and retail (10%). These industries have mostly suffered because of the war, and the owners of the corresponding assets have suffered the most significant losses.

First, we are talking about physical damage or destruction of production facilities, real estate, lost assets in the occupied territories. That is why Rinat Akhmetov announced the preparation of lawsuits against the Russian Federation for compensation of damages.

A full assessment of the losses is yet to come, but the question arises of what margin of economic strength big business has.

And should the capable state help such large taxpayers and employers, whose enterprises, in many cases, have a critical importance to the country, especially during wartime.

Ukrainian oligarchs, who have openly condemned Russia, actively help the Armed Forces and citizens of Ukraine in various formats.

Rinat Akhmetov’s companies began to manufacture anti-tank and anti-aircraft hedgehogs, spiked chains against wheeled vehicles, certified protective plates for bulletproof vests, and modular shelters for dugouts.

This equipment is provided free of charge to the Armed Forces. The Poroshenko Foundation, Roshen Company, and volunteers of NGO “Sprava Hromad” (NGO “Community Affairs”) handed over thousands of bulletproof vests and kevlar helmets, weapons, hundreds of vehicles of various purposes (armored vehicles, trucks, and pickups), thermal imagers, drones, power generators, digital radio stations and others to the Armed Forces.

Viktor and Olena Pinchuk’s foundations, the company “Interpipe,” took seven brigades of the Armed Forces of Ukraine and the Territorial Defense of Ukraine under their care. And, of course, these and other rich Ukrainians provide essential humanitarian aid to vulnerable sections of the population.

Such actions are a contribution to the future of Ukraine and the future of the relevant personalities.

At the same time, in November 2022, the assets of five enterprises were alienated in favor of the state. The goal is to meet the urgent needs of the Armed Forces of Ukraine and the security sector.

This decision caused mixed reactions. We only note that since some of these enterprises are experiencing severe difficulties, the state will have to invest certain funds in their reconstruction.

The war certainly affected the process of de-oligarchization, initiated in 2021 by the law “On prevention of threats to national security associated with the excessive influence of persons who have significant economic and political weight in public life (oligarchs).”

As part of this process, Petro Poroshenko and Rinat Akhmetov independently disposed of their media assets.

At the same time, the Venice Commission has yet to provide conclusions on Ukrainian anti-oligarchic legislation. The Register of oligarchs is still not formed, which is explained by the changes in the status of the relevant persons caused by the war.

The de-oligarchization process is only the first step in overcoming political corruption. It is much more essential to create a system that would minimize the possibilities of “seizing” the state by individual groups to realize their private interests.

For this, it is necessary to have an effective and politically independent antimonopoly committee, transparent mechanisms for financing political parties, legally regulated rules, and tools for lobbying.

Now it is necessary to decide on the policy of involving big business in the country’s post-war reconstruction.

Ihor Burakovkyi, Head of the Board of The Institute for Economic Research and Policy Consulting, for Economic Pravda