“Family” on the March

Mykola Riabchuk

Ukraine has entered the New Year with a new government approved in the parliament by the Party of Regions, their Communist satellites, and a dozen “independents” engaged by both hook and crook. There are few changes in the content of the new-old government, either in personalities, or (even less) in its spirit, i.e. the expected policies. Some ministers, like Borys Kolesnikov, moved into the parliament to serve as MPs; others, like Valery Khoroshkovsky, resigned citing policy disagreements; and still others were moved to honorable positions as presidential advisers, like SBU chief Ihor Kalinin and Minister of Defense Dmytro Salamatin, or were promoted to seemingly prestigious but less influential positions of deputy prime ministers, like former Minister of Foreign Affairs Kostiantyn Hryshchenko and former Minister of Energy and Coal Industry Yury Boyko.

There are no signs, however, that all these moves were connected to the incumbents’ policy failures or corruption scandals, and no signs that the new nominations are merit-based and policy-driven. Again, more than half of the ministers were either born in the Donbas region or made some crucial part of their careers there. It seems the president and his team feel no need to hide or justify this peculiar regional cronyism—staffing police, judiciary, and tax services all over Ukraine with Donbas people [http://expres.ua/main/2012/01/31/59312], giving various preferences to regional business, or endorsing over 46% of the budget subventions for social and economic development to two privileged oblasts, Donetsk and Luhansk, – 618 million UAH ($76.2 million)  [http://www.epravda.com.ua/columns/2012/12/24/352306/].

The only shamelessness overshadowing this regional cronyism is the nepotism of the president and his son. The latter is particularly notorious for the promotion of his close friends and business associates to top governmental positions. Now, his clients have taken an even firmer grip over Ukraine’s economy and law-enforcement agencies. Besides the General Prosecutor’s office, which fully staffed with Yanukovych’s loyalists from Donbas, and the Security Service and Ministry of Defense subordinated directly to the president, the Family controls the Interior Ministry, Ministry of Finance, Ministry of Agrarian Policy, National Bank, and a newly created Klondike—the Ministry of Revenues and Duties, which has replaced the Customs Service (loaned out until recently to the Communist allies) and National Tax Administration. The most conspicuous event is the rise of the 36-year-old Serhiy Arbuzov, within a few years, from the manager of a minor bank in Donetsk to the head of the National Bank and, now, to first deputy prime minister. Rumors are afoot that it is only a matter of time until he replaces incumbent Prime Minister Mykola Azarov.

Serhiy Leshchenko, a leading Ukrainian investigative journalist, aptly characterizes the new government as representing the “undisguised advance of the ‘Family’ into the main power cabinets and onto the major budget flows… Whereas filling and distribution of the budget was already under the ‘Family’s’ control, the really new acquisition by Sasha-the-dentist [Yanukovych junior] is the Ministry of Energy and Coal Industry given to Eduard Stavytsky” [http://www.pravda.com.ua/articles/2012/12/25/6980434/].

According to Leshchenko, Stavytsky facilitated a number of business schemes for the Family, including the murky privatization of the Mezhyhirya estate for Viktor Yanukovych [http://www.pravda.com.ua/articles/2009/11/5/4293541/].

These six persons—Arbuzov, Stavytsky, the Interior Minister Vitaly Zakharchenko, the Minister of Finance Yury Kolobov, the Minister of Revenues and Duties Oleksandr Klymenko, and the Minister of Agrarian Policy Mykola Prysiazhniuk are nicknamed the “Big Six”—the core of the inner circle of the extended Yanukovych “Family.” Consolidation of their positions in the government, Leshchenko argues, reflects Yanukovych’s increasing distrust of outsiders. “He agrees to entrust his future exclusively to the people with whom he has profited within the past years in power.”

Whether these people will be able and willing to carry out the much-needed reforms, which would inevitably undermine the Family’s profits, is a rhetorical question. No one has ever heard of any reformist plans, or even serious activities among them. They have very “limited competence to rule the country”, the Polish analyst Slawomir Matuszak implied delicately in his report last year on the “Oligarchic Democracy. The Influence of Business Groups on Ukrainian Politics.” Therefore, he concludes, “While future reshuffles among the groups of influence are possible (and will certainly take place), there is still little chance that the model of relations between the ruling class and big business will change, at least in the medium term” [http://www.osw.waw.pl/sites/default/files/Prace_42_EN.pdf].

Dmytro Mendeleyev defines these types of managers as “typical schemers” (схемотехніки) – people whose major goal and main skill is to “extract more money [for the Family] by means of newer, faster, and more efficient schemes” [http://politikan.com.ua/8/11/0/51147.htm].

Such a deeply dysfunctional regime, Alexander Motyl argues, is a “leading candidate for stagnation and decay. And, sooner or later, the sultanistic Yanukovych system will collapse under its own dead weight.” Motyl tends to believe that this will happen rather sooner than later because the regime has already attained the “highest stage” of sultanism and can experience little institutional development in the next three to eight years: “Yanukovych and his family cannot acquire more power, the other institutions of government cannot become more meaningless, and the Regionnaires cannot become more rapacious” [http://www.worldaffairsjournal.org/blog/alexander-j-motyl/yanukovych-ruin-and-its-aftermath-part-1].

He is wrong. The Family has acquired a lot of power but can take still more by destroying alternative centers of power and wealth and eliminating the remnants of relative pluralism in Ukraine. At least one institution, the parliament (not to mention some city and regional councils), is not yet meaningless, and the Family might be tempted to emasculate it completely. And the rapaciousness of the ruling “elite” still has some space for development (privatization of land, takeover of citizens’ bank savings, sale of the national sovereignty, and the like): intestinal worms basically do not care much about the organism they exhaust.

We, the experts, may be perfectly aware that such a system has no prospects for the future and sooner or later “will collapse under its own weight.” But this does not mean that the rapacious “elites” understand this as well, and that even they do, they believe in a “sooner” rather than “later.” As Alexander Motyl himself acknowledges: “Because sultanistic regimes are invariably corrupt and conservative, there is no reason to think that the avaricious mediocrities who man the Yanukovych system will be able or willing to sacrifice their well-being to vague notions of reform, especially if reform undermines their power and privilege.”

Rather, logically, they would try to tighten the screws and accelerate the looting of resources, while keeping the population, as it always has been in this country, at the minimal subsistence level.

A few years ago, an influential member of the Party of Regions and of the parliament, former “red director” and current oligarch Volodymyr Landyk made a revealing statement at the end of a lengthy interview. It reflects the mentality of his class and the political force that runs the country but is seldom expressed so candidly:

“What is the difference between Ukraine’s East and West?” – the journalists asked.

“Well, just take a look how a steel worker or machinist works in the East. There are terrible conditions. He earns $200-300. In the meantime, vuyko [a derogatory name for Westerners] says: ‘Why should I work for such money? I’d rather go to a Pole, and do some house work for him, he’ll give me a 100 bucks, and then I’ll come again [to Poland].’ They have such a mentality. We planned to open our factory in Ivano-Frankivsk. But failed. We had to bring our people there by train because vuykies did not want work. Even though we offered the same salary as in Donetsk.”

And what is Mr. Landyk’s conclusion? Should he increase the salary at least to the Polish level? Or, maybe, ameliorate the “terrible conditions”? Definitely not!

“Everyone must work. We should close the borders and produce our own products. We’ll try to do this within the next ten years: or longer, if necessary” [http://obkom.net.ua/articles/2010-11/05.1739.shtml].

Unfortunately, this tells more about Ukraine’s probable future than all the government’s programs, president’s statements, and the shrewd analytical deliberations of political pundits.