Donbass: The battle over billions

 By Victor Shapinov

December 23: Lugansk and Donetsk are threatened not only by the military aggression of Kiev. Today, acting in different ways, Ukrainian oligarchs are secretly preparing “a creeping restoration of order” in the young republics. 

 A colorful representative of the Ukrainian oligarchy is trying to “make money” off the difficult situation with gasoline and fuel in the Lugansk People’s Republic (LC) and Donetsk People’s Republic (DNR) — Sergei Kurchenko. On December 17, his business took a bullet: the special commission of the People’s Council of the DNR adopted an appeal to Alexander Zakharchenko on the results of its own investigation on the “… actions of businessman Sergei Kurchenko and affiliated businesses on the territory of the Donetsk People’s Republic.”

It’s been known for years that Sergei Kurchenko made a career leap from petty official to multimillionaire thanks to his friendship with the son of President Yanukovych, Alexander. From 2005 to 2008, “good friend” Kurchenko increased his capital from $200,000 USD to $300 million. Even then, unpleasant jokes were made about his business talents. However, Kurchenko continued his “successful career” and by 2014 was the owner of numerous assets in various sectors of the Ukrainian economy. The term “family clan” of Yanukovych was applied to Kurchenko almost at the official level. After the victory of Maidan, Kurchenko fled to Moscow, but his relations with Ukraine were not lost. He actively communicates with his friend and business partner Boris Lozhkin, no less than the head of Poroshenko’s presidential administration [similar to the White House chief of staff in the U.S.].

Today Sergei Kurchenko is actively trying to “return” to the Donbass. His business group has been active in the sphere of fuel and gas supply in the LC and the DNR. In the summer of 2015, Kurchenko managed to negotiate with the leadership of the republics to supply gas and oil in the Donbass. The oligarch promised to organize an uninterrupted supply of gasoline and other petroleum products at affordable prices. Once he had a de facto monopoly on the market for fuel supplies, Kurchenko unreasonably raised prices, injuring both citizens and commercial and state structures of the DNR and LC. 

Thanks to the Ukrainian oligarch’s ruse, gasoline prices rose 1.5 times higher than in the neighboring regions of the Russian Federation and Ukraine, and delivery schedules were disrupted. In addition, since February 2015, the Ukrainian oligarch obtained a monopoly on Russian gas supplies in the Donbass, according to members of the special commission. From that time on there were constant interruptions in gas supply in the republics. The investigation also revealed that while “thrashing money from ordinary people,” Kurchenko shows “strange softness” in relation to other Ukrainian oligarchs who have businesses in the Donbass. “For all that time he did not take a dime, but provided free Russian gas to the enterprises of Firtash, Akhmetov, Grigorishin, Novinsky, Boyko, Tartura, Nunsenkis!” reported the outraged DNR commission.

His gasoline monopoly was halted by the leadership of the people’s republics. Heads of the LC Igor Plotnitsky and DNR Alexander Zakharchenko, in simultaneously decrees, ordered an investigation of possible sabotage by Kurchenko and affiliated institutions and individuals on the territory of the republics. In addition, these same decrees banned Kurchenko’s companies from supplying the republics with fuel and from purchasing coal and other products on the territory of the LC. This clarification is not accidental. The oligarch’s companies hoarded 6 million tons of coal from the LC in order to bring them to Russia’s Novocherkassk GRES [a thermal power plant in Russia’s Rostov region]. Since the breakaway LC and the Russian Federation have no formal economic relations, officially delivering coal to Russia is impossible. As a result, a scheme was planned, in which the millionaire bought abandoned or uneconomic mines in the city of Novoshakhtinsk in the Rostov region of Russia. But the coal which he allegedly produced there actually came from the LC. And in fact, the oligarch began buying coal not from the republic, but from the owners of illegal mines in Lugansk – partly in the sphere of influence of the Efremov – Korolevskoy oligarch clan. Thus, Lugansk mines are left without cash proceeds, which instead are deposited in the accounts of the old Ukrainian oligarchy. 

The findings of the commission set up to investigate Kurchenko’s activities in the DNR were clear: The oligarch used his role as intermediary between Russia and the people’s republics to enrich himself at the expense of the population and economy of Donbass. However, he is not alone. Ukrainian oligarchs continue to receive income from the Donbass. For example, according to the calculations of tax authorities, revenues for just one plant in Gorlovka, “Styrene,” owned by Dmitry Firtash, amounted to at least $25 million. “But, thanks to collusion of Kurchenko and Firtash, ‘Styrene’ is not paying anything for gas!” says the DNR. “This is actually about the creation of a black market for Russian gas, which runs to hundreds of millions of dollars,” said the commission. “This money could work for the republic. Instead, it’s shoved into the pockets of the oligarchs.”

Another colorful character attempting to return to the Donbass is Yuri Ivanyushchenko. He’s also part of the “family clan” of the Ukrainian oligarchy. Ivanyushchenko (also referred to in the media as the “kingpin” Yura Yenakiyevo) was a member of the inner circle of ex-President of Ukraine Viktor Yanukovych. A longstanding Verkhovna Rada deputy of the Party of Regions, Ivanyushchenko rarely appeared at meetings of Parliament, preferring to engage in “economic issues.” Under the “old regime,” the name of Ivanyushchenko, or the criminal nicknamed Yenakiyevo, was often known as a “kingpin.”[Polozhenets, mob boss]. In fact, the influence of this businessman, who never liked publicity, has always been greater than one would expect based on the enterprises officially belonging to him.

A particular focus of the clan of Ivanyushchenko and his younger business partner Ivan Avramov was the coal-mining state-owned enterprise (SOE) “Anthracite,” located on the territory of the Lugansk People’s Republic. Its structure includes the mines “Komsomol” and “Guerrilla,” as well as seven support units and the privatized central concentrating factory “Nagolchanskaya.” The total number of workers and staff is more than 3,000 people.

In May 2015, SE “Anthracite” was re-registered as a state unitary enterprise of the Lugansk People’s Republic, which led to a conflict between the oligarchic clan and LC leadership. In the summer of 2015, Avramov attempted to regain his former position of control over the enterprise. The recent grab by Ivanyushchenko – Avramov was blocked by the LC, but the oligarchic clan keeps trying to return to the Donbass, and control it in the old ways.

And here is another representative of the “family clan” — former Minister of Revenue of Ukraine Alexander Klimenko. After the victory of Euromaidan, Klimenko fled to Russia, and apparently decided to stop trying to break into the DNR and LC. He created an organization called “Restoration of Donbass.” However, recently the oligarch has “sworn allegiance” to Kiev: the statements of his pet organization denounced the Donbass militias as “militants”, and referred to the “so-called authorities of the LC and DNR.” Apparently, Alexander Klimenko realized that there was no “gain” for him in the people’s republics and, like many other members of Viktor Yanukovich’s entourage, he openly defected to the Kiev authorities. 

The republics’ demand to “Make the oligarch’ pay!” is a good measure, but not enough. Limiting the activities of the oligarchy must continue until the Ukrainian business magnates are completely “squeezed” out of the economy and (especially!) the politics of Donbass.

These examples show clearly that the “activity” and growing influence of oligarchic groups in the LC may lead to a worsening of the socio-economic situation in the Donbass, and disrupt or even disintegrate the state bodies of the republic. Given the role played by the Ukrainian oligarchs during the so-called “Euromaidan,” we can safely say that while enriching their business interests in the LC and the DNI, Ukrainian oligarchic groups can also operate covertly in the interests of the Kiev regime and its U.S. patrons.

The fight against the Ukrainian oligarchy is truly a “second front” in the struggle for the freedom and independence of the people’s republics. And the Ukrainian oligarchs are a “Trojan horse” in the fight against the DNR and LC. Their activity corrodes both the economy and public administration from within. The republic’s leadership has already begun fighting against this social evil, which we inherited from the 25-year-history of capitalist Ukraine. However, it is important that the fight against the oligarchy not be limited to governmental offices, because in the “underground struggle” the oligarchs have greater resources and experience. The fight against the creeping return of Ukrainian oligarchy in Donbass should become a task of public organizations and trade unions, civil society, journalists and social activists, and all conscious citizens. Only then will a decisive victory in this “second front” of the war against the people of Donbass be achieved.

The republics have to build an economy based on the nationalization of strategic economic projects and cooperation with the private sector on the basis of the dominance of public interest over private and clan. In this way, it is necessary to eliminate the Ukrainian oligarchic heritage, to minimize the influence of the key oligarchic groups of the old Ukraine, who are trying to restore their destructive dominance in the DNR and LC.