Wed, Jul 17, 2019

If Zelenskyy’s serious about reform, he’ll ditch the cronies

UkraineAlert by Diane Francis

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Elections Fiscal and Structural Reform Political Reform Ukraine

President of Ukraine Volodymyr Zelenskyy (L) and his chief of staff Andriy Bohdan (R) attend a meeting with lawmakers in Kyiv, Ukraine May 21, 2019. Ukrainian Presidential Press Service/Handout via REUTERS

Recent polls forecast that President Volodymyr Zelenskyy’s political party, Servant of the People, may take 43 percent in Sunday’s parliamentary elections, or 30 percent less than he won in the April presidential race.

There are more competitors than in the presidential race but another reason has to do with Ihor Kolomoisky.

A political proverb holds that not only must a leader be above suspicion but also that, as Julius Caesar stated, “Caesar’s wife must be above suspicion.” In other words, leaders are judged by those closest to them, and Zelenskyy’s mishandling of this matter is destroying his “brand” and will impede his reform agenda.

Kolomoisky is a scourge and an impediment to progress, but the consensus is that Zelenskyy should not only take firm action against the oligarch but also dismiss the oligarch’s lawyer, Andriy Bohdan, appointed as his chief of staff and the second most important decisionmaker in the new administration.

“Nobody’s happy with his appointment so openly,” said businessman Mohammed Zahoor in May. “He has a conflict of interest because Kolomoisky is fighting the government to get back his bank or to get billions in compensation. And here his lawyer is in the government.”

The honeymoon period for the president continues, but is waning as an increasingly emboldened Kolomoisky causes consternation at home and abroad. For instance, he publicly stated that Ukraine should default on its IMF loans, causing the hryvnia to drop slightly.

As Zahoor stated: “He [Zelenskyy] should have the balls to say this openly… that Kolomoisky is a detached oligarch and has nothing to do with us. We are running our own government and he’s not involved in any way. Now everyone thinks that Kolomoisky is behind Zelenskyy.”

Since then, there have been rumors and some signals that Zelenskyy is trying to put distance between himself and Ukraine’s most notorious oligarch. Not everyone is convinced.

Kolomoisky is the beneficiary of recent court judgments designed to cripple his airline competitor SkyUp and to damage the National Bank of Ukraine for nationalizing the bank he and a partner drove into the ground. Kolomoisky denies any involvement and churlishly responded to an interviewer’s questions: “You probably know that at every meeting with the current president the Americans raise a question about you.”

“So what?” said Kolomoisky. “I do not care. Our property was stolen from us. The thieves who stole it from us, selected it under the auspices of the state, incited by international organizations, such as the IMF or the World Bank, which applauded.”

Zelenskyy, for his part, has handled these oligarch onslaughts poorly. He refuses to fire Bohdan and said he will defend the independence of the National Bank and stay out of controversies like SkyUp’s. But neither are good enough, given the oligarchy’s manipulation and ownership of Ukraine’s thoroughly rotten courts.

For instance, a small-town court ordered the grounding of SkyUp based on a complaint about a flight that never existed, by a ”passenger” who never flew. Likewise, another small-town judge ruled to dismiss the deputy governor of the National Bank of Ukraine based on a complaint by a company that doesn’t exist, according to the Kyiv Post

Both decisions should be tossed out of hand by the president’s office especially given that in June Zelenskyy promised to end “raider attacks” on businesses before 500 international businesspeople, said SkyUp’s President Alexander Alba. “But he and his government don’t even return our phone calls and the president has not condemned this.”

Such silence damages the country and is also encouraging more misbehavior.

On July 1, 200 million hryvnia was set aside to build a new international runway at Dnipro Airport which is owned by Kolomoisky, who has banned SkyUp and Turkish Airlines from landing there for anti-competitive reasons. This allocation must be blocked, as must the airport’s ban against the airlines.

Another issue is that there are Kolomoisky operatives littering the Servant of the People’s party list, including Oleksandr Dubinsky. He is a commentator on Kolomoisky’s 1+1 channel, that backed Zelenskyy, and has been at the forefront of campaigning against the National Bank of Ukraine’s former head who nationalized Kolomoisky’s bank as well as an obscenity-laden video attacking SkyUp discount airline which competes against Kolomoisky’s Ukraine International Airlines.

Other Servant of the People candidates in single-member constituencies are linked to Kolomoisky’s 1+1 channel or his UKROP party. The Liga news website counted more than twenty of Kolomoisky’s people among them. Clearly, Dubinsky and all the others must be culled.

Parliamentary reformer Yegor Soboliev recently pointed out another corrupt Kolomoisky offensive. The tainted Constitutional Court overturned the cancelation, by the National Anti-Corruption Bureau and the Specialized Anti-Corruption Prosecutor’s Office, of 97 agreements proven unlawful. The complaint to the Constitutional Court was filed by an enterprise, Zaporozhye Ferroalloy Plant, owned by Kolomoisky.

Clearly, an example must be made of the aggressive and entitled Kolomoisky, and his minions. This will send an important signal to voters, businesses, investors, foreign governments, courts, institutions, and other oligarchs.

If Zelenskyy does not stand up now, his plurality in the July 21 vote may shrink further and faster. And deservedly so.

Diane Francis is a senior fellow at the Atlantic Council’s Eurasia Center, editor at large with the National Post in Canada, a distinguished professor at Ryerson University’s Ted Rogers School of Management, and author of ten books.