Friday, May 27, 2011

The Asset Grab is on

Once again my good acquaintance Ivan Lozowy hits the nail right on the head with his INSIDER. Ivan is kind enough to allow me to share his insight with you all and commentary can be addressed to him, or discussion is welcome here on my blog.

THE UKRAINE INSIDER - is distributed via the Internet free of charge to
all interested parties as a source of in-depth information on political
events in Ukraine, including behind-the-scenes coverage of significant
current issues, the positions of policy-makers, tactics and strategy
information on Ukraine's ongoing struggle toward a free and democratic

Vol. 11, No. 1
May 27, 2011

When the General Procuratura made the sensational announcement on March
22, 2011 that a criminal case had been opened against former President
Leonid Kuchma, analysts scurried to speculate over the reasons for the
move. But those with a good understanding of Ukrainian politics and the
principal players involved got it from the get-go.

The case against Kuchma is a shot across the bow of his son-in-law and
one of Ukraine's richest men, Viktor Pinchuk.

The priority of President Viktor Yanukovych's Party of Regions (PoR) is
to amass even more wealth for its senior members. They are interested
in assets, only assets. Since most of Ukraine's formerly state-owned
property has been privatized, members of the current government have no
choice but to look to private wealth as the source of their own
aggrandizement. Oligarchs like Pinchuk hold most of Ukraine's wealth.

The primary purpose of the Kuchma case is to bring Pinchuk to the
bargaining table, at which he would negotiate favorable terms for the
PoR to take over his assets. It was Kuchma, after all, who put most of
Pinchuk's wealth in the oligarch's hands through corrupt privatization
deals. Pinchuk is still married to Kuchma's daughter.

Other benefits to the PoR of the Kuchma case are incidental. Doubtless,
Yanukovych holds a grudge against Kuchma for not agreeing to his
demands -- at the time, Yanukovych was Prime Minister -- to disperse
the protesters of the Orange Revolution by force. But Yanukovych has
many grudges, including, for example, against Serhiy Tyhipko, who ran
his failed presidential bid in 2004 and then jumped ship when the
Orange Revolution got under way. Yet Tyhipko was invited into the
government following his strong third-place showing in last year's
presidential race.

Also, the PoR realizes that the Kuchma case is an argument against
accusations that they are persecuting the opposition in the person of
Yulia Tymoshenko. A good PR move, nodded PoR heads in unison. But the
current government has not bothered to buttress this PR move with
criminal cases against non-Tymoshenko supporters, other than Kuchma.

The shot, aimed at Pinchuk, in the form of the criminal case against
Kuchma may, however, turn out to be a blank. Its principal intention
has failed already and Pinchuk has fought back. He understands that to
give up anything to the PoR is the beginning to giving up everything.
Harvard Professor Alan Dershowitz has been hired to defend Kuchma, who
has appeared recently on Ukrainian TV as a sponsor for schools.

More important than the legal and PR defense mounted by Kuchma is the
relative ineffectiveness of the campaign of pressure against him and

For starters, it has not escaped the attention of Ukrainian observers
that Kuchma is accused of "exceeding his authority in issuing illegal
orders to the police which led to the murder of a journalist." In other
words, he is accused of ordering the killing of Georgiy Gongadze, but
is not being tried for murder.

The principal proof in the case, recordings made by former presidential
bodyguard Mykola Melnychenko, have been so diluted by time and multiple
distribution that it forms a flimsy evidentiary base. The person to
whom Kuchma allegedly issued orders to kill Gongadze, then Minister of
the Interior, Yuriy Kravchenko, is dead.

In other words, for a crowd that has tried to make a name for
themselves as people who "can get things done," the Party of Regions is
behaving more like traditional governmental bumblers.

The campaign by the Party of Regions (PoR) to grab assets belonging to
Ukrainian oligarchs runs wider than just Pinchuk.

When Israel's President, Shimon Peres, visited Ukraine in November 2010
his real purpose was to negotiate with the PoR to leave alone a
prominent Jewish oligarch, Ihor Kolomoisky. During his visit, Peres met
personally with Kolomoisky and Hennadiy Boholiubov, Kolomoisky's
partner, in their home base of Dnipropetrovsk.

Another oligarch, Hryhoriy Surkis, who rules Ukraine's football
(soccer) sports sector as head of the National Football Federation
(NFF), came under sustained pressure initiated by the government and
was almost removed from office. Only after Surkis appealed to the
international governing body, FIFA, and the latter issued a letter
supporting Surkis, was he granted a reprieve. FIFA's letter, which was
probably drafted by Surkis himself, threatened not to recognize any
vote by the NFF removing Surkis from his post and even went so far as
to demand the cessation "of any activities directed at organizing early
elections of the leadership of the NFF."

Thus, the current score is: Party of Regions - 0 : Oligarchs - 3.

(In the following issue: Tymoshenko as martyr?)

(c) Ivan Lozowy
Correspondence should be addressed to: lozowy @

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