Rise of the Oligarchs in Russia and Ukraine
How Boris Berezovsky Fled Russia and Supported a Coup in Ukraine
The â€œexpulsionâ€ of Boris Berezovsky from Russia under the Putin Regime sparked a chain of events that led to Ukraineâ€™s upheaval. Though considered an â€œexpulsionâ€ by the Russian billionaire, Berezovsky was actually summoned to appear for questioning by the Prosecutor General but chose to remain in exile in UK and obtain political asylum there (BBC, 2012). The story is worth telling because what followed in the geopolitical spat between Berezovsky and Putin impacted Ukraine and millions of lives there, and the telling reveals the fragile nature of the democracies of Eastern Europe in general in the post-Soviet era. For it was Berezovsky who vowed revenge against Putin and immediately began meddling in Ukraine politics as a way of getting back at the new head of Russiaâ€”with the help of various investors, politicos and other power brokers from both the US and Israel (BBC, 2012). Regardless of where the influence and money came from, the falling out between the man who promised to strip the oligarchs of their political power in Russia and the oligarch who helped to install Putin in the Kremlin had an indirect but ultimately disruptive effect on Russiaâ€™s neighboring stateâ€”Ukraine (Mezrich, 2015). Ukraine is perhaps the best and most devastating example of how elusive the promise of democracy and capitalism has been for Eastern Europe. The reason for this elusiveness is that, at the end of the day, Eastern Europe has essentially been a geopolitical vacuum, into which all the major players on the world stageâ€”from the Bushes to the Bidens to the Berezovskys and Putinsâ€”have sought to wield influence (BBC, 2012;Risen, 2019). Since the fall of Communism, Ukraine has struggled to develop its own identity independent of both Western and Eastern influenceâ€”perhaps not surprising since it exists between the two like a middle child uncertain of who or what she can become.
Fall of Communism
Ukraine declared its sovereignty in 1990 and its independence in 1991 following the fall of the Berlin Wall (the symbol of Communism) in1989. Elections were held and Leonid Kravchuk. However, economic and political crises appeared, and another election was held for 1994, in which Leonid Kuchma was elected with just over half the popular vote. Kuchma opened the door for the International Monetary Fund (IMF) to be part of the countryâ€™s reconstruction, and in 1996 a new, formal constitution was delivered. Still, throughout the 1990s, the hoped-for economic prosperity did not manifest and instead Ukraine lost 60% of its GDP that decade (IMF, 2007). Inflation, crime and corruption so plagued the country that soon workers were striking and protests were appearing en masse. Kuchma gave way to Berezovsky-backed Viktor Yushchenko, who gave way to Putin-backed favorite Viktor Yanukovych, who gave way to Western-backed Petro Poroshenko (Berezovsky found dead in this bathroom in England by that point), who promised to return Crimea to Ukraine (though the Crimean people themselves voted for annexation and a return to Russia), and the civil war that ensued ensured a limited run by Poroshenko and he gave way to Volodymyr Zelensky, who subsequently assured the world that President Trump did not pressure him to look into any improprieties committed by Joe Biden and son Hunter with regards to Ukraineâ€™s natural gas company Burisma Holdings. If it all sounds like an unending melodramatic soap operaâ€”that is because it is exactly thatâ€”except the toll of all this drama has been felt in real loss of life, real destabilization of the nationâ€™s economy, and real geopolitical consequences. Ukraine should have been a natural ally of Russiaâ€”but when Russiaâ€™s Putin and oligarch â€œroof,â€ aka â€œkryshaâ€ as Mezrich (2015) described Berezovsky, fell out with one another, it opened a rift of gigantic proportions and a power play in the East European country where the exiled krysha looked to impose his revenge. In short, the Fall of Communism did not do anything to usher in a period of peace and prosperity for Ukraine. Instead, it opened up an opportunity for a power play in a vacuum that needed to be filled. The IMF first stepped in to fill it. Then Berezovsky looked to wield influence and control the puppet president from behind the scenes. Then Putin pushed back, unwilling to allow the neighbor state to be controlled by the same man Putin vowed to push out of politics. Then the West pushed back, unwilling to be left out of the power play. Then Ukraine, splintered into pieces and elected a comedian to be president, which shows the people there are not without a sense of irony.
Why So Many Problems?
The problems of the Ukraine are essentially the problems that Russia had under Yeltsin in the 1990s: with the dissolution of the Soviet Union, Russia saw a wholesale looting of the economy by a group of men who became known as the oligarchsâ€”businessmen like Berezovsky, Abramovich, Chubais, Khodorkovsky, and othersâ€”who privatized or controlled the nationâ€™s industries and accumulated vast wealth for themselves while the state itself disintegrated into ruin and the people into despair, even to the point where they longed for the good old days of Soviet leadership (Alexievich, 2007, 2017; Klebnikov,2000). The Soviet Experiment had ended in disarray and ruin, but compared to what came afterâ€”a void or vacuum into which the most self-enriching elements of the land leaptâ€”the Soviet Era at least seemed to have a kind of rule of law now completely missing in the new Russia (Suny, 2011).
The same could be said of Ukraine. The oligarchs played a major role in the development of the stateâ€™s problems in East Europe as well. As Samuels (2019) points out, â€œit is important to remember that while these ultrawealthy individuals are not formally part of the government, as Aristotle might have envisioned, they are very much in charge of the countryâ€™s economic, media and political interests.â€ Samuels (2019) explains the behind-the-scenes dealings that transpired to land the current (former) comedian into power in Ukraine. The previous presidentâ€”Petro Poroshenkoâ€”had been a thorn in the side of a certain oligarch by the name of Ihor Kolomoisky, founder of PrivatBank in the 1990s in the days when Ukraine was grappling with the establishment of its own statehood. Kolomoiskyâ€™s PrivatBank â€œgrew to be a key bank in Ukraine, handling more than a third of private deposits and serving approximately half the countryâ€™s populationâ€ (Forbes, 2020). Thus, just as the oligarchs pounced on the opportunity to leverage chaos to their advantage in Russia when Communism collapse, so too did oligarchs pounce on the opportunity to leverage chaos to their advantage in East European countriesâ€”like in Ukraine. Kolomoisky was just one of several to push the envelope in private industry, and so long as the political leaders of the country aligned with his ambitions there was no problem. The problemâ€”when it did ariseâ€”was that Kolomoisky was not the only oligarch in town, and there were many others and much richer ones at that who had their own fish to fryâ€”such as Berezovsky.
Berezovskyâ€™s ouster from the Kremlin at the hands of Putin was taken not only as a financial slap but also as a personal rebukeâ€”and Berezovsky did not like that the upstart Putin could treat the former godfather of the Kremlin with such disdain. Berezovsky had wormed his way into the establishment through the auto industry and then had leveraged his clout by getting close to the Yeltsin family, going so far as to marry one of his own media protÃ©gÃ©s to the daughter of Boris Yeltsinâ€”a chess move that gave him a virtual â€œinâ€ with the family from that point on (Mezrich, 2015). Yet, with Yeltsinâ€™s health in peril and a rival oligarch pushing his weight around on the nationâ€™s stage, the Yeltsin family along with Berezovsky saw that they needed a strategy to ensure that their legacy would not be compromised. They turned to Putin, who had previously been put in power at the head of the FSB. Putin was picked to replace Yeltsin just before the election was to occur and Putin instantly won over the people that Yeltsin had not been able to win over and the election fell his way. Yet Putinâ€™s words had not been insincere: he did not want the oligarchs meddling in Russian politics any longer. He told them they could keep their money but if they did not get out of politics, he would throw them in prison or chase them out of the country. Abramovich got the message. Khodorkovsky and Berezovsky did not. The former was arrested and imprisoned for years. Berezovsky fled to avoid a similar fate (Mezrich, 2015). Only upon being granted asylum in the UK, Berezovsky turned to friends in Israel and in the West to help organize a coup in Ukraine to begin his plot of revenge against Putin (BBC, 2012).
Thus, Berezovsky was now a much bigger fish swimming in the sea of oligarchs in Ukraine, and the competition among so many people with so much money, all of whom looked to have influence and control in the new state, was in effect like lifting the lid on the genieâ€™s lamp. Once off, it was impossible to get the genie back in the bottle. Ukraine was now a circus stateâ€”with the IMF, the West, ex-Russian oligarchs, and Ukrainian oligarchs vying for control. Putin meanwhile had ushered in an era of stability in Russia that had not been seen in decades. It was little wonder to any objective observer of geopolitics that Crimea would essentially throw itself into the arms of Russia following the explosion of violence in Ukraine as a result of the made circus of events that transpired as Berezovsky sought to overthrow the Russian-backed president and install his own puppet, andâ€”when the exiled oligarch was found dead in his bathroomâ€”a new puppet (this one backed by the West) would be installed, to the chagrin of native oligarchs like Kolomoisky, who saw their power diminishing under a cloud of vultures descending from the West to feed on the carcass of Ukraine.
All the while, the concepts of democracy and capitalism were thrown about as though they were magic words that, if uttered enough times in the popular media, would make people think that Ukraine was at long last a free and prosperous nation. The reality of the situation was far from such wishful thinking, however. The reason, though, was not that democracy and capitalism had failed to be implemented effectively in Ukraine; rather, it was that democracy and capitalism were not and never have been a magic recipe for peace, freedom and prosperity. Just as Communism is a screen for those seeking a power grab, democracy and capitalism are as well. The history of the United States shows as much: the Declaration of Independence paid lip service to the Rights of Man promoted by Thomas Paineâ€”but even Paine felt betrayed when the Founding Fathers failed to abolish slavery and truly embrace the principle of equality. The Founding Fathers were as interested in land and power grabs as the Virginia House of Commons had been when it chafed at the signing of a peace treaty between the Native Americans and the Crown. Hamilton and the Federalists would pay lip service to democracy and capitalism in their argument for the ratification of the Constitution in the Federalist Papers, but their efforts were simply aimed at a consolidation of power in the hands of a few, small centralized players. Jefferson understood as much when he indicated that the Supreme Court would effectively constitute a tyranny.
Thus, in Ukraine, it was nothing different. Democracy and capitalism were the buzzwords and everywhere the buzzards flew, picking the bones of the nation clean as they fattened and enriched themselves, in turn drawing other eyes to the feast and suddenly feeling insecure and less powerful as bigger and meaner buzzards began to appearâ€”Berezovsky being one of these latter (Samuels, 2019). When Berezovsky died, Kolomoisky saw the opportunity to get back some of the power and control he had lost under Poroshenko. Poroshenko had been a threat to Kolomoiskyâ€™s wealth, because Poroshenko was a front man for Western interests, whoâ€”now that Putinâ€™s man was out of the way and Berezovsky was deadâ€”saw an opportunity for themselves; and that is where the comedian came into play: he was supported by Kolomoiskyâ€”a dark horse candidate meant to undermine the unpopular antics of the new status quo (Samuels, 2019). Kolomoisky played the hand perfectly and the comedian came to power. Zelensky knew Kolomoisky: the former had appeared on TV as an actor on the station owned by the latter. It was, in other words, much like the relationship between Berezovsky the Krysha and the young journalist at newspaper owned by Berezovsky: the oligarch turned the writer into a power play by getting the daughter of Yeltsin to marry the young man (Mezrich, 2015). In Ukraine, the oligarch Kolomoisky used his influence to promote the actor before the public and turn him into a power play. In both cases it was the sameâ€”simply the practice of the puppeteer aiming to control the puppet in politics, as has been the case throughout the history of democracy and capitalism all around the world.
The civil war in the Donbass region of Ukraine has been an indirect outcome of Putinâ€™s war with the oligarchs in Russia. The collapse of Communism in Russia led to an opportunity for men like Berezovsky to strike it rich as the currency collapsed and hyperinflation set in. Berezovsky made his billions by borrowing at large amounts and then waiting for the currency to collapse before paying back his debts, basically ensuring that he would pay pennies on the dollar (Mezrich, 2015). Berezovsky then went on to influence politics in Russia by worming his way into the Kremlin. When Putin came to power, however, the game was up, and Berezovsky fled to UK and launched his war against Putin by supporting a coup in Ukraine. Civil war broke out between Ukraine and pro-Russian forces in the Donbass region; Crimea was annexed by Russia; and Berezovsky died in a bathroom. The election of Zelensky to the highest office in Ukraine came about as a result of Ukraine oligarch Kolomoisky wielding his influence and, in particularly, his media empire to promote the kind of anti-establishment candidate that Donald Trump was presented as in the US. Of course, things are never as simple as they appear, and the Trump Administration has been filled with establishmentarians from the beginning, including West Point graduate Mike Pompeo, now serving as US Secretary of State. In Ukraine, the situation is really no different. For all the talk of democracy and capitalism, these buzzwords are little more than screens set up so that the real power players can go about their business with as little interruption as possibleâ€”until the next round of power grabbing commences.
Alexievich, S. (2007). Secondhand Time: The Last of the Soviets. NY: Random House.
Alexievich, S. (2017). The Unwomanly Face of War: An Oral History of Women in World War II. NY: Random House.
BBC. (2012). Russian godfathers. Retrieved from https://www.documentary24.com/russian-godfathers-putin-and-the-oligarchs–848/
Forbes. (2020). Ihor Kolomoyskyy. Retrieved from https://nationalinterest.org/blog/buzz/how-russian-oligarchs-changed-countryâ€”and-not-better-97472
Klebnikov, P. (2000). Godfather of the Kremlin. New York, NY: Harcourt.
IMF. (2007). Report for Ukraine. Retrieved from https://www.imf.org/external/pubs/ft/weo/2007/02/weodata/weorept.aspx?sy=1992&ey=2008&scsm=1&ssd=1&sort=country&ds=.&br=1&c=926&s=PPPGDP&grp=0&a=&pr1.x=41&pr1.y=2
Mezrich, B. (2015). Once upon a time in Russia. New York, NY: Atria.
Risen, J. (2019). I Wrote About the Bidens and Ukraine Years Ago. Retrieved from https://theintercept.com/2019/09/25/i-wrote-about-the-bidens-and-ukraine-years-ago-then-the-right-wing-spin-machine-turned-the-story-upside-down/
Samuels, J. (2019). How Russian Oligarchs Changed the Countryâ€”and Not for the Better. Retrieved from https://nationalinterest.org/blog/buzz/how-russian-oligarchs-changed-countryâ€”and-not-better-97472
Suny, R. (2011). The Soviet Experiment. UK: Oxford University Press.
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