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Will Ukraine Turn Back to Russia? This Billionaire Thinks So

Leonid Bershidsky

(Bloomberg Opinion) -- When Igor Kolomoisky says Ukraine should turn away from the West and back toward Russia, the world should listen, even if the Ukrainian billionaire doesn’t call the shots in Kyiv to the extent that many believe he does. Despite the seemingly irreparable damage Russia caused to its relationship with Ukraine by annexing its territory and sustaining a separatist war in its eastern regions, it’s conceivable that Ukraine eventually could return to its old strategy of having Russia and the West compete for its affections.

Kolomoisky, whose TV channel ran Volodymyr Zelenskiy’s comedy shows before the actor and producer became Ukraine’s president this year, gave a scandalous interview to the New York Times. He said that since the West is in no hurry to accept Ukraine as a member of the European Union and the North Atlantic Treaty Organization, Ukraine should make peace with Russia and take Russian money instead of International Monetary Fund loans. As things stand, he said, the U.S. is just using Ukraine to wage “war against Russia to the last Ukrainian.” But Russia is “stronger anyway” and it’s time to mend fences.

Kolomoisky was one of the engineers of Ukraine’s decisive break with Russia in 2014. He funded the volunteer battalions that fought off the early onslaught of Russian-backed separatists in eastern Ukraine, helping to contain the spread of secession before the long-underfunded regular army was strong enough to be of any use. In the process, he lost his financial business in Russia and gained the Dnipropetrovsk regional governorship in Ukraine, which former President Petro Poroshenko soon took away, seeking to dismantle what he saw as Kolomoisky’s personal army. So what the oligarch is saying now could be seen as a turnabout, except Kolomoisky doesn’t think in such terms: Whatever he says or does, he’s looking out for his business interests first.

Today, these interests consist in getting compensation for the 2016 nationalization of Privatbank, Ukraine’s biggest lender, which he co-owned and which the Poroshenko government accused him of plundering. Kolomoisky is tied up in complex litigation with now-state-owned Privatbank. He and his partner have just been forced to pay 10 million pounds ($12.8 million) to cover Ukraine’s legal expenses in a London court. The billionaire is widely suspected of trying to exploit his longstanding relationship with Zelenskiy to end the conflict in his favor. The president so far has managed to remain above the fray, but he hasn’t heeded calls from U.S., European and International Monetary Fund officials to distance himself clearly from Kolomoisky. 

The oligarch has few friends in Washington or the European capitals, and he used the interview to make an implicit threat: If Western officials continue fighting him and supporting the Privatbank nationalization, he’ll turn Zelenskiy sharply toward Russia. 

Whether he can do that is a different matter.

Zelenskiy was elected on the promise of restoring peace to eastern Ukraine, and he’s taken some steps toward that goal by exchanging prisoners with Russia and accepting a key Russian demand concerning the sequence of events that should lead to the return of separatist territories to Ukrainian control. But even that progress ran into the resistance of Ukrainian intellectuals who see it as capitulation — and of the very volunteers Kolomoisky once funded. These combat veterans, armed with weapons they’d brought back from the war, inserted themselves in areas where Ukraine and the separatists had agreed to pull back their troops as a prelude to “Normandy format” peace talks mediated by France and Germany. Zelenskiy was forced to travel to the area and attempt to persuade them to leave.

Now, the pullback appears to be complete, the area is being cleared of mines and there are no obstacles to the talks. But Zelenskiy is aware by now that compromises with Russia are fraught with the danger of a revolt at home, possibly even an armed one. If he did what Kolomoisky says, Kyiv and much of central and western Ukraine almost certainly would rise against him. That’s not a reasonable price to pay for Kolomoisky’s early support, and today, the billionaire has no obvious leverage on the president.

Voice, a liberal opposition party, recently proposed that Ukraine exit the 2015 Minsk agreements, which serve as the framework for the current peace process, and put off ending the conflict in the east and concentrate on domestic issues until better times. Zelenskiy is probably tempted to try a version of this plan, only without formally exiting the Minsk agreements, which likely would anger Ukraine’s European allies. Zelenskiy has his hands full with an ambitious reform agenda. On Wednesday, the Ukrainian parliament, in which his party has a majority, took the first step toward allowing a market in land, something all of Ukraine’s previous governments failed to do.

Yet Kolomoisky's provocative statements shouldn’t be dismissed out of hand.

Zelenskiy, indeed, isn’t getting much Western support today, apart from technical and military assistance programs that are, let’s face it, useful but not vitally important. The IMF is withholding its more significant support, in part because it fears Zelenskiy might not try hard enough to recoup Privatbank losses from Kolomoisky. French President Emmanuel Macron lately has been talking about a rapprochement with Russian leader Vladimir Putin, and neither France nor Germany can be expected actively to side with Ukraine in the peace talks because both are eager to be rid of the problem. In the U.S., ongoing Ukrainegate and impeachment proceedings have, in effect, made Ukraine the actual country both toxic and irrelevant.

Kolomoisky’s point is that, five years after breaking with Russia, Ukraine isn’t a priority project for the West — but it’s still a priority for Putin. Zelenskiy can’t afford, and doesn’t want, to hand his country to the Russian president. But he can quietly open it to more Russian trade and investment, and he can gradually return to the both-sides-against-the-middle policy all Ukrainians leaders except Poroshenko tried to pursue after Ukraine became independent. In a way, that’s also the game Alexander Lukashenko, the president of neighboring Belarus, tries to play, turning to the West every time he has a disagreement with Putin and to Putin when he senses he can get something out of him.

This cynical policy is a long way from the “civilizational choice” Ukrainian politicians claimed to have made under Poroshenko. But Western politicians must realize it’s a natural fall back for Ukrainians when they feel spurned. If Zelenskiy does start flirting with Putin, it won’t necessarily be because of Kolomoisky’s evil influence. A Western failure to embrace his reformist zeal and support his attempts to get more favorable peace terms with Russia could be the real reason.

To contact the author of this story: Leonid Bershidsky at lbershidsky@bloomberg.net

To contact the editor responsible for this story: Tobin Harshaw at tharshaw@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.

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