Oligarch Igor Kolomoisky won't back down in the face of US sanctions. Photo: YES press service ©2019, photographer Sergey Ilyin.
Privat Group co-owner Ihor Kolomoisky has been placed under personal US sanctions and risks losing his political influence. However, the oligarch appears to have anticipated some kind of attack and has therefore begun regrouping his forces in parliament. His relationship with President Volodymyr Zelenskyy will be crucial to his future.
More specifically, will the authorities, following the American sanctions, begin criminal prosecution of the oligarch within Ukraine? For now, it appears the president will try to exploit the situation not to destroy the oligarch and his business, but to "tame" him, so that he and his influence group in the Rada will carry out Bankova's every order.
However, the Americans, who are determined to completely "zero out" Kolomoisky's influence and will pressure Zelenskyy to do so, could make adjustments to this strategy.
Details of the situation are in the material "Countries".
The "Cudgel" of Attraction
The well-known troublemaker in parliament, People's Deputy Alexander Dubinsky (non-factional), expelled from the Servant of the People (SN) faction after the introduction of American sanctions, is gathering deputies into an inter-faction parliamentary association.
"In accordance with Article 60 of the Rules of Procedure of the Verkhovna Rada of Ukraine, I hereby announce the creation of... the inter-faction parliamentary association 'Dubina – Servant of the Ukrainian People.' Chairman – Oleksandr Anatolyevich Dubinsky," Speaker Dmytro Razumkov announced at the plenary session on March 4.
On his Telegram channel, Dubinsky outlined the following objectives of the International Financial Organization: "to serve the Ukrainian people and protect Ukraine's national interests."
— to facilitate the formation of an agenda for the authorities, including parliament, that would “really meet the demands of Ukrainian society and modern challenges.”
— implement “specific, effective steps to address Ukraine’s main and pressing problems.”
— to counteract “by legal means any attempts to interfere with and illegally influence the activities of state authorities of Ukraine and government officials of Ukraine.”
— to facilitate “Ukraine’s fulfillment of its long-standing international obligations in investigating high-profile crimes and administering genuine justice in these cases.”
Dubinsky also noted that the number of participants in the MFO will not be limited to its initial composition, but did not name other participants.
A list of potential MFO members was published by Oleksiy Goncharenko, a member of parliament from the European Solidarity party. In addition to Dubinsky, it includes Oleksiy Movchan (SN), Serhiy Shvets (SN), Anastasia Lyashenko (SN), Andriy Boblyakh (SN), Dmytro Chernyy (SN), and Anton Polyakov (from the For the Future parliamentary group, who was previously expelled from the presidential faction).
Dubinsky effectively confirmed the fact that these colleagues had joined the International Financial Organization, and at the same time accused certain swindlers of spying on Razumkov.
"Considering that this list was submitted personally to the speaker and was not disclosed anywhere, and that information about the list of participants was not public and was to be disclosed by me a little later, then 'agent' Goncharenko was exposed. Because such information could only have been possessed by scammers who had infiltrated Bankova, through their sources, who were secretly monitoring Razumkov and immediately leaking crucial information to those same scammers," he wrote on his Facebook page.
People's Deputy Dmitry Cherny from the SN party explained to Strana that members of the International Fund for Economic Cooperation intend to focus on identifying lobbying activity in parliament.
"Unfortunately, lobbying bills targeting one industry or another or another individual are increasingly appearing in the Rada. And I don't intend to support them, following the lead of most factions," he told Strana. He also predicted that "certain media stories" would eventually emerge, sponsored by the International Fund for National Economy (IFO), but declined to elaborate.
The people's deputy also admitted an ambiguous attitude towards his joining "Dubina" in the SN faction.
"Alexander Dubinsky is an enemy to most 'Servant of the People,' even though he remains a party member. But for me, this (joining the MFO – Ed.) is a normal decision. No one is running around the session hall trying to persuade people to join us, but the doors are open. Alexander himself said the number of deputies in the MFO will grow," the parliamentarian asserts.
Interestingly, Anton Polyakov responded to Strana's questions about joining the International Financial Organization (IFI) in the style of "it's too early to talk about anything."
"Every few days, I get asked to join the International Fund of Independent States (IFO): no problem, I'll sign up. In general, these IFOs are getting so much attention in the media, as if a new party had been formed. Let them show some results, and then ask questions. If Alexander really does gather people who will do something, and it's not just a declaration, then we'll be able to talk about something," MP Polyakov (For the Future) told Strana.
"There will be an emphasis on competing influence groups and, possibly, direct contacts between some Servant of the People MPs and a well-known oligarch named A (that is, the owner of the SCM corporation, Rinat Akhmetov – Ed.)," one Servant of the People MP predicted the group's activities.
The deputies who joined the MFO led by Dubinsky are considered part of the influence group of Privat Group co-owner Ihor Kolomoisky, a claim the deputies themselves deny. Meanwhile, Dubinsky, who previously worked for the oligarch's television channel 1+1, claims that Kolomoisky has no influence on his parliamentary activities.
"Dubinsky has already started talking about the 'Servants of the People's' ills and will now do so on behalf of the International Fund for Economic Cooperation (IFO). If this story takes off in the media, it could develop into a new political project. Especially given that the wheels are falling off the Maybach (the informal nickname for the group "For the Future," which is believed to be influenced by the oligarch – Ed.), and Palytsia (the head of the "For the Future" party – Ed.) is increasingly distancing himself from Kolomoisky, Ihor Valerievich may need another supporter in the Rada," a source among the MPs believes.
Deputy Cherny, however, denies that the MFO was created for any other purposes than those stated. "And this is definitely not a political project," he says.
However, this group of deputies could theoretically form the core of a new parliamentary group. All of them are majoritarians, meaning they could leave the Servant of the People faction if they wish without losing their parliamentary powers. The names of seven have been announced, but the total number of MFO members is said to be ten. To form their own parliamentary group, 17 are needed (following the model of the smallest faction at the time of its formation: "Holos" in this convocation of the Verkhovna Rada). Kolomoisky's circle includes about 25 deputies within the Servant of the People faction alone. He also has people in "For the Future." So, a group could be formed.
Moreover, here's another interesting piece of political arithmetic: If at least 20 members leave the Servant of the People faction, it will have 225 members, thus eliminating the de jure mono-majority. This is a clear reason for early elections or the formation of a coalition.
True, Bankova could try to recruit deputies from outside the parliamentary faction, or simply ignore this fact and continue to operate without a formal majority. But either way, the situation will be unpleasant.
In short, Kolomoisky has a certain amount of leverage over the "Servants of the People" faction. And the fact that deputies close to him have formed their own association now (hinting that they might use this leverage) is also hardly a coincidence.
Considering what happened on Friday – the introduction of American sanctions against Kolomoisky.
Ring shrinks
On Friday, March 5, US Secretary of State Antony Blinken announced sanctions against the oligarch and his immediate family. They are banned from entering the United States. The sanctions are based on allegations of involvement in corruption during Kolomoisky's tenure as leader of the Dnipropetrovsk region from 2014 to 2015.
This, according to Blinken, undermined “the rule of law and the Ukrainian public’s faith in the democratic institutions of their government and public processes.”
“While this sanctions designation is based on actions he (Kolomoisky – Ed.) took during his tenure, I also want to express concern about Kolomoisky’s current and ongoing efforts to undermine Ukraine’s democratic processes and institutions, which pose a serious threat to its future,” Blinken noted.
The use of Kolomoisky's tenure as governor of the Dnipropetrovsk region as a motive for imposing sanctions was perceived by many as ironic, given that it was during this post that the oligarch distinguished himself by resisting the "Russian Spring." Now, Blinken characterizes this period of Kolomoisky's tenure as "corrupt practices that undermined the rule of law and the Ukrainian public's trust in democratic institutions and governance processes, including the use of his political influence and official power for personal gain."
But in reality, the Americans simply needed a formal link to categorize Kolomoisky under Section 7031(c). Under this category, sanctions are imposed on government officials, and the oligarch's only period of public service was his governorship.
Incidentally, not long ago, in July 2020, Chechen leader Ramzan Kadyrov was sanctioned for human rights violations. And in January of the same year, Moldovan oligarch Vladimir Plahotniuc was also sanctioned for corruption.
A week ago, Secretary of State Blinken announced sanctions against former Slovakian Prosecutor General Dobroslav Trnka, who is allegedly linked to influential businessman Marian Kočner. In total, 150 individuals have been sanctioned over the five years since the law was introduced.
The sanctions themselves appear insignificant at first glance and include only an entry ban. Financial sanctions have not been imposed, at least not yet (financial sanctions are imposed not by the State Department, but by the US Treasury Department, and it's quite possible they will follow in the future).
But it is clear to everyone that this is, first and foremost, a political signal to both Kolomoisky himself and the Ukrainian authorities.
"We understand the political weight of such a signal," Igor Popov, a member of parliament of the eighth convocation and a member of the Verkhovna Rada's interparliamentary relations group with the United States, commented on the sanctions situation on his Facebook page.
Kolomoisky had already had problems with his U.S. visa in the 2000s. It was for his work as regional governor during the critical years of the post-Maidan regime in 2014-15 that his entry permit was restored.
Since then, Washington and the West's overall attitude toward Kolomoisky and other Ukrainian oligarchs has changed. The US no longer needs their services to curb Russian influence in southeastern Ukraine as much as it did in 2014. In the West, they have come to be seen more as competitors in the struggle for control over the country's domestic political and economic space.
"The problem with our oligarchs is that they are too influential in politics and economics, and their place in the future should be taken by transnational companies," wrote political scientist Ruslan Bortnik on his Facebook page.
Zelensky's Choice
But the main question in this story is whose side will President Volodymyr Zelenskyy take?
Immediately after the news of sanctions against Kolomoisky was announced, the President's Office stated that Zelenskyy himself is fighting the oligarchs and thanks his partners for their assistance in this difficult task.
But these are just words. What's more important is whether they will be followed by action. That is, will real action be taken to prosecute Kolomoisky in Ukraine? For example, will a notice of suspicion be served? Will he be jailed? Will the oligarch's assets be confiscated due to his debts to the NBU and PrivatBank? Will his Ukrainian citizenship be stripped on the grounds that he has admitted to holding citizenship in other countries?
"The most dangerous option for Kolomoisky is stripping him of his citizenship. Our country can't extradite him to other countries as a Ukrainian citizen, but it can certainly extradite him as a citizen of Cyprus or Israel. Moreover, there are precedents of politicians being stripped of their citizenship for holding a second passport (just ask Artemenko)," Bortnik believes, recalling the situation of Andriy Artemenko, a member of parliament of the eighth convocation, who was stripped of his mandate for allegedly holding a Canadian passport.
At the same time, given that Kolomoisky is a close and long-standing partner of Zelenskyy, and controls nearly three dozen deputies from the Servant of the People faction and one of the largest television channels, 1+1, such a path could be very painful for the president.
Another option is to do nothing, effectively supporting Kolomoisky. But this would reinforce the perception in the US of himself as an "oligarch's stooge" and risk losing American support, which would also lead to domestic destabilization.
Calls for Zelenskyy to expedite the investigation into Kolomoisky are particularly loud among the pro-Western elements of the establishment. They hope that the oligarch's influential group in parliament will begin to crumble, fearing the inevitable problems. But for now, our sources within it remain optimistic.
"It's not yet clear how Bankova will react to this, but for now we remain in Servant of the People and in our group," said a source in Kolomoisky's influence group.
How Kolomoisky will react is the most interesting question in this context. According to political scientist Vadym Karasev, the oligarch would be better off not escalating the situation now, otherwise it will only get worse. "He's being closely watched both in Ukraine and abroad. If he tries, for example, through his people in the Rada, to escalate the situation, he'll only worsen his situation," Karasev believes.
"Kolomoisky has plenty of room to maneuver. If he so chooses, he could get on the nerves of both the president and the residents of the building on Sikorsky Street (the US Embassy – Ed.). But he'll still act stealthily. He's unlikely to be as formal as he was with Poroshenko. Zelenskyy's public support level is still higher today than Poroshenko's was at the end of his term. Therefore, Kolomoisky won't get too heated and will try to act indirectly," believes political scientist Andriy Zolotarev.
Political scientist Volodymyr Fesenko, meanwhile, believes it's unlikely Kolomoisky will be arrested in Ukraine, his assets confiscated, or anything like that. "This would require criminal proceedings, investigative actions, and court decisions. The opening of criminal proceedings is entirely possible," Fesenko wrote on his Facebook page.
He doubts the National Security and Defense Council will impose sanctions against the oligarch. "Such sanctions would have to be justified by facilitating (at least financial) terrorism. It's hard to believe that Kolomoisky had any business ties to the occupied territories of Donetsk and Luhansk Oblasts (ORDLO). However, the National Security and Defense Council's ordering the relevant law enforcement agencies to investigate the charges outlined in the US State Department's sanctions decision is also entirely possible," the expert admits.
Taming the Oligarch
According to Strana, rumors have been circulating in Kyiv's political circles for a week now that Kolomoisky may soon be served with a notice of suspicion.
Following the news of the imposition of American sanctions, these rumors intensified.
However, after Strana spoke with several sources close to the Presidential Office, as well as with members of the Servant of the People party, a somewhat different picture emerged.
"To a certain extent, Zelenskyy was even pleased by the sanctions against Kolomoisky. The two of them have a long-standing and close relationship. But the oligarch is a problematic partner, prone to constantly asserting his rights and demanding things. That's why Bankova now wants to use sanctions against the oligarch to tame him. They're saying, 'Look, Igor Valerievich – one step left, one step right, and you're finished. The Americans are pressing. You see for yourself, the situation is serious. And your only chance is to behave quietly and do what we tell you. Your deputies must vote as we say, and your TV channel must portray us well.' Perhaps, to demonstrate seriousness of intentions, they'll even hand him a "suspicion." But not to jail him and confiscate his business (this would obviously provoke harsh retaliatory actions from the oligarch against Zelenskyy), but to make him even more manageable. And at the same time, it would send a signal to other oligarchs. But there are two problematic aspects to this scheme. "Firstly, the Americans don't need this. Washington isn't demanding that Kolomoisky be tamed, but that he be dealt with seriously and his assets confiscated to cover his debts to PrivatBank. Secondly, Kolomoisky isn't the type to be tamed. He's impulsive and can lose his temper. Therefore, the situation is difficult for Zelenskyy. And everything depends on how hard the Americans apply pressure and whether Kolomoisky agrees to be tamed," our sources say.
In topic: The US imposed sanctions against Kolomoisky and his family.
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