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Bottom – up oligarchy

May 3, 2017

Every now and again questions are asked by the interested amateur Ukraine watcher regarding what has happened to the old oligarchy names of dark days past?

What of the (perceived) lessened political power of Rinat Akhmentov, of Viktor Pinchuk, of Ihor Kolomoisky et al?

The fate of Dmitry Firtash is well documented.  Notwithstanding being wanted in Spain and the USA to face corruption charges, nor being in hoc to Gazprombank for $5 billion, Mr Firtash also has liquidity issues.  Asset rich perhaps, but cash is another issue when cheap gas no longer fuels a chemicals empire and firms that are now losing money but have a workforce that requires paying.

To lay off the workforce and mothball industrial units would equate to a further political and economic loss of influence – and act as an invitation for the State to regain control over those industrial assets on the prima facie rationale of saving those jobs with elections upon the horizon.

There is then the enigmatic Mr Pinchuk, the recently de-banked but still sly Ihor Kolomoisky, or the apparently subdued Rinat Akhmetov (with whom The Radical Party appear to slowly be gravitating toward).

Yes they all still have “their people” either owned or rented within the Verkhovna Rada and across almost all parties, but all are perceived to have lost some political clout within the Verkhovna Rada in comparison to years and decades past.

However the decentralisation of power is a policy that found traction after the EuroMaidan/Revolution of Dignity and one which Ukraine has actually made progress.  It therefore follows that the oligarchy power has decentralised itself accordingly.

Whereas once it was possible to own and/or rent a political party, plus significant number of legislators across parties lines within the Verkhovna Rada, adding a pinch of Oblast Governors and a sprinkling of Mayors to insure an oligarch’s clout, there is now a need to look a little wider and lower within the political power network.

As power, and as importantly budgets, have moved to the periphery with slow but sure and continuing decentralisation, so an oligarch has to adjust too.

But how?

The oligarchy has now to work a little bit harder with many more of their employees – and the broader the collection of assets geographically, the greater an oligarch’s political influence will now become vis a vis “the centre” which was once all that was necessary.

Naturally that does not mean the people of western Ukraine would support Rinat Akhmetov – or would they?

Approximately 57,000 people live in or around Dobrotvosky, just north of Lviv and yet of the 22 members of the council, 11 work for a firm owned by Mr Akhmetov.  Beyond that, within the administrative/bureaucratic machinery of that council, several dozen are family members of those that are employed by one Mr Akhmetov’s companies.  Expanding that network outward, there are then prosecutors, judges, police, etc also family members to Mr Akhmetov’s employees on this council in western Ukraine.

Dobrotvosky is not the only council in western Ukraine to be significantly populated by employees of Mr Akhmetov’s companies – nor the surrounding council bureaucracies.

When it comes to Mr Akhmetov’s entities, it is a pattern for employees and their families across the nation where he has assets.  He has decentralised into local power and local budgets at the very lowest of governance levels – nationally.

A reader will therefore now have cause to ponder the geographical locations of the assets of Messers Kolomoisky, Pinchuk, Firtash et al, to then consider the size of their workforce, how swiftly local councils can be populated by employees and associated bureaucracies and institutions by the families of employees if the Akhmetov model is indicative of the new oligarch playbook.

After all, there must be something in it when an eastern Ukrainian oligarch much despised by many in western Ukraine, can so easily and successfully project his power at the most local of levels in several locations close to Lviv.

Now political/business/economic decisions and budgets are truly getting decided at a local level, naturally an oligarch must decentralise their influence too.

Thus the question presents itself – is bottom-up oligarchy is the new way to capture the State?

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