COMMENT: Yanukovych’s “Own Goal;” Zelenskiy’s “Lesson Learned”

COMMENT: Yanukovych’s “Own Goal;” Zelenskiy’s “Lesson Learned”
Ukrainian President Volodymyr Zelenskiy has learnt the lessons ousted president VIktor Yanukovych taught by his failure
By Robert Homans in Los Angeles June 25, 2020

In September 2013, at the Annual “YES” Conference in Yalta, former President Yanukovych announced: “We have to move toward European integration,” causing participants to dance on the beach.

Two months later, on November 21, 2013, Prime Minister Azarov announced that his government would not sign the European Union Association & Free Trade Agreement (EU-FTA), sparking the 2013 Revolution of Dignity that directly led to Yanukovych’s departure.

This was Yanukovych’s “Own Goal.” Six and half years later, Ukrainian President Volodymyr Zelenskiy appears to have learned the lesson of Yanukovych’s “Own Goal.”

Today, Zelenskiy is making statements in support of European integration, and eventual EU membership, while at the same time removing reformers from his government who were intent on closing of sources of graft, in customs in the civil service, in healthcare and elsewhere in the government.

This is Zelenskiy’s “Lesson Learned.” Will Zelenskiy and his supporters succeed? This depends entirely on three factors: The willingness of Ukrainian voters, 73% of whom voted for Zelenskiy, to hold Zelenskiy accountable for his campaign promise to end graft and corruption; the willingness of a talented group of Ukrainians reformers to seek and step into leadership positions, in order to make sure that the wishes of Ukrainian voters are fulfilled; and the willingness of Western supporters to learn from the mistakes they made, during the period leading up to November 21, 2013, the greatest of which was their willingness to believe what Ukraine’s leaders were/are telling them.

The “Own Goal”  

Had the Yanukovych government gone ahead and signed the EU-FTA on November 28, 2013, instead of declining to do so, at the Vilnius EU Enlargement Summit, three things likely would have happened: there would likely not have been a Revolution of Dignity; Yanukovych would have been remembered as a transformational President, for “moving Ukraine toward Europe” as he promised he would at the YES Conference, and he likely would have been re-elected to a second term as president in 2015.

Yanukovych, his “family,” and others in his government would likely have gone right on stealing, as they had been doing on a massive scale throughout Yanukovych’s first term.

Why Yanukovych didn’t sign the EU-FTA? I believe that the answer, in a word, was greed. Russian pressure was one factor, including its decision in September 2013 to close its borders to Ukrainian exports, but likely not the only influence.

Another factor was the EU’s insistence on Ukraine releasing Yulia Tymoshenko from prison. Although there were negotiations between the government of Ukraine and the EU over how a release could be orchestrated, including whether or not a pardon would be required, or a medical evacuation to Germany without charges being dropped, releasing Tymoshenko always was a non-starter for Yanukovych.

Likely the biggest factor was greed. As Andrew Wilson writes in his book, “Ukraine Crisis – What it means for the West”, in September 2013 Ukraine, in response to Russia’s border closing, demanded, as a condition for signing the EU-FTA, that the EU indemnify Ukraine for the loss of the Russian market, €12bn for modernisation, such as the need to confirm to EU standards, and €13bn in direct compensation for lost Russian markets, per year.

As President of Ukraine, Yanukovych was supported by Russia, but he was not a “Russian puppet” as many continue to describe him. He was, primarily, his own man. Yanukovych ended up concluding that he, his “family,” and his associates could only continue to steal if they didn’t sign the EU-FTA. This turned out to be a major miscalculation.

During the summer and autumn of 2013, the expatriate community in Kyiv along with a number of Western experts seemed either oblivious, or willing to ignore, the lack of progress of the negotiations between Ukraine and the EU.

The local and Western press was full of articles about the “inevitability” of Ukraine signing the agreement and, as one widely quoted pundit said, “Yanukovych has no other option but to sign the agreement.” It was expected that after the agreement that Ukraine would become a European Country in all respects.  

To my knowledge, the only person who voiced any scepticism about whether or not Ukraine would sign the EU-FTA was a friend of mine, an expat lawyer with long experience in Ukraine, with whom I had coffee in the Lufthansa Business Class Lounge in early November 2013, just before Ukraine made its choice not to sign the EU-FTA. In answering the pundit’s remark that Ukraine had no options but to sign the EU-FTA, he told me: “Yanukovych has plenty of options.”  

To Ukraine, the EU was clear – no more money was forthcoming. At the same time, the Russian government offered Ukraine a loan of $15bn, with the lender being one of their funds established for the benefit of Russian pensioners. Conditions included a 2-year term paid out in tranches of $3mn, and payable in full soon after the scheduled 2015 Presidential election. Velvet handcuffs, if there ever was one. Both countries were represented by US law firms, the loan was listed on the Irish Stock Exchange, with the UK being the venue for dispute resolution. Only one tranche of $3bn was released, in December 2013. Ukraine is currently disputing its payment obligations in a London Court.

On November 21, 2013, the day PM Azarov made the announcement that Ukraine was not going to sign the EU-FTA, Roman Olearchuk and Peter Spiegel reported in the Financial Times that Stefan Fule, the EU’s Enlargement Commissioner, was on his way to Kyiv with a package of additional monetary incentives, including expanded trade support, additional gas supplies and increased aid from the International Monetary Fund (IMF). By Ukraine’s decision not to sign the EU-FTA, Yanukovych may have relieved the EU of falling prey to his own attempt at blackmail.

The “Lesson Learned”

During the first year of his presidency Zelenskiy seems to have learned the lesson of Yanukovych’s “Own Goal.” Instead of pulling back from Euro-Atlantic Integration, as Yanukovych did by not signing the EU-FTA, Zelenskiy tells Western backers of Ukraine’s desire for “Euro-Atlantic Integration,” while at the same time improving the conditions allowing graft to flow unhindered. Indications include: soon after Zelenskiy’s inauguration, the return to Ukraine from exile of a number of ministers in Yanukovych’s government, including Andriy Portnov, Yanukovych’s former Chief of Staff, and Raisa Bogatyrova, Yanukovych’s former Minister of Health.  Other members of Yanukovych’s government, those who stayed in Ukraine, are assuming higher profiles, such as Hanna Herman, Yanukovych’s press spokesperson.

There is an increase in the power and influence of Viktor Medvedchuk, Russia’s Man in Ukraine. Medvedchuk is now the head of the largest opposition faction in Parliament and, arguably, Ukraine’s biggest media baron, especially since it has been revealed that he owns 25% interest in 1+1, the broadcast network owned by Igor Kolomoisky, Zelenskiy’s once, and perhaps future, patron.

There is the dismissal of reformers who were closing off major segments of Ukraine’s government to graft, segments that constituted major conduits of graft under Yanukovych, including, but not limited to, Oleksandr Starodubtsev from the Civil Service Commission, Maksym Nefyodov from Customs and, most significantly, Ruslan Ryaboshapka as Prosecutor General.

Except for Arsen Avakov as Interior Minister, on March 4 Zelenskiy dismissed his entire Cabinet, including a number of well-known reformers.

There is the decision to prosecute former President Petro Poroshenko on charges of issuing an illegal decree concerning the appointment of the Deputy Head of Ukraine’s Foreign Intelligence Service, and for aiding and abetting divisions over the establishment of an independent Ukrainian Orthodox Church. Tymoshenko Redux? If this is in fact Zelenskiy’s strategy, talking up Euro-Atlantic Integration while seemingly creating improved conditions for graft to flow to favoured oligarchs and others, he seems to be succeeding. Recently, along with the extension of a $5bn standby credit to Ukraine, the IMF released a strong statement on the need for Ukraine to increase its anti-corruption efforts. It remains to be seen if the IMF’s statement carries any teeth.

Failure of Euromaidan Leadership

Ukraine has a large number of extremely competent and committed, mostly young, reformers. I have the pleasure of knowing a few of them. However, in the six-plus years since the end of Euromaidan, none of them have taken major leadership roles in the government. None have mounted a serious run at the presidency. Some have assumed responsible positions in previous parliaments and ministries, but many have since stepped back. Recently, Slava Vakarchuk, head of Ukraine’s major reform party, Holos, resigned from Parliament. Unless this group of reformers seeks and steps forward into major leadership positions Zelenskiy’s strategy, if he has one, will likely succeed.

Overall, I am optimistic that Zelenskiy’s strategy, assuming that this is his strategy, will fail, because: The Euromaidan Leadership will, at some point, be faced with a stark choice – either start leading, and thereby redeem the objectives of Euromaidan, or Ukraine will likely see stronger Russian influence and even domination, as well as reduced Western interest and support.

Ukrainian voters are becoming increasingly energised and, as was proved by last year’s election results, as well as by Euromaidan, they will likely not tolerate a reversion back to the status quo ante.

Helped by the IMF and others, Zelenskiy stood up to Kolomoisky, when he signed the bill preventing the return to Kolomoisky of PrivatBank. He needs to stand up to Medvedchuk; he needs to stand up to other major oligarchs, by telling them that the old ways of doing business are over, and taking corresponding actions. Western backers need to help, minus the encouraging words, which are meaningless. Otherwise the return on their investments in Ukraine, and the trust that Ukrainians have placed on Western support, will go to zero.

“Mr. Jones”

Last Friday I watched the movie “Mr. Jones,” about Gareth Jones the journalist who was credited by breaking the news of the 1932/33 Famine to the Public. I originally thought “Mr. Jones” was going to be another movie about the Famine. I was pleasantly surprised.

Instead of the Famine, Mr. Jones was primarily a movie about fake news, corruption, the willingness of respected reporters to be blackmailed, and the willingness of one journalist to tell the truth, at the risk of his own career and personal safety, all with the Famine as background. Students of journalism would be well-served to watch the movie, as is the case with working journalists and hosts and hostesses of news shows on cable TV.

This morning I watched a webinar about the movie, moderated by Anne Applebaum, author of the book “Red Famine”, and the movie’s screenwriter, Andrea Chalupa, and the director, Agnieszka Holland. Here is the link to the Webinar - Instead of 1 hour, I could’ve easily listened to them talk all day.

If you want to learn more about the Famine, you would be well-served to read either “Red Famine” by Anne Applebaum, or “Bloodlands” by Timothy Snyder. In either case, I hope you have a strong stomach.

Robert Homans is a financial sector expert who has lived and worked in Ukraine for over 15 years. You can follow him on Twitter at @rhomansjr