After Neutrality Proves Untenable, an Oligarch Makes His Move

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c.2014 New York Times News Service

DONETSK, Ukraine — For weeks, a seemingly unstoppable pro-Russian separatist movement steamrollered through eastern Ukraine. The government’s soldiers proved incompetent or switched sides, and the police readily surrendered their weapons.

When the first formidable obstacle to the pro-Russian forces emerged last week, it was not a general or paramilitary leader but, improbably, the owner of a large corporation, Rinat Akhmetov.

Akhmetov, the son of a Soviet coal miner who amassed a fortune from contentious privatizations in the 1990s, is ranked by Forbes magazine as the 92nd richest man in the world and is by far the wealthiest person in Ukraine, with a net worth of $12.4 billion.

He is now leading the charge against the separatists, calling for steelworkers and coal miners in his employ to resist, and pointing out that they would lose their export-dependent jobs if the region became an unrecognized splinter state.

In a statement posted on the website of his company, System Capital Management, Akhmetov issued on Monday his sharpest critique to date of the separatist cause, clearly ending months of fence sitting. “Is looting in cities and taking peaceful citizens hostages a fight for the happiness of our region?” he asked. “No, it is not! It is a fight against the citizens of our region.”

Unlike in Russia, where President Vladimir Putin banished oligarchs from politics, the wealthy remain powerful and independent forces in Ukraine. So a tug of war between Ukraine and pro-Russian groups has also been waged for the backing of the superrich, with Akhmetov as the prize.

But for Ukrainians who watched as Akhmetov deftly navigated the country’s treacherous political waters over the years, the question was not whether he would succeed in defeating the separatist challenge, but why he chose to move now, and what was in it for him.

Akhmetov, one of the most puzzling characters in Ukraine’s post-Soviet history, lives in a mansion surrounded by a botanical garden and, until now, had an aversion to publicity. He was a onetime confidant of President Viktor F. Yanukovych, who was ousted in February.

Like many of the post-Soviet wealthy, Akhmetov is reputed to have emerged from a bloody power struggle among organized crime groups in the 1990s that sought to control the mighty coal and steel assets of the Soviet Union. But once in charge, he quickly set about transforming those assets into corporations, now called Metinvest and DTEK Krymenergo, which are overseen by System Capital Management.

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As the result of a leaked document last summer of 1990s-era police surveillance records, new evidence surfaced touching on Akhmetov’s personal acquaintance with an organized crime kingpin, Alexander Bragin, who went by the nickname Alek the Greek and is as famous for how he died as he was for his life of crime: He and six others in a VIP section of a soccer stadium were killed when a bomb detonated during a Shakhtar Donetsk soccer match in 1996.

Akhmetov has denied any ties to organized crime, and like many tycoons of the former Soviet space, he has endorsed Western business management ideas. Even at his Komsomolets Donbassa coal mine, where a clanging elevator carries grimy-faced workers into the depths of the earth through tunnels burrowed by Komsomol volunteers three decades ago, Akhmetov hired the consulting firm McKinsey & Co. to optimize the geometry of the shafts for profit and safety, the mine’s director said in an interview.

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System Capital Management depends today on all the banking and trade ties of globalized commerce, which would be severed if the separatists succeeded in carving out an independent region. The West would impose economic sanctions against Russia and the region, which would lose access to vital European markets.

It made no sense for Akhmetov to support pro-Russian forces. But opposing the separatists, particularly after Putin’s bellicose response to the revolts in February, could be equally ruinous.

Akhmetov could not be absolutely sure that the separatists would fail, even though he knew that most Ukrainians in the east wanted to stay in a united Ukraine. As long as Putin was in their corner, the separatists had the chance of seizing Donbass; there was even an outside chance that Russia would step in militarily on their behalf, as it had done in Crimea.

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Ukrainian officials now blame exiled business figures close to the Yanukovych family for bankrolling the uprising in southeastern Ukraine, with Russian backing. Akhmetov was never tempted to join them, however. He had broken with Yanukovych before the troubles started. More important, success in carving out a rump, pro-Russian state in southeast Ukraine would mean almost certain collapse for his companies.

Yet there were risks in withholding support for the new government and its Western backers. These were vividly illustrated when Austrian authorities detained Dmitry V. Firtash, another onetime supporter of Yanukovych, on a U.S. warrant. Firtash is awaiting an extradition hearing. In a warning of sorts, the Swiss authorities raided one of Akhmetov’s offshore companies in March, looking for business ties to the former president.

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For months, Akhmetov stayed quiet, doing his best to appear to support the two sides. When protests started in November, after Yanukovych pulled out of a trade deal with the European Union in favor of a pact with Russia, Akhmetov issued largely neutral statements saying he favored integration with both Russia and Europe.

He kept the two sides guessing until he felt confident enough to make his move. Just last week, Pavel Gubarev, the self-appointed “people’s governor” of Donetsk, said that Akhmetov backed the separatists.

“It turns out that two-thirds of the activists are already supported by the oligarch Akhmetov,” he told journalists. “A small number remain true to the idea, but still take money. Everybody takes money.”

Yuriy Zinchenko, the director of Ilyich Iron and Steel Works, which sent out patrols by steelworkers last week, said that Akhmetov had tried to remain “outside of politics” but that neutrality was becoming untenable. “I really believe our future is in a single and undivided Ukraine,” he said.

That sentiment became much easier for Akhmetov to act on earlier this month, when Putin announced plans to withdraw the tens of thousands of Russian troops he had amassed at Ukraine’s border and when he expressed at least tacit acceptance of elections to select a new leader for Ukraine.

Barely a week later, Akhmetov released his workers on Mariupol, ending the separatist reign there, and moved toward Donetsk.

Russia - Eastern Europe - Europe - Ukraine - Vladimir Putin - Russia government - Viktor Yanukovych - Donetsk - Crimea

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