Guest Post: What Is Happening In The Ukraine?

Tyler Durden's picture

Submitted by Pater Tenebrarum of Acting-Man blog,

Beware of Revolutionaries – Better Yet, Beware of Everyone

The current unrest in the Ukraine is very reminiscent of the failed 'Orange Revolution' that pushed current pro-Russian president Viktor Yanukovich (then prime minister under president Leonid Kuchma) from power when the opposition candidate approved by the West, Viktor Yushchenko, won the 2004 election. Prior to the 2004 election, Yushchenko's handlers launched a propaganda story about how their man was allegedly poisoned with dioxin. It later came to light that the story was very likely made up, but it sure helped his election victory along. 

'Our' man was finally in power – and soon turned out to be an even worse leader than his predecessor. The economy tanked and his political supporters split into different factions. Yushchenko's prime minister Julia Tymoschenko, another darling of the West, apparently got involved in shady deals – at least that is what the Ukrainian court that sent her to jail in 2011 claims (it involved a gas deal with Russia – politicians robbing the country blind once they are in power is a well-worn tradition in the Ukraine and if memory serves, her protestations of innocence were not very convincing). In fact, both the Kuchma and Yushchenko governments have been referred to as 'kleptocracies' in US diplomatic cables published by Wikileaks.

Yushchenko, the former hero of the revolution, received only 5% of the vote in the 2010 election, which makes it all the more likely that his power-grab was largely orchestrated (although it is undoubtedly true that people were fed up with Kuchma and there was probably some hope that things might change for the better at the time of Yushchenko's election). The main opponent of Yanukovich in the 2010 election was in fact Ms. Tymoschenko, and he in turn probably mainly won because many people regarded him as the lesser evil at that point.

The current 'revolution' started after Yanukovich refused to sign a deal with the EU (which involved more than just trade – he would have had to make various unrelated concessions) and took what appeared to be a far better deal offered by Putin ($15 billion better at a minimum). We certainly cannot blame him for not wanting to have anything to do with the socialistic Moloch in Brussels. It is by the way pretty astonishing that EU politicians feel called upon to make imperious demands of Yanukovich because he is confronted with street protests. If EU governments were to immediately resign upon facing massive street protests, neither Rajoy nor Samaras would be in power today.

 


 

yush and tymo
Former president Viktor Yushchenko and former prime minister Julia Tymoschenko: Orange Revolution disappointment

(Photo via snb.nu / Author unknown)

 


 

Corrupt to the Core?

However, it is a very good bet that Yanukovitch is also upholding the above mentioned political tradition of robbing his country blind. We can't prove it of course, but plenty of rumors to this effect certainly exist. If so, then he cannot afford to loosen his grip on power, otherwise he will run the risk of suffering the same fate as Tymoschenko down the road. Still, he could presumably lose the next election when Vitaly Klitschko – the ex-boxer who has become the new revolutionary leader – stands against him and wins. Provided of course that there is no election fraud – allegations of election fraud tend to surface in every election as it were.  

As an aside, as a teenager, Yanukovich was once sentenced for participating in a robbery and three years later he was again sentenced for assault ('mistakes of youth' according to him). He also holds academic titles that he seems to have obtained under what appear to be rather dubious circumstances; his publications are listed by the national library, but cannot be found. His military rank of major is belied by the non-existence of any military service on his part (all this is independent of the fact that he could have easily joined the cast of 'Goodfellas' on his looks alone).

 


 

yanu
Viktor Yanukovich, who looks like he would make a good bouncer

(Photo credit: Reuters)

 


 

Not surprisingly,  the Ukraine is listed as one of the most corrupt countries in the world, tied with Bangladesh, Cameroon, the Central African Republic and Syria. On the surface, the conflict in the Ukraine is between the Russian-speaking half of the country (where Yanukovich's main support base is) and the more pro-Western Ukrainian-speaking half.

It appears to an outside observer rather as though various criminal gangs are vying for control of the State so that they can steal without fear of retribution.

A friend pointed the following example of a wealth-grab by Ukrainian politicians out to us. Apparently two businessmen and members of parliament have shaken down BNP Paribas for $100 million, with the connivance of the Ukrainian courts. Here is an open letter written by the board of the Ukrainian subsidiary of BNP Paribas to the president:

“Dear Mr. President,

 

BNP Paribas international financial group represented by UkrSibbank PJSC expresses its deep respect and is forced to appeal to you for protecting its rights as a reliable strategic investor of banking system that promotes the development of Ukrainian economy with credit resources. The European Bank for Reconstruction and Development, the largest financial investor in Ukraine, owns a 15% stake in UkrSibbank PJSC.

 

Taken the importance you traditionally pay to the investment climate in the country, we hope that you will not leave without attention an egregious situation that has been developed in business relations between UkrSibbank PJSC as a lender and the actual owners of AIS corporation Dmitriy Svyatash and Vasiliy Polyakov as unscrupulous borrowers who have been evading repayment of debt totaling USD 100 mln for nearly 5 years.

 

Such loans were granted by our bank in 2007-2009 under personal guarantees of Messrs Svyatash and Polyakov being the actual owners of AIS corporation, managing its current activities and now serving as the People’s Deputies of Ukraine. However, instead of complying with the terms and conditions of loan agreements, during all this time the borrowers have been committing acts qualified by the lawyers as persistent refusal to meet their obligations. They have commenced bankruptcy proceedings of companies-borrowers and many assets pledged to our Bank have been illegally transferred through offshore structures to new companies. Messrs Svyatash and Polyakov are currently continuing their business under `AIS` corporate brand based on newly incorporated companies that formally bear no indebtedness to UkrSibbank PJSC and report an annual turnover amounting to USD 800 million. Messrs Dmitriy Svyatash and Vasiliy Polyakov continue making attempts to evade repaying their debts therefore discrediting the government system of Ukraine they actually represent in the parliament.

 

Numerous shifting of dates of court and other proceedings without warning the bank’s lawyers, groundless rejection of their petitions, other procedural irregularities, and finally the cynical appointment of a court hearing on the national weekend and a holy holiday for all Orthodox Christians, the Christmas eve, on the 6th of January – this is an incomplete list of facts evidencing that court decisions are biased and passed in favor of unscrupulous borrowers.

 

The utmost injustice with regard to UkrSibbank PJSC was the decision of the Court of Appeal of Kyiv adopted at the hearing on January the 6th when the judge Anna Kryzhanovskaya has de facto sanctioned the fraudulent schemes and allowed Messrs Svyatash and Polyakov not to repay USD 100 mln to the Bank. Unfortunately, according to the trend of making judicial verdicts, we fear that our appeal against this decision will not be treated on a fair basis.

 

That is why, Mr. President, we are writing to you as the guarantor of observance of legality in the country to intervene in the situation and help restore the justice.

 

We hope for your support and assistance in practical confirmation of commitment of the Ukrainian State to the rule of law. We believe that the willingness of the President of Ukraine, the Government, and the higher judicial institutions to advocate for the rights of banking institutions will have a positive impact on the international image of Ukraine and its system of state power. In addition, this will serve to strengthen the confidence in the judicial and law enforcement system of the country, which demonstrate its impartiality, the ability to make fair decisions regardless of political affiliation of the parties.

 

 Jean-Paul Sabet

Chairman of UkrSibbank Supervisory Board”

It remains to be seen whether Yanukovich will intervene on behalf of BNP, but this is quite a story. Shaking down a big powerful Western bank for $100m. in broad daylight takes some chutzpa, and the way in which it was done certainly seems to confirm the validity of the Ukraine's corruption ranking.

Naturally, it seems quite likely that there is genuine frustration in the population over the state of political affairs in the country. In other words, the protests likely are rooted in genuine grievances, even though Western powers may have had a hand in their timing. Here is a BBC update on the latest developments. One reader sagely commented:

It seems astonishing that protesters are risking their lives to join the EU whilst southern Europeans are bankrupt, unemployed and taxed to the hilt at the hands of Brussels.”

It is not merely 'astonishing', it really strains credulity. In other words, we don't believe for a second that people have been standing in the cold for weeks and engaging in battles with the police because they love Brussels and Herman 'damp rag' Rompuy so much, in spite of his undeniable haiku-writing talent. It seems far more likely that they are simply hoping that finally a perhaps somewhat less corrupt political group will take over. That seems quite a tall order considering the disappointments of the Yushchenko/Tymoschenko era.