Donbass: A Battle Over Billions


Translated by Ollie Richardson for Fort Russ

11th January, 2016


Lugansk and Donetsk are not only threatened by the military aggression of Kiev. At the moment, with another form of act, the Ukrainian Oligarchy prepares in the shadow of a “restoration of order” in the young republics.

Who is Kurchenko?

One of the picturesque representatives of the Oligarchy in Ukraine, Sergey Kurchenko, is to do business by taking advantage of the complicated situation of the fuel and the gas in the Republics of Donetsk and Lugansk. On the 17th of December, its business received a blow: the special commission of the People’s Council of the DPR submitted to Alexander Zakharchenko the findings of a study on the “actions of the businessman Sergey Kurchenko, and their affiliated businesses on the territory of the people’s Republic of Donetsk”.

Years ago, it is well known that Sergey Kurchenko made the jump from officer to second-in-command to the multi-millionaire thanks to his friendship with Alexander, one of the sons of then-president Viktor Yanukovich. Between 2005 and 2008, the “good friend” Kurchenko increased his fortune from $200,000 to $300 million. Already then they were jokes about his talent for business. But Kurchenko continued with his successful career and in 2014 was already the owner of numerous companies in various sectors of the Ukrainian economy. The term ‘clan family’ could be applied, practically at the official level, of Yanukovich to Kurchenko. After the victory of Maidan, Kurchenko fled to Moscow, but did not lose his connections in Ukraine. Actively communicates with his friend and partner, Boris Lozhkin, who is nothing less than the head of the presidential administration Poroshenko.

Now, Sergey Kurchenko is doing everything he can to “return” to Donbass. The business group has continued to be active in the sector of the fuel and the gas supply to the DPR and the LPR. In the summer of 2015, Kurchenko was able to negotiate with the authorities of the republics the supply of oil and gas to Donbass. The Oligarch promised a supply of gasoline and other petroleum products without interruptions and at an affordable price. As he managed, de facto, a monopoly on the fuel market, Kurchenko increased the prices excessively, harming both the population and commercial structures and state of the Republics Popular.

Because of this scam by the Ukrainian Oligarchy, gasoline prices increased more than in the neighbouring regions of the Russian Federation and Ukraine and the supply suffered interruptions. In addition, according to members of the special committee, from February 2015 Kurchenko had a monopoly of the supply of Russian gas to Donbass. Since that time, there were continuing disruptions in the supply of gas in the Republics. Research also found that while “sacking people”, Kurchenko shows a “strange generosity” with other Ukrainian Oligarch with interests in Donbass. “Over time, he did not gain anything and supplied Russian gas for free to the companies of Firtash, Akmetov, Grigorishin, Novinsky, Boyko, Tartura, Nusenkis!”, he informed the shocked commission of the DPR.

The authorities of the People’s Republics ended the monopoly of the gasoline. In decrees issued simultaneously, Igor Plotnitsky and Alexander Zakharchenko gave orders to investigate any sabotage on the part of Kurchenko, or of individuals or institutions affiliated to him, in the territory of the Republics. The same decrees had also prohibited the companies of Kurchenko to supply fuel to the Republics and to acquire, in the territory of the LPR, coal and other products. This clarification was not accidental. The companies of the Oligarch had six million tons of coal from the LPR for the thermal power plant of Novocherkassk, in Russia. The LPR, as a republic, was not recognized, and Russia did not have formal economic relations, so the delivery of coal in Russia officially was impossible. They prepared a plan according to which the billionaire acquired abandoned mines or that are not in use in the city of Novoshakhtinsk, in the Rostov region in Russia. The coal that was supposedly produced there in fact came from the LPR. In fact, the Oligarch began to acquire the coal in illegal mines of Lugansk – in a part of the sphere of influence of the clan Efremov-Korolevsk. So the mines of Lugansk are without income, they are deposited in accounts of the old Oligarchy in Ukraine, Oligarchs in the mining territory.

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The conclusions of the commission set up to investigate activities of Kurchenko in the DPR were clear: the Oligarch had used his role as an intermediary between Russia and the Republics to enrich himself at the expense of the population and the economy of Donbass. But Kurchenko was not alone. Other Ukrainian Oligarchs continued to receive revenue from Donbass. For example, according to the calculations of the tax authorities, the income of a single plant in Gorlovka, Styrene, owned by Dmitry Firtash, totalled $25 million. “But thanks to the agreement between Kurchenko and Firtash, Styrene did not have to pay anything for the gas,” said the DPR. “This involves the creation of a black market for Russian gas, which handles hundreds of millions of dollars”, confirmed the commission. “This money would be key for the Republic. Instead, it ended up in the pockets of the Oligarchs”.

Another one of the colourful characters that tried to return to Donbass is Yuriy Ivanyushchenko, who is also part of the “clan” of the Oligarchy in Ukraine. Ivanyushchenko, who often is also called  Yuri Enakievo, was one of the members of the circle closest to the former president Viktor Yanukovich. The Deputy of the Party of Regions for years, rarely spoke to Ivanyushchenko in parliamentary sessions and preferred to devote himself to “economic affairs”. In the “old regime”, I met Ivanyushchenko, or Enakievo, as the boss. In fact, the influence of this entrepreneur, who never liked to attract attention, has always been greater than could have been expected according to the companies which he officially has.

Ivanyushchenko, one of the pillars of the clan of Viktor Yanukovich, has not lost neither weight nor influence since the fall of the “criminal regime” and the victory of the “revolution of dignity”. The rumors say that Ivanyushchenko is not a stranger in the circle of the current prime minister Yatsenyuk.

Ivanyushchenko, and his minority partner Ivan Avramov, focused on the state-owned mine – Antratsit, located in the territory of the LPR. Its structure has the mine Komsomol and Partizan, as well as seven support units and the privatized central factory Nagolchanskaya. The total number of workers exceeds 3,000 people.

In May 2015, Antratsit was registered again as a state-owned company in the LPR, which gave rise to the conflict between the Oligarch-clan and the authorities of the LPR. In the summer of 2015, Avramov tried to reclaim his old position of control over the company. The attempt to appropriate the group of Ivanyushchenko-Avramov was blocked by the authorities of the LPR, though the clan is still trying to come back to Donbass and control it as they have in the past.

And here appears another of the representatives of the “clan”, the former minister Alexander Klimenko. After the victory of Euromaidan, Klimenko fled to Russia, and apparently decided to abandon the attempt to return to Donbass, instead creating an organization, “Restoration of Donbass”. Despite this, he has recently sworn allegiance to Kiev: press releases of your organization denounce the militias of Donbass as “militants” and refers to “the supposed authorities of the LPR and the DPR”. It seems that Alexander Klimenko has understood that he had nothing to gain in the Republics, and, like many other members of the entourage of Viktor Yanukovich, has returned to change sides to join the authorities of Kiev.

The Ukrainian Oligarch: the Trojan horse of Donbass

The requirement of the republics for the Oligarchs to “pay” is a good measure, but it is not enough. The policy of limiting the activities of the Oligarchy to completely remove the moguls from the Ukrainian economy and, especially, of the policy of Donbass should continue.

These examples clearly show that the growing activity and influence of the Oligarchy groups in the LPR may lead to a worsening of the socio-economic situation in Donbass, or difficulties, and even collapse, of the State structures of the republic. Taking into account the role of the Oligarchy in Ukraine in the so-called Euromaidan, it is safe to say that by increasing their economic interests in the DPR and the LPR, the Ukrainian Oligarchy can also operate in favour of the interests of Kiev and their U.S owners.

The struggle against the Oligarchy is indeed the second front in the struggle for the freedom and independence of the Republics. The Oligarchs that are Ukrainians are a Trojan horse in the struggle of Ukraine against the DPR and the LPR. Their acts will erode both the economy and the public administration. The authorities of the republics have already begun to fight against this socially evil legacy of the past twenty-five years of Ukraine’s capitalism. But it is important that the fight against the Oligarchy does not limit the scope of the government, because the Oligarchy have sufficient resources and experience for the “covert fight”. The fight against the return of the Ukrainian Oligarchy to  Donbass must become the task of public organizations and trade unions, civil society, journalists, social activists and all citizens in general. Only then you will be able to get a victory on the second front of the war against the people of Donbass.

The republics must build an economy based on the nationalisation of the strategic projects for the economy and the cooperation with the private sector on the basis of subordinating private interests to the public. 

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