Democracy Lab

Throwing Their Weight Around

President Yanukovych is losing his support among Ukraine's oligarchs -- and that could be the key to his fate.

When Rinat Akhmetov celebrated his birthday a few years back, he counted among his gifts a painting and best wishes from none other than Viktor Yanukovych, the president of Ukraine. Few of their compatriots paid much attention. After all, Yanukovych and Akhmetov, who both hail from the same hardscrabble industrial town, have been close allies for decades. Many Ukrainians, indeed, regard the president as a virtual protégé of Akhmetov, who happens to be the richest man in the country.

But a lot has happened since then. In November, Ukrainians took to the street to protest their president's last-minute decision to back out of an agreement on closer cooperation with the European Union. For a while it seemed as if Akhmetov was unwilling to distance himself from his old friend, at least in public. But after Ukrainian security forces opened fire on protestors last month, killing several, Akhmetov (estimated personal wealth: $15.4 billion) published a statement on his company website that condemned the deaths and called for "peaceful action" and "constructive negotiations and results." Just hours later, Yanukovych offered jobs in his cabinet to two leaders of the opposition -- who quickly denounced the offer as too little, too late. Either way, it was hard to avoid the conclusion that Yanukovych isn't feeling pressure only from the streets.

The protests in the center of the Ukrainian capital of Kiev have now spread across the country. But it is not the protestors alone who will decide the president's fate. The political class will also have its say -- and no one within that class is more powerful than Ukraine's oligarchs, the billionaire business tycoons who together own a vastly disproportionate share of the country's wealth. (Akhmetov, for example, commands the loyalties of around 50 of the 450-member parliament -- among them his former driver, his head of security, and his family lawyer. This group has generally supported Yanukovych throughout the crisis.)

Some oligarchs have opposed the president from the start, of course. Perhaps the best example is Viktor Pinchuk, who amassed many of his assets during the reign of previous President Leonid Kuchma -- who happened to be Pinchuk's father-in-law. In more recent years Pinchuk has rebranded himself as a fan of shareholder-friendly business practices and close ties with the West. The owner of a mansion in one of London's priciest neighborhoods, Pinchuk opened an event during last month's World Economic Forum in Davos with a moment of silence for the protesters who were killed in the center of Kiev. Pinchuk came out in favor of the protests early in December, and his newspaper, Facts, suddenly began reprinting articles from online media that were sharply critical of the president.

Yet Pinchuk may be motivated less by his admiration for Western values than by cold self-interest. Like many of the other oligarchs, he evidently sees closer alignment with the European Union as a prelude to tariff-free access for his exports -- and he also knows that an authoritarian crackdown by Yanukovych would be likely to prompt European and United States sanctions that could complicate doing business with the outside world. And moving closer to the Moscow-engineered Customs Union, which already includes ex-Soviet republics such as Kazakhstan and Belarus in addition to Russia itself, could potentially make Ukrainian businessmen vulnerable to takeover bids by their Russian rivals.

Can Pinchuk's camp bring others to its side? One candidate for defection is Dmitry Firtash, whose personal fortune is estimated at $3.8 billion. Firtash, who also controls a significant bloc of parliamentary votes, is a former firefighter who once allegedly admitted to U.S. diplomats in Kiev his ties to mobster Semyon Mogilevich, one of the FBI's "Ten Most Wanted Criminals." (Firtash has since denied "any partnership or other commercial association" with Mogilevich.) A founding member of the scandal-plagued gas trade company RosUkrEnergo, which has earned hundreds of millions of dollars from its monopoly on gas, Firtash has long remained close to Yanukovych. Among other signs of support, he transformed his TV channel, Inter (the biggest network in Ukraine), into a government propaganda machine.

But now Firtash, too, is trying to hedge his bets. Over the past few years, Firtash has tried to polish his reputation in the West by launching PR campaigns and cozying up to the British elite -- part of an effort to fend off possible sanctions by the United Kingdom or the EU. (He's already persona non grata in the United States.) Recently, a close Firtash ally named Sergii Liovochkin resigned from his job as Yanukovych's chief of staff -- then turned up in Davos, where he took care to present himself as a thoroughly pro-European politician.

It's Akhmetov, though, who -- thanks to his long years of association with the embattled president -- may face the biggest challenge when it comes to straddling the growing gulf between president and opposition. Akhmetov, ranked by Forbes as the 47th richest man in the world, rose from obscure beginnings in the industrial city of Donetsk to amass vast assets in mining, metals, real estate, and telecommunications. (He first attracted national notice when he became the head of the Donetsk soccer club after his predecessor in the job, a well-known local criminal, was blown up by a bomb.) And even as Akhmetov luxuriates in his $200 million London flat and his $30 million French chalet, he has done his best to cultivate his contacts on both sides of the political divide back home in Ukraine.

Publicly, Akhmetov still supports Yanukovych -- but he also negotiates regularly with opposition leader Arseniy Yatsenyuk (one of the opposition figures who was offered a job by the president). It has also been widely noted in Kiev that Akhmetov has yet to cut off the power supply to protester-controlled areas of the capital, even though he controls the relevant energy distribution company. Akhmetov's normally pro-government Ukrainian television channel has also given airtime to opposition leaders.

The oligarchs are a sensitive topic for Ukrainians. One of the issues that fueled the current wave of protests is a general awareness of the oversized role played by tycoons in the country's political and economic life. (The photo above shows a recent protest outside Akhmetov's Kiev office.) Yanukovych has inspired public anger by enabling the rise of the so-called "Family," a group of high-ranking officials who gained office through their connections with Yanukovych's son Oleksandr. Oleksandr has a history of opaque business dealings that have won him a vast fortune estimated at half a billion dollars; he also controls Ukraine's much-criticized security forces. Last fall the Family also stirred controversy through its purchase of one of Ukraine's few remaining independent magazines, prompting the departure of dozens of journalists who accused the new owners of censoring coverage unfavorable to the government.

Indeed, Yanukovych's efforts to maximize his own political and economic power have aggravated the oligarchs as well. Pinchuk and another tycoon by the name of Igor Kolomoysky hail from the city of Dnipropetrovsk, where Yanukovych appointed one of his own loyalists to the key job of provincial governor in 2010. That slap in the face gave the city's tycoons an additional reason to back the opposition. Geneva-based Kolomoysky has since allowed his television channel, 1+1, to support the protesters despite intense pressure from government officials to do otherwise.

Yet most of the oligarchs have shied away from criticizing Yanukovych all too directly -- perhaps because they suspect that the president isn't willing to surrender power. The main exception is Petro Poroshenko, the so-called "chocolate king of Ukraine," whose core business has been hit particularly hard by recent Russian moves to pressure Ukraine economically into toeing the Kremlin line (including restrictions on Ukrainian chocolate imports). Poroshenko regularly speaks on one of the main opposition TV networks. He also frequently visits Western Europe to discuss means for resolving the crisis with senior EU officials, and makes no secret of his aspiration to be prime minister. According to the latest polls, he has the third-highest level of support in the country -- right after Yanukovych and opposition leader Vitaly Klitchko.

Yanukovych and the oligarchs are also highly sensitive to pressure from the outside. U.S. sources say that Western banks, worried by the recent turmoil, have recently refused to extend credit lines for some of the oligarchs. It's rumored that similar hesitations by some of Ahkmetov's Swiss banks may have persuaded him to order his parliamentarians to vote for the resignation of Yanukovych's cabinet and against a recent package of legislation aimed at suppressing the protests. In other cases, though, the oligarchs' forces have continued to vote with the government.

The U.S. use of targeted financial and visa sanctions has apparently unnerved the tycoons oligarchs who have indirectly controlled Ukrainian politics for decades, and who have funded Yanukovych's ruling party. Their families live in London and Vienna, enjoy the benefits of European values such as democracy and the rule of law, and enrich themselves using capital from European markets. In a perfect world, removing the oligarchs from politics altogether would seem to be the solution of many of Ukraine's problems -- but such a goal is simply unrealistic. The oligarchs are simply too deeply integrated into politics and society. The best hope, perhaps, is to use the oligarchs' experience of Western life to convince them of the advantages of furthering Ukrainian democracy. The future of a truly democratic Ukraine depends on it.



No More Mr. Nice Guy

The sad end of Ambassador Michael McFaul's troubled tenure in Moscow.

Strange as it may seem, there is no tutorial for U.S. ambassadors that teaches them how not to look like fools. The State Department may have its courses on diplomatic protocol, and the White House its talking points on the best and least boat-rocking means of articulating U.S. foreign policy. But there's a reason that our finest diplomats never learn how to project sangfroid and seriousness even in the face of unremitting hostility. That's because these are traits that cannot really be taught. George Kennan, with his incisive and prescient observations about Stalinism, and Robert Schwarz Strauss, with his f-bomb-dropping stewardship of the post-Communist order, were to-the-manner-born and knew exactly what and whom they were up against. It may have also helped that neither of them tweeted.

The news on Tuesday, Feb. 4, that Michael McFaul, the headline-grabbing, social media-obsessed U.S. ambassador to Moscow, has decided to call it quits and return to the calmer quadrangles of Stanford University has been met with a characteristic public outpouring of praise for a job well done. Secretary of State John Kerry issued a statement saying that, among other things, "Mike has a clear-eyed understanding of the realities of diplomacy." Maybe, but Mike's family seems to have an even clearer-eyed understanding of those realities -- they got the hell out of Russia months ago, repairing to the family home in California, which prompted now-confirmed rumors of McFaul's intent to join them imminently. Other emotions -- principally sadness and relief -- attend this diplomatic departure, even if these are to be kept decorously private for now.

The Kremlin, for instance, will be sad to see the nicest, most eager-to-please man to ever inhabit Spaso House quit the joint after only two years of floundering and squirming under the Kremlin's systematic, Vienna Convention-violating sadism. Since first landing in Moscow in January 2012, McFaul has been labeled by various Putinist mouthpieces as a spy, an agent provocateur trying to foment revolution (this on his first day, no less), and even a pedophile. Sometimes, it must be said, he fashioned a rod for his own back. McFaul once told a group of economics students at a Moscow university that the Kremlin had "bribed" Kyrgyzstan into booting the United States off the Manas airbase -- a vital transport hub for troops and supplies into Afghanistan. (The statement was true, but the Russian Foreign Ministry was not amused.)  Just last week, he tweeted an ITAR-TASS article featuring his open invitation to Vladimir Putin to come and watch the Super Bowl with him at the U.S. embassy in Moscow, one of those many aw-shucks moments of Twitter diplomacy rendered unintentionally hilarious by the context. The only known association between the Russian president and American football was Putin's alleged theft of Patriots owner Robert Kraft's diamond-studded Super Bowl ring in 2005. But then, that was our Mike, ever willing to extend the hand of friendship even if its intended recipient could only return the gesture with a punch in the face or a pocketing of the jewelry.

McFaul had a style that was hard to account for or justify, as when he admitted, by way of an apology, that he was "not a professional diplomat." This, too, had the merit of being true; but what, it prompted many to wonder, was he doing in the most difficult diplomatic posting on the planet advertising as much? Or consider the campaign-styled YouTube video heralding his appointment as ambassador, in which McFaul was meant to present himself as a genial Russophile to his host nation, complete with folksy comparisons between Montana, where he grew up, and the Russian regions, where most Russians wish they hadn't. He narrated this introduction, bizarrely, in English.

He did, however, save his bilingual fluency for pique rather than comity. McFaul was stalked so mercilessly by the state-run propaganda channel NTV -- almost certainly with the assistance of Russian intelligence, which knew his schedule in advance and may have even bugged his phones -- that he famously unleashed on a particularly aggravating red-haired correspondent after she buttonholed him outside the office of Lev Ponomaryov's venerable For Human Rights, an NGO which has now been targeted under Putin's "foreign agents" law. On a dreary, snowy day early in his tenure, she interrogated McFaul: Why was he there and what was he really up to? Here, that famous Montana permasmile (which always denoted to me a Bruce Banner-like volatility lying just beneath the surface) disappeared entirely. "[Y]ou guys are always with me," McFaul thundered, coatless, in the cold. "In my house! Are you not ashamed of this? You're insulting your own country when you do this, don't you understand?"

The NTV stoogette did understand, only too well, and this primetime gobbet of American dyspepsia was further sensationalized by McFaul's follow-up comment that Russia was a "wild country" (dikaya strana), a slip that gave the state propagandist exactly what she came for. (He later apologized for this, too, saying lamely that he only meant NTV was "wild.")

The outburst led the Russian news cycle and even prompted a State Department rebuke of the Kremlin's suspected surveillance methods, although it apparently did McFaul no favors with the staid old hands at Foggy Bottom, from whose ranks he never graduated and for whom such improvisational defiance was simply not done. The old hands were wrong, though. This was McFaul's finest hour on the job -- a mad-as-hell primal scream that told the truth of what it was like to live under the thuggishness and tedium of Putinism rather than dress it up remotely in impossible theoretical constructs. It was also the perfect moment for introspection in America's approach to Russia because the most high-flown of those theoretical constructs was one of McFaul's own devising. And here is where the relief factor of his resignation comes into play.

McFaul's legacy will undoubtedly be the U.S.-Russian "reset," a policy which a few brave Beltway types still celebrate as an enduring triumph of statecraft. He was its principal architect and foremost exponent, first as the go-to Russianist on Obama's National Security Council, then as ambassador. Yet the policy got off to a memorably bumpy start in 2009 when the word "reset" (perezagruzka) was mistranslated as "overload" (peregruzka) on a button which then-Secretary of State Hillary Clinton presented to a bemused Russian Foreign Minister Sergei Lavrov in a solecism that would prove accidentally correct. The reset was, in practice, a lot like a truck tipping over, or an elevator falling down a shaft, under the weight of an unbearable burden.

This is because it combined cynicism and naiveté simultaneously, beginning with the belief that the placeholder presidency of Dmitry Medvedev augured an era of substantive reform and that all Washington needed to get past the previous era of bad feelings with Moscow was endless dialogue, economic back-scratching, and bilateral commissions on PR-friendly issues such as civil society -- something the Kremlin was only interested in destroying, not cultivating. (An early indicator of this was the appointment of chief ideologist Vladislav Surkov as the Russian co-chairman of a new working group on civil society, an act tantamount to placing a pit bull in charge of a nursery.)  Most dangerously, however, the reset codified the lie that the Cold War was a thing of the past and that, after the bad old years of the Bush administration, Russia and the United States could finally cooperate with each other in a spirit of mutually-assured good faith.

So it was a bath of very cold water indeed for the man who, after the NTV "gotcha" and much else, confessed to Foreign Policy near the end of his ambassadorship's first year: "What I did not anticipate, honestly, was the degree, the volume, the relentless anti-Americanism that we're seeing right now. That is odd for us. Because we have spent three years trying to build a different relationship with this country. I mean, I'm genuinely confused by it."

That he was genuinely confused by it was precisely the problem.

No one is more disappointed with McFaul's fundamental misapprehension of the Putin regime than Russian dissidents who have long believed, justifiably, that the Obama administration could care less about them because it prefers a transactional realpolitik ("a different relationship"), premised on trade and intermittent episodes of cooperation. Most of these episodes, from nuclear de-proliferation to Iran sanctions to the Syrian chemical disarmament agreement have lately proved subject to diminishing returns where they have not been completely vitiated by Russian provisos, foot-dragging, or outright double-crosses. Yet anti-Putin protestors never believed that McFaul could care less about them. He was always seen as their ally and champion to a degree that has many of them now wishing that some of that hysterical Kremlin propaganda had been legitimate.

His first official meeting in Moscow was -- either famously or notoriously -- with members of the opposition (even though it had been pre-scheduled and not intended to provoke the Kremlin); his first official tweet was directed at Alexey Navalny, now the undisputed leader of that opposition (here, though, it was all McFaul ad-libbing). He also, admirably, tweeted at Navalny during the verdict and sentence reading at the latter's show trial for "embezzlement" last July: "Hi, I'm watching," this time in appropriate Russian. It may not have been "tear down this wall," but it's hard to imagine a career diplomat saying anything to Putin's arch-nemesis facing five years in the gulag.

Many of the dissidents now in the dock, under house arrest, or on probation will nevertheless be happy to see the back of an agonized pantomime that tried too hard to keep up appearances and navigate too many contradictions -- a peregruzka embodied in statesman form. After all, McFaul made a name for himself as an academic pushing democratization and human rights in post-Soviet Russia and then wound up working for a president who sees these as obstacles, rather than objectives, of U.S. foreign policy. The irony could be bitterly disappointing.

A low point in his tenure was McFaul's attempt, at an event held in Washington at the Peterson Institute for International Economics in March 2012, to enlist Navalny in the White House's stated policy of "de-linking" the repeal of the Jackson-Vanik amendment -- a dated, Soviet-era piece of U.S. legislation that made trade with Russia contingent on Moscow's human rights record -- with the passage of the Magnitsky Act, an up-to-date piece of legislation that aimed to blacklist and sanction Russian officials accused of gross human rights abuses. (The act, named for the most famous Russian whistleblower of the Putin era who later, as a corpse, was subjected to his own perverse show trial, became law last year, in spite of not-so-subtle White House pressure to prevent this from happening.) The logic was simple. McFaul needed Jackson-Vanik repealed in order to complete Russia's full accession to the World Trade Organization -- a linchpin of the reset -- and so he claimed at the Peterson event that Navalny was in favor of de-linkage too. Except that Navalny wasn't.

The attempt back-fired catastrophically and earned McFaul a personal reprimand from Garry Kasparov and Boris Nemtsov in the pages of the Wall Street Journal as well as an implicit rebuttal from Navalny, whom they quoted unambiguously on his views. McFaul's real offense, however, was trying to co-opt an embattled dissident in order to sell the Obama administration's agenda -- a cardinal sin in diplomacy and one that still inspires winces among European diplomats who remember it. Every nice tweet, it seems, had a not-so-nice counterpart action.

McFaul said in that YouTube video in 2012 that he'd be coming to Moscow to "help Russians understand who Americans are, what we stand for, and what we seek in our relationship with Russia and the Russian people." Unfortunately, he's leaving with the Russian media portraying America as a country that tortures orphans to death, brainwashes children into becoming homosexuals, supports al Qaeda terrorists in the Middle East, eggs on neo-Nazis to overthrow the government of Ukraine, and otherwise behaves as both a bumbling colossus and a serially defrauded and discombobulated mug in world affairs.

U.S. diplomacy in Moscow is and always will be a difficult trade, not for the faint-of-heart, much less the sensitive bookworm. But trying too hard to be liked and to have your country esteemed at a time when such are not really feasible has a certain quaint American nobility to it, even if it is an enterprise that Saul Bellow would have rightly characterized as the Good Intentions Paving Company.

-/AFP/Getty Images