A Tale of Two Oligarchies

Ukrainian billionaires and their friends in Washington.

In 1939, Churchill famously remarked, “Russia is a riddle, wrapped in a mystery, inside an enigma.” I suspect that his description also applies to Ukraine today. For the American taxpayer, prudence dictates that at least some effort is made to understand who owns and runs the country. 

For many years I lived in Vienna, Austria, and became fascinated by what a Foreign Policy magazine reporter called the “Great Pipeline Opera”—that is, the competing projects for supplying natural gas to Europe. At the heart of this opera was the growing tension between Russians and Ukrainians over, you guessed it, money. 

As Bohden Sokolovsky, an energy advisor to Ukrainian President Viktor Yushchenko, put it to the FP reporter over a breakfast of vodka, blintzes, and cigarettes:

It all came down to two things, Sokolovsky said, “Otkat and deriban” — roughly translated, kickbacks and theft. As Soviet assets and state-run energy companies were privatized in Ukraine in the 1990s, apparatchiks and businessmen on both sides of the border concocted elaborate schemes to get in on the action. They manipulated prices and parceled out kickbacks. The deals were “obviously corrupt,” recalled a senior advisor to former Ukrainian President Leonid Kuchma. “But it was a great deal for Ukraine.”

The more I studied the Pipeline Opera, the more it seemed to me that Russia and Ukraine are largely cut from the same cloth. Both are mostly owned and run by oligarchies. Starting around 2005, many of the guys who run Ukraine were tempted to believe that their fortunes would be greater if they formed a deeper alliance with the EU and the US.

They understood that their talk of eventually joining the EU and NATO would cause alarm and consternation in Moscow, which (for good reason) does not trust the U.S. military-industrial complex (MIC) and its hawkish friends in the government. Nevertheless, many of Ukraine’s oligarchs gambled that there would be more money, power, and fun in playing along with the ambitions of the U.S. government and its Neocon-dominated MIC.

In Afghanistan, the United States government spent $2.313 trillion over the span of twenty years and then hastily and chaotically pulled out, abandoning the country to the Taliban. Following the U.S. withdrawal in August 2021, the Neocons were faced with a cessation of America’s post 9/11 “Forever Wars,” and they set their eyes on Ukraine as the ultimate theater for getting back into business. 

Since a 2008 summit in Bucharest, Romania, Vladimir Putin had been warning the West that Russia would regard any attempt to expand NATO to its borders as a direct threat. The Biden administration did nothing to address Russian security concerns, and in December 2021, President Biden rejected all of Putin’s requests—most importantly his request for assurances that Ukraine would not be granted admission to NATO. 

US Neocon hawks have long itched for an opportunity to put Vladimir Putin in his place, and the crisis of late 2021 apparently gave them a golden one. As far as the U.S. MIC is concerned, Ukraine offers—far more so than Afghanistan—a perfect environment for a bonanza with no end. 

Getting into bed with the U.S. Neocon hawks and their MIC cronies was extremely risky for Ukraine, but not so much for its oligarchs, who keep most of their money offshore and can always retreat to their homes abroad.

Who are Ukraine’s oligarchs, and what is the nature of their relationship with Russia and the United States? To answer this question, it is useful to review a bit of Ukrainian history. 

Since the state of Kievan Rus’ was founded in 880, the peoples of Russia and Ukraine have been closely related, though the territory of modern Ukraine was often contested by the ruling classes of Austria, Lithuania, and Poland.

In 1783, Russian empress Catherine the Great annexed most of Ukraine, including the Crimea. During the 19th century, a strong Ukrainian nationalist movement developed, emphasizing its ethnic and linguistic identity. After fighting a war for independence in 1917, Ukraine was subsumed by the Soviet Union. In the winter of 1932-1933, Joseph Stalin caused a famine (known as the Holodomor)—a genocidal crime that, for good reason, inflamed Ukrainian resentment of Russian dominance. The New York Times Moscow bureau chief at the time, Walter Duranty, denied that the famine was happening and excoriated Manchester Sun reporter Malcolm Muggeridge for reporting it.

With the fall of the Soviet Union in 1991, Ukraine became an independent nation, though it maintained strong ties with Russia. Since the end of the Cold War, the economies of Ukraine and Russia have been heavily shaped by oligarchies who own the lion’s share of real estate and mineral resources. According to a 2008 report, the combined wealth of Ukraine's 50 richest oligarchs was equal to 85% of Ukraine's GDP.

While Ukraine’s Annual Household Income per Capita is about $1,583, the country boasts six billionaires who wield an outsized influence in its politics.

Ukrainain oligarchs, from left to right: Dmytro Firtash, Rinat Akhmetov, Viktor Pinchuk, Petro Poroshenko, Ihor Kolomoyskyi. Graphics by: Ganna Naronina, Euromaidan Press

The US State Department has long been leery of these men. That they had acquired so much wealth so quickly raised the suspicion that much of their economic activity was illegal. In 2012, Wikileaks released a diplomatic cable on one of the men—Rinat Akhmetov. According to the Wikipedia entry on the cable:

Volodymyr Horbulin, one of Ukraine's most respected policy strategists and former presidential advisor, told the U.S. Ambassador to Ukraine in 2006 that the Party of Regions, which "enjoyed deep pockets, being largely financed by billionaire Donetsk boss Rinat Akhmetov" is partly composed of "pure criminals" and "criminal and anti-democracy figures." In a U.S. diplomatic cable dated 3 February 2006, then U.S. Ambassador John Herbst referred to Akhmetov's Party of Regions as "long a haven for Donetsk-based mobsters and oligarchs" and called Akhmetov the "godfather" of the Donetsk clan.

The second richest man in Ukraine, Victor Pinchuk, has long been the Clinton Foundation’s largest donor. According to a 2016 New York Times report:

Victor Pinchuk, a steel magnate whose father-in-law, Leonid Kuchma, was president of Ukraine from 1994 to 2005, has directed between $10 million and $25 million to the foundation. He has lent his private plane to the Clintons and traveled to Los Angeles in 2011 to attend Mr. Clinton’s star-studded 65th birthday celebration.

According to the Wikipedia entry on Pinchuk:

On 4 March 2015, at the hearing on Special Control Commission of Privatization in the Verkhovna Rada of Ukraine, oligarch Igor Kolomoyskyy accused Viktor Pinchuk of receiving a bribe of $5 million a month for the rights to manage Ukrnafta, 50 + 1% of which is owned by the state-owned company Naftogaz of Ukraine. According to Kolomoyskyy, the money was transferred to offshore companies, the "ultimate owners of which were identified" as Victor Pinchuk and Leonid Kuchma.

"We paid this money, and besides that, we paid dividends to the state, all taxes and everything else. But for the right to receive our dividends, we were forced to pay another 5 million from our dividends to Pinchuk,” said Kolomoyskyy.

On 18 March 2015, National Anti-Corruption Bureau opened criminal proceedings on the basis of Kolomoyskyy statements. According to the investigation, the amount of the bribe to Viktor Pinchuk from 2003 to 2006 was allegedly $110 million.

Kolomoyskyy, who is number 6 on the list, was the chief patron of Ukrainian President Volodymyr Zelensky. Kolomoyskyy’s 1+1 Media Group distributed Servant of the People, a comedy series in which Volodymyr Zelenskyy plays a school teacher who—to everyone’s surprise including his own—is elected president on an anti-corruption platform.

With Kolomoyskyy’s powerful media support, Zelensky registered his Servant of the People party in 2018, and rode the wave of the show’s popularity to being elected President of Ukraine in 2019.

After entering office, Zelensky seemed determined to protect his patron from corruption allegations that had plagued him for many years. However, for reasons that are obscured in the murky politics of Ukraine, Kolomoyskyy’s fortunes in Ukraine and the United States took a turn for the worse after Zelensky entered office, with law enforcement agencies in both countries aggressively investigating him for an array of massive financial crimes including international money laundering.

According to the Pandora Papers—a collection of leaked documents exposing the offshore banking activities of innumerable politicians and celebrities—President Zelensky also has extensive and questionable offshore holdings.

Following the Russian invasion of Ukraine in 2022, President Zelensky came under increasing pressure to dump his patron. Kolomoyskyy is currently persona non grata in the United States and remains under federal investigation.

Another colorful Ukrainian oligarch is former President Petro Poroshenko (in office from 2014-2019). During the 2016 US Presidential election, Poroschenko’s government favored Hilary Clinton. Ukrainian agents worked with a Ukrainian-American Democratic operative named Alexandra Chalupa, who had served in the White House Office of Public Liaison during the Clinton administration. Chalupa then worked as a consultant for the Democratic National Committee, and disseminated claims of Trump’s allegedly close ties with the Putin regime.

In 2022, Poroshenko was arrested by Zelensky’s government on charges of high treason. Though Poroshenko always presented himself as pro-Western and anti-Russian, he is alleged to have (treasonously) facilitated the sale of large amounts of coal that helped finance Russian-backed separatists waging conflict in eastern Ukraine in 2014-15.

Generally, Ukraine’s oligarchs seem to be somewhat agnostic in their personal and political attachments. Over the years they have done deals together, and later accused each other of corruption. In the realm of international politics, Victor Pinchuk has strongly advocated building better relations with Russia while at the same time hobnobbing with the Clintons. Likewise, Kolomoyskyy has vacillated between advocating better relations with Russia and exchanging amusing insults with Russian President Vladimir Putin. In 2014, he called Putin a "schizophrenic of short stature” and accused him of having a "messianic drive" to recreate the Russian Empire or the Soviet Union.

Putin responded by describing Kolomoisky as:

a unique crook who even managed to cheat our Roman Abramovich two or three years ago. Scammed him, as our intellectuals like to say. They signed some deal, Abramovich transferred several billion dollars, while this guy never delivered and pocketed the money. When I asked him [Abramovich]: 'Why did you do it?' he said: 'I never thought this was possible.’

In a 2017 report issued by Transparency International, Ukraine was ranked the second most corrupt country in Europe after Russia. Compared to the rest of the world, Ukraine ranked closely with Gambia, Iran, Myanmar and Sierra Leone.

Ukraine’s strategic location in Europe, its agricultural and mineral wealth, and its large border with Russia have made it a country of enormous interest to US politicians and their friends in the military-industrial complex. These circumstances, combined with the nation’s billionaire oligarchs who are always looking to do big deals, have resulted in the Clinton and Biden families taking a keen interest in Ukraine.

I already mentioned the special friendship between the Clintons and Victor Pinchuk. For a while Joe and Hunter Biden maintained a close relationship with Ukrainian oligarch Mykola Vladislavovich Zlochevsky, who owned a 50% stake in Burisma Holdings, one of the largest natural gas producers in Ukraine.

As noted in a recent report issued by the U.S. Senate Committee on Homeland Security and Governmental Affairs, right after the abdication of Ukrainian President Viktor Yanukovych in 2014, then Vice President Biden and his son quickly set up shop in Ukraine.

On April 16, 2014, Vice President Biden met with his son’s business partner, Devon Archer, at the White House. Five days later, Vice President Biden visited Ukraine, and he soon after was described in the press as the “public face of the administration’s handling of Ukraine.” The day after his visit, on April 22, Archer joined the board of Burisma. Six days later, on April 28, British officials seized $23 million from the London bank accounts of Burisma’s owner, Mykola Zlochevsky.

Fourteen days later, on May 12, Hunter Biden joined the board of Burisma, and over the course of the next several years, Hunter Biden and Devon Archer were paid millions of dollars from a corrupt Ukrainian oligarch for their participation on the board.

With Vice President Biden serving as a sort of American proconsul in Ukraine, his son served on the Burisma board as a “corporate compliance officer,” even though he couldn’t read the Ukrainian legal code.

A recently released FBI report documents a meeting between an FBI informant and Zlochevsky at a cafe in Vienna in 2016, in which Zlochevsky explained the utility of having Biden on his board, as it enabled him to resolve several problems Burisma was having with regulatory authorities. To be sure, Zlochevsky had to pay handsomely for the protection—“5 [million] to pay one Biden, and 5 [million] to another Biden,” he stated. Zlochevsky remarked that Hunter Biden ‘was stupid, and his (Zlochevsky’s) dog was smarter,’ he needed to keep Hunter Biden (on Burisma’s board) ‘so everything will be okay.’

According to a recent report issued by the Council on Foreign Relations, as of May 2023, the US has sent $76.8 billion to Ukraine—about 38% of Ukraine’s 2021 GDP.

A total of $115 billion has been appropriated to Ukraine and is projected to continue flowing until 2032.

The U.S. government’s largesse to Ukraine contrasts with the $12 million the Biden administration pledged (on August 23) to assist 3,300 households in the incinerated American city of Lahaina.

All of this money has flowed to Ukraine during the same period in which the Department of Defense cannot manage to pass a Government Accountability Office (GAO) audit. According to a report recently issued by the House Committee on Oversight and Accountability, in November 2022, the DoD flunked its fifth consecutive audit, unable to account for sixty-one percent of its $3.5 trillion in assets.

Thus we see how the DoD, its defense contractor cronies, the Biden administration, and whoever is running Ukraine appear to have created the perfect machine for enriching themselves with American taxpayer money (or debt, to be more precise). With so much money flowing, and so little accountability for it, I do not expect to see any interest in seeking a negotiated settlement to end the war. Instead we will continue hearing that the war must continue indefinitely, perhaps until there are no men left to fight or artillery rounds to fire.

Never ones to be left out of a major action, the Clintons just announced that their Global Initiative is launching a new humanitarian network for rebuilding Ukraine.

As Robert F. Kennedy, Jr. advocates ending the bloodshed in Ukraine by way of a negotiated settlement that considers the interests and concerns of both warring parties, he must contend with the widely held, passionate sentiment that negotiating with Russia is anathema.

It seems to me that hardliners in the United States and Ukraine would earn greater credibility if they and their sons would go to the front and fight. According to a recent report in Le Monde, many of Ukraine’s oligarchs have left the country and are living at their villas in the South of France. 

Likewise, America’s fortunate sons haven’t done much fighting since World War II. A remarkable exception was Kennedy’s 28-year-old son, Conor, who traveled to Ukraine without notifying his family and served as a heavy machine gunner for two months. Conor’s courageous actions were an exception to the rule. Most of today’s privileged hawks wouldn’t consider putting themselves in the line of fire. 

Contemplating America’s elite armchair warriors makes me look back in admiration at 19th century aristocrats like James Brudenell, 7th Earl of Cardigan, who led the famous Charge of the Light Brigade in the Crimean War’s Battle of Balaclava. 

The French commander, Pierre Bosquet, could scarcely believe his eyes as he watched the British cavalry gallop headlong into a line of heavy Russian artillery.“C’est magnifique, mais ce n’est pas la guerre: c'est de la folie,” he famously remarked—that is, “It is magnificent, but it is not war: it is madness.”

It would be magnificent, and do much for morale, to see neocon scholar Robert Kagan and his wife, Acting Deputy Secretary of State Victoria Nuland, lead a direct frontal assault into a Russian artillery battery.