Ukraine: a fight between two oligarchs
30 November 2004

A full-scale power struggle inside Ukraine's ruling class has opened after the presidential elections. Viktor Yanukovich was been declared the winner in presidential second round elections with 49.4 per cent of the votes compared with 46.7 per cent for his opponent Viktor Yushchenko.

The opposition camp accuses Yanukovich and his backers of the old Kuchma administration of vote-rigging and has called for mass mobilisations in Kiev. Indeed hundreds of thousands of people went on the streets. Because of the party colour of Yushchenko' camp his supporters call their protests the "orange revolution".

In fact the whole ruling class and its state apparatus is split down the middle. Sectors of the police have openly declared their sympathy for the opposition. On the evening of the elections four of the five main moderators of the TV channel 1+1 - owned by Kuchma's son-in-law - have resigned their post in protest about the official media propaganda. Last Wednesday 14 colleagues from the state TV First Program followed. The popular pop star Ruslana, winner of the latest song contest and until recently "cultural adviser" for president Kuchma, understood the change of the wind and went on hunger strike to protest against the rigging of the election.

At the moment it seems that the two camps might reach a compromise and will have a repetition of the elections, probably in mid-December.

Socialists and the working class cannot support either of these camps. This is not a struggle between progressive and reactionary forces or between democratic and authoritarian camps. It is a power struggle between different sectors of the bourgeoisie and the question if Ukraine should orient more towards Russia or the West.

In fact Ukraine is a poor, impoverished semi-colonial country and therefore its bourgeoisie is divided and wavering between different imperialist masters. In Soviet times, Ukraine's GDP per capita was slightly higher than Russia's, but since than it has declined to less than half of Russia's. Albeit since 2000 it saw GDP growth rates of 7.3 per cent a year in average in the 1990s it saw a decline of its national wealth worse than the 1929-33 depression in the West.

This is the result of capitalist restoration after 1991. The bourgeois regimes - and particularly since Kuchma came to power in 1994 - worked hard to privatise, i.e. sell cheaply, the national property to a small clique of capitalist oligarchs. Now about two-thirds of its national income is produced by private enterprises. From this year, a flat personal income tax of 13 percent has been introduced.

As a result while the bourgeoisie enriched themselves enormously the mass of the working class saw unprecedented poverty. By 2003 29 per cent of the population lives officially in poverty. While the poorest 10 per cent of the population only consumes 3.7 per cent of national wealth, the richest 10 per cent consumes 23.2 per cent.

Ukraine ruling class is highly dominated by a few oligarchs which are regionally centred. These oligarchs also play a decisive and direct role in the country's politics. The three most important oligarchic groups are the Donetsk group, the Dnepropetrovsk group and the Surkis-Medvedchuk group in Kiev. The most influential group is the Donetsk group around Rinat Akhmetov who owns Ukraine's biggest corporation System Capital Management.

The supposed winner of the elections and former Prime Minister Viktor Yanukovich and the Deputy Prime Ministers for energy and finance are also from the Donetsk group. They even form their own parliamentary faction, the Regions, which has around 65 members out of a total of 450. The second most important group is the Dnepropetrovsk group, whose business leader is Viktor Pinchuk, who owns the metallurgical company Interpipe.

They also have their party, Labor Ukraine, which has about 40 parliamentarians and is led by the Chairman of the National Bank, Serhiy Tyhypko. Pinchuk owns three TV channels. The Kiev businessman Hryhoriy Surkis and President Kuchma's chief of staff Viktor Medvedchuk form the third group, which is much more directly dependent on the support by the state. Medvedchuk controls the three biggest TV channels. Their United Social Democratic Party comprises some 40 parliamentarians.


However Ukraine's bourgeoisie is marked by an historic dilemma. It is too weak to play an independent, strong role both in regional politics and in the economic sphere. It is therefore split between orientating towards subordination to Russia or to the West. In fact it is dependent on both. Imperialist Russia is the most important trading partner. 30 per cent of Ukraine's exports go to Russia. Ukraine is highly dependent on Russia's energy exports. Russian monopolies also play an important role in the country's core industries.

In fact big Russian corporations have bought off significant Ukraine enterprises. For example four different Russian oil corporations bought four large Ukrainian oil refineries and two large aluminium companies were also purchased. In addition the two leading mobile phone companies in Ukraine were bought by Russia's two largest mobile phone companies and two different Russian groups have been buying up Ukrainian public utilities.

In 2003 imperialist Russia also initiated the so called Common Economic Space, including Russia, Ukraine, Kazakhstan and Belarus. Initially, it is supposed to be a free trade area, and then to become a customs union, and ultimately even a currency union.

However US and EU imperialist capital are determined to bring Ukraine into their orbit and minimise Russian influence. They are economically much stronger than Russia and they have tried to woo the country's elite by vaguely offering them integration into NATO, EU and WTO. Potentially Western imperialist capital has much more strength.

And in the last week it has demonstrated this strength by openly siding with Yushchenko and refusing to accept the election result. But in the short term neither the EU nor US are prepared to let Ukraine into their alliances and by this offering Ukraine's bourgeoisie a realistic alternative to Russia's hegemony.

As a result the countries ruling class is deeply divided between a pro-Russian orientation and a pro-Western orientation. The two presidential candidates reflect this: While Yanukovich represents the pro-Moscow camp, Yushchenko is the openly pro-Western candidate. While the EU and the US threw their weight behind Yushchenko Putin openly supported Yanukovich.


For the Ukraine working class the alternative of Yanukovich and Yushchenko provides no choice at all. Both are candidates of the ruling class,both represent the corruption, greed and the policy of social cuts and privatisation. While Yanukovich is the present Prime Minster and long-time president Kuchma's candidate, Yushchenko was also for very long time Kuchma's loyal agent (first as Central Bank president and later as Prime Minister).

Both sides were able to rally their supporters on the streets. Yushchenko in the cities where his camp is strong - Kiev and the Western Ukraine - and Yanukovich in the industrial centres in the East and the South of the country. While last weeks mobilisation were huge and brought real masses on the streets they had nothing to do with a revolution in any sense. The people on the streets were just foot-soldiers manipulated by corrupt politicians fighting for their position and their friends like right-wing neo-liberal whip Walesa, Havel or Ruslana.

True the election were most certainly rigged and undoubtedly there is a gross lack of even bourgeois democracy in Ukraine. The parliament is a collection of the countries rich and riches (It is said that about two-thirds of the Ukrainian parliamentarians are dollar millionaires!). But the present mobilisations are not mobilisation of even a democratic revolution but just about bringing one pro-imperialist candidate into power.

What the Ukraine working class desperately needs is their own alternative: a revolutionary mass working class party fighting for a direct-democratic, socialist society.