Ukraine's New Boss, Same as the Old Boss?
Hundreds of thousands put their lives on the line, and more than 100 died, to put an end to decades of corrupt, oligarchic rule in the Ukrainian revolution of 2014. The question facing Petro Poroshenko, the man who seems poised to win the Ukrainian presidency on May 25, is whether all their efforts will prove to have been in vain.
A self-made man with a net worth estimated at $1.6 billion by Forbes Ukraine, Poroshenko, 49, is very much a product of the chaos that has reigned during the country's 22 years of independence. Like Russian President Vladimir Putin, he is a black belt in judo, though his oily and wily tactics contrast sharply with Putin's strong-arm approach.
Poroshenko had the good fortune to earn a degree in international economics in 1989, just when the Soviet Union was trying to liberalize its economy. He says he started out in business advising Soviet factories on building relationships with foreign partners and made his first million dollars in 1991 speculating in black pepper. He laid the foundation of his current fortune by buying up bankrupt candy factories and, with his partners, building up a bus assembly business. Last year, Poroshenko's Roshen corporation was the 18th biggest confectionery producer in the world with net sales of $1.276 billion, according to Candy Industry magazine.
Poroshenko's involvement in politics dates back to the late 1990s, when he attached himself to the Social Democratic Party, in which Viktor Medvedchuk, a close Putin friend, played a leading role. In 2000, he helped set up what became the Party of Regions, the political force that later brought now-deposed President Viktor Yanukovych to power. In 2001, he became friends with Viktor Yushchenko, who gave him his first big break in government after coming to power in 2005. Under President Yushchenko, Poroshenko served as head of the national security council and foreign minister.
In those years, the Ukrainian oligarchy established itself as a ruthless, lawless group of clans feeding off Ukraine's Soviet-built economy. Poroshenko was later accused of running complicated tax scams to boost profits from his various businesses -- charges that were almost certainly politically motivated, given that cheating on taxes was a national sport practiced by most businesspeople, particularly the oligarchs. Poroshenko's guilt or innocence didn't matter: He was a major player in a system where political connections, aggression and creative accounting were the way of life.
By 2012, two years into Yanukovych's disastrous presidency, the Yushchenko years of economic mismanagement and political infighting were largely forgotten. With the oligarchs increasingly shunted aside by the president's voracious family, Poroshenko was back in government -- this time as Yanukovich's economics minister. Yanukovych had invited him as a competent manager who could help Ukraine avoid a debt default. "If I need to take a reputational risk to speed up Ukraine's European integration, I will take it," Poroshenko said at the time.
It would be easier to believe in his noble motives had he not, as economics minister, demanded the construction of protectionist barriers to favor Ukrainian automakers. He had by then sold the bus business to a longtime partner, but the conflict of interest was too obvious to be ignored. Later, in an interview with Forbes, Poroshenko alleged that his enemies paid the news media to link his protectionist proposals to his business interests.
Now, Poroshenko has made another alliance, this time with former boxing champion Vitali Klitschko, his comrade-in-arms during the Maidan protests. With the presidential elections less than two months away, Poroshenko's lead in the polls is comfortable enough to believe that he will defeat former Prime Minister Yulia Tymoshenko, despite her powerful charisma and her history as a political prisoner under Yanukovych.
Poroshenko portrays himself as the progressive, pro-European candidate who has always stayed true to his liberal values. In reality, he has worked with some of the most unsavory figures in Ukraine's short history as an independent nation and found a way to flourish and increase his fortune under every regime, including Yanukovych's. "In this election he is meant to play the part of a 'good Yanukovych,' a candidate around whom financial and industrial elites will consolidate," columnist Sergei Vysotsky wrote on Liga.net. "Their interest in a Poroshenko presidency is a cosmetic reform that would preserve a corruption rent for the key players."
If the oligarchy has its way after Poroshenko's presidential dream comes true, the goals of Ukraine's revolution will be undermined. This need not be the outcome: Most Ukrainians want a president with fewer powers after Yanukovych's failed dictatorship. The next few months will be a test for the Ukrainian people, who must prove that business as usual is no longer possible.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
To contact the author on this story:
Leonid Bershidsky at firstname.lastname@example.org
To contact the editor on this story:
Mark Whitehouse at email@example.com