Ukraine's latest challenge: unhappy oligarchs with private armies

President Poroshenko fired Igor Kolomoisky from his position as governor of Dnipropetrovsk today. Kolomoisky used his political power and personal battalions to seize the state oil company's offices in Kiev last week.

Valentyn Ogirenko/Reuters
Igor Kolomoisky, billionaire and governor of the Dnipropetrovsk region speaks during an interview in Dnipropetrovsk May 24, 2014. Ukrainian self-defense fighters who clashed with armed pro-Russian separatists on Friday are at the forefront of Kiev's efforts to prevent the country splitting.

As Ukraine struggles with near-financial meltdown and a shaky peace deal with pro-Russian rebels in the east, the last thing it needs is a showdown with a powerful oligarch with a private army. But that may be just what is brewing.

President Petro Poroshenko announced he has fired rough-and-tumble tycoon Igor Kolomoisky on Wednesday from the position as governor of the restive Dnipropetrovsk region of east Ukraine, setting up a potential clash between Kiev and one of its key oligarch allies. Mr. Kolomoisky was handed political power and the right to establish an army in the wake of last year's Maidan revolution, but last week triggered what some are calling a serious political crisis by using that force to seize the state oil company's headquarters in Kiev.

At stake now, experts say, is a harsh redivision of property and influence under way as Ukraine tries to meet International Monetary Fund demands for deep reforms to its oligarch-dominated economy.

A domestic affair

Unlike the war against rebels in the east, who enjoy considerable support from Moscow, this is an entirely home-grown problem. One of the key demands of the Maidan protesters who overthrew former President Viktor Yanukovych was to end the economic reign of predatory oligarchs. Instead, many oligarchs were empowered by the new government, given governorships of important regions and a relatively free hand to maintain order. 

Some experts have warned that enabling economic oligarchs to effectively transform themselves into warlords was storing up trouble for the future. Kolomoisky, a banking and media mogul, cracked down hard on rebel sympathizers in Dnipropetrovsk, and funded several private militias who've played an important role in the war. Rumors suggest that he controls as many as 10,000 armed men.      

President Poroshenko has ordered all such private battalions to be integrated with the official armed forces. But in a strong indication that may not have happened, he found it necessary to repeat himself in a meeting with military commanders Monday. "Territorial defense will be subordinated to the strict military vertical. Our governors will not have their own armed forces!" he said.        

Russian media, perhaps hoping to inflame the situation, are playing up unconfirmed reports that private militias are leaving the front lines in the Donbass region and heading for Kiev. They are also promoting reports that Mr. Poroshenko, himself a top tycoon, has ordered two Army battalions to Dnipropetrovsk to keep order. 

"It's getting quite serious. The chances of an internal war of oligarchs is growing," says Volodymyr Horbach, an expert with the independent Institute of Euro-Atlantic Integration in Kiev. "Kolomoisky has challenged Ukraine's leadership because he sees them taking the side of all the other oligarchs he competes with. It's pretty bad, but Kolomoisky doesn't have the resources to win in a battle with everyone else." 

Laws unfriendly to oligarchs

The trigger for the current crisis was a law passed by parliament last week to make it easier to change the management of state corporations. Kolomoisky owns a minority stake in state oil company UkrNafta, but he has controlled the company for years, cutting out competitors and channeling oil to his own concerns through the state pipeline company, UkrTransNafta, which he also controlled. When the government tried to fire the head of UkrTransNafta, the Dnipropetrovsk governor stormed its Kiev office with his armed militia. In an epic rant caught on video, he told journalists that he was protecting the building from "Russian saboteurs."  

But he may be overstepping, say observers.

"Kolomoisky is an extremely influential oligarch and politician. He has a very strong lobby in Kiev," and he owns a major Ukrainian broadcaster, says Vadim Karasyov, director of the independent Institute of Global Strategies in Kiev. "But he's going up against the state here. He's threatening political stability in Ukraine."

Most experts say Kolomoisky's actions in Kiev, and the rally his supporters at home are planning Wednesday, are a bargaining ploy and not a declaration of war. The conflict might even have positive consequences if it forces Kiev to move on long-stalled plans for "decentralization" of power to the country's diverse regions. 

"Kolomoisky isn't a separatist; this is a very different kind of challenge from what we face in Donbass," says Yury Yakimenko, an expert with the independent Razumkov Center in Kiev. "This is basically about division of influence and assets, but Kolomoisky should understand that he's a political figure and not just a businessman. It is to be hoped that the parties to this conflict will realize the stakes, and come to some agreement. This is about the survival of the state." 

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to

QR Code to Ukraine's latest challenge: unhappy oligarchs with private armies
Read this article in
QR Code to Subscription page
Start your subscription today