“The present government, it is known, is corrupt and controlled by the oligarchs,” declared Ukrainian presidential candidate Viktor Yushchenko in a televised debate against his opponent, Viktor Yanukovych, on November 15. “I have already signed a package of decrees we will issue at once after our victory. The first is a resolute fight against corruption at all levels,” he said. According to opinion polls he is now favored to win the run-off election on December 26.
Reformer-politicians in the former Soviet Union invariably campaign as “anti-corruption” crusaders. Mr. Yushchenko is one such figure, and his professed drive to sweep away the old “oligarchic” structures and bring in a new generation of reform-minded democrats is a familiar refrain. Yet Washington should think twice about the possible consequences of a Yushchenko presidency in a strategic lynchpin of its policy in the region. Americans like to believe their government is supporting politicians committed to building cleaner, more affluent societies and economies, but even a cursory look at Yushchenko’s background reveals his “Mr. Clean” image is not quite deserved.
Viktor Yushchenko began his career in the banking structures of the USSR, as an official of the Ukrainian division of the giant centralized Soviet planning apparatus known as “Gosbank.” In the final years of the Soviet Union’s existence, the disintegration of Gosbank spawned many scams and crooked schemes. Under the guise of allocating credits for state-approved projects, the emerging “entrepreneurs” embezzled the equivalent of billions of dollars worth of state resources. Corruption proliferated under a collapsing regime where legislative oversight of banking activity was practically non-existent. Almost overnight, a new breed of financial “oligarchs” was born. Mr. Yushchenko likes to brand others as “oligarchs,” but few people personify the concept better than he does.
Western observers tend to dismiss the crime and corruption of the ex-USSR as the “growing pains” of countries striving for civilized free-market capitalism. Some people seem to believe that former Communist states must go through a period of “robber baron” rule on the path to a market economy governed by the rule of law. This view is misguided. As some contemporary observers put it, the “patriots” of post-Soviet Ukraine made their first million with their first billion, a reverse of the Rockefeller-Morgan scenario of success through hard work and discipline.
Yushchenko was a founding father of Bank Ukraina, successor to the Soviet Ukrainian Agro-Industrial Bank, which inherited billions of rubles in reserves equal to those of all other banks in Ukraine combined at a time when the official ruble-dollar exchange rate heavily favored the Soviet currency. Bank Ukraina issued credits for a variety of ventures that looked legitimate on the surface but were actually illegal. Yet, in the chaotic circumstances of the USSR’s collapse, the culprits were able to bury the facts.
During the time when the Ukrainian parliament was considering Yushchenko’s nomination to head the National Bank of Ukraine, proof emerged that in October 1991 he and his colleague at Bank Ukraina, Igor Mitiukov (now ambassador to Britain), had bypassed required procedure and approved issuance of a 100 million ruble loan for conversion into hard currency, ostensibly to buy agricultural equipment. The money was never returned to Bank Ukraina and, since the bank was partially state-owned, public resources had been embezzled. In other words, a serious crime had been committed. Yushchenko’s candidacy was mysteriously approved by Ukraine’s fledgling parliament and the prosecutor’s office dropped its investigation.
Was Yushchenko simply employing the necessary means to reach his goal of leading Ukraine to a better future? Perhaps, but the record suggests that the notion that Yushchenko acted as a patriotic democrat standing up for Ukrainian national interests against a pro-Russian Soviet holdover is a carefully constructed myth.
In 1992, as deputy chairman of Bank Ukraina, Yushchenko was the de facto benefactor of a pro-Russian political movement in Ukraine’s southern region of Crimea. From 1992-93, the demagogic leader of this movement, Yuri Meshkov, claimed to be standing up for the rights of Russians threatened by nationalism in the newly-independent Ukraine. Meshkov dangerously provoked conflict between Russia and Ukraine in a highly militarized area that served as the headquarters of the Soviet Black Sea Fleet. Would a genuine Ukrainian “national patriot,” as Yushchenko is alleged to be, fund a political figure like Meshkov?
All this was happening at a time of serious hardship for ordinary Ukrainians. Hyper-inflation began soon after the breakup of the USSR, and Ukraine’s currency changed three times. The eventual collapse of Bank Ukraina was one of the most tragic episodes in post-Soviet Ukrainian history, as millions of ordinary Ukrainians lost their life savings.
Viktor Yushchenko was one of the people who profited from the chaos and social breakdown accompanying the Soviet Union’s disintegration. But his opportunism in those days doesn’t make him a statesman today.
CHAD NAGLE is an American lawyer who was accredited as an international observer for the 2004 Ukrainian presidential elections.
Editors’ note: CHAD NAGLE’s first report on Yushchenko’s medical condition contained a description of rosacea that should have been attributed to Dr Thomas Boyle, not Dr Chris Rangel. Here’s Boyle’s lore, as cited by Nagle: “As for rosacea, I disagree with all those who have said that it does not look like what Yushchenko has and that rosacea does not progress this rapidly. Rosacea can be explosive, and extremely disfiguring — and it can be triggered by even one alcoholic drink. In five years of work at major inner city hospitals in Manhattan, I saw several such cases.” See Dr Boyle’s entertaining and iluminating weblog for 12/12/2004. There’s a Rangel link at the foot of his comment, which led to the erroneous attribution.