Who is Victor Yushchenko?

Viktor Yushchenko’s popularity in Ukraine has been exaggerated both by his supporters within Ukraine and by commentators abroad. The West portrays the ex-premier as a man of the people who understands the market economy, civil society, etc., and is untainted compared with the rest of the Ukrainian political establishment. But Ukrainians see him differently.

A First Generation Oligarch

A close examination of Yushchenko’s biography indicates a less than squeaky-clean figure on the post-Soviet scene. Born in Sumy Oblast in east-central Ukraine, close to the Russian border, Yushchenko began his career in the agricultural division of the Soviet centralized state banking apparatus, “Gosbank.” As a rank-and-file Communist Party member his extreme conscientiousness in attendance and voting at Party meetings won him material rewards and in December 1989 he was appointed Deputy Chairman of the Ukrainian SSR division of AgroPromBank (Agro-Industrial Bank) USSR.

As the USSR was disintegrating, the Ukrainian SSR division of the Soviet Gosbank dropped – in its entirety – into the hands of the Ukrainian SSR banking sector chiefs, who formed the Joint-Stock Commercial Agro-Industrial Bank “Ukraina” (Bank Ukraina) with an extensive nationwide network of branches, a complacent clientele of collective and state farms, and billions of rubles in state funds. In 1990, one share of Bank Ukraina was worth roughly $17,000, and Soviet state credits continued to pour into Bank Ukraina as the government allocated multi-million-ruble subsidies to the agricultural sector. Viktor Yushchenko was deputy chairman of the board of Bank Ukraina, and was one of the individuals who is alleged to have embezzled huge revenues at a time when legislative oversight of banking activities was practically non-existent.

In 1992, after Ukraine had achieved independence, Bank Ukraina debuted on the post-Soviet scene with 1.254 billion rubles in profits. It was third among all the banks of the ex-USSR in terms of reserve capital with deposits equal to the combined deposits of all commercial banks in Ukraine at the time. As some contemporary observers put it, the “patriots” of post-Soviet Ukraine made their first million with their first billion – a reversal of the Rockefeller-Morgan scenario. Land and cheap labor were supplied to them by the collective farm system and they received political protection from the members of parliament they “owned.” In other words, the “leaders” of Bank Ukraina – Viktor Yushchenko included – were among the first Ukrainian oligarchs.

Bank Ukraina was the incubator for a “front line” of banking cadres, playing a role comparable to that of the Central Committee of the Ukrainian Communist Youth Union (Komsomol) in supplying new members to the Ukrainian SSR Communist Party. The top names at the time were Vadim Hetman, Viktor Yushchenko, Igor Mitiukov, Viktor Kravets and Alexander Veselovsky. Most of these figures met tragic fates. Hetman was murdered, Veselovsky died in a strange auto accident and Kravets went to prison on charges of malfeasance at Bank Ukraina (as did another colleague of Yushchenko’s, Vladimir Bondar). Yushchenko magically went on – unscathed – to the next phase of his career. His long-time partner at Bank Ukraina, Igor Mitiukov, went on to become Ambassador to Great Britain, a post he still holds today.

Before and after Ukrainian independence, Yushchenko was de facto benefactor at Bank Ukraina for a number of shady organisations springing up, including an association called “Impex 55 Crimea” (Impex). From 1989-92, Impex received hundreds of millions of rubles from Bank Ukraina in a series of illicit payments – 510 million rubles in non-interest loans to one entity under the Impex umbrella and another 300 million or so to others at an annual interest rate of 1-8%. Although the charter of Bank Ukraina specified a maximum of 5 million rubles at 25-30% interest for such loans, Impex and its structures received much larger sums under very profitable conditions. The facilitator of these transactions was Viktor Yushchenko. Almost none of the credits were ever returned to the bank, but were converted into hard currency and went into the pockets of the participants.

Impex funded the activities of several groups including the Russian Movement of Crimea (RDK) and the future president of the Crimean Autonomous Republic, Yuri Meshkov. Meshkov purported to champion the rights of Russians living in Crimea and, briefly, provoked conflict between Ukraine and Russia in 1993 in a heavily militarized area that was the headquarters of the former Soviet Black Sea Fleet. Oddly, Yushchenko, who took free Crimean holidays at the expense of Impex, is now portrayed as the representative of Ukrainian patriotic nationalism while his opponent, Viktor Yanukovich, is lambasted for favoring closer ties with Russia. Seemingly at odds with the would-be aims of a Ukrainian national-patriot like Yushchenko, Impex transferred to the “Russian Scientific Foundation” millions of rubles for “political consulting,” “methodological activities,” and “organization of contacts with the Supreme Soviet and the Government of Russia.” In short, the money which was used by the RDK brought Yuri Meshkov to power.

As an example of the sort of efficient, “free market” activities of the nascent financial elite around Yushchenko, Bank Ukraina issued Impex a credit for conversion into foreign currency supposedly for the purchase of agricultural equipment in October 1991. According to Bank Ukraina’s own rules, the bank’s credit committee was responsible for adopting resolutions on issuing credits, but in this instance the letter requesting the credit bypassed the credit committee and fell directly into the hands Igor Mitiukov who handed it to his colleague Viktor Yushchenko. The credit of 100 million rubles was duly issued. Although many Impex documents were forged and many necessary contractual forms were not even presented in the legal case that later arose, the protocol of the credit committee session clearly showed that the committee reached a decision to issue a 100-million ruble credit to Impex. During questioning, Ukrainian investigators established that only two persons – Viktor Yushchenko and Igor Mitiukov – attended the “session.” The eyewitness account of the credit committee chairman at Bank Ukraina, summoned by the Prosecutor-General on 10 November 1992, reads: “I did not participate in the session and did not take part in the discussion over whether to authorize the issue of a credit of 100 million.” Other committee members, except Mitiukov, gave analogous depositions. The letter requesting the credit was addressed to Igor Mitiukov, but final decision-making fell entirely to Viktor Yushchenko.

Impex never returned the credit. Furthermore, since Bank Ukraina was partially state-owned, part of the legal case should have involved embezzlement and misuse of state and collective property. Such charges – including forgery and use of forged documents, clearly applicable to Yushchenko – were brought against former Ukrainian Premier Pavlo Lazarenko, now languishing in prison in America. But somehow Yushchenko was nominated to the post of head of the National Bank of Ukraine (NBU) and the Prosecutor-General’s case against him evaporated. The Prosecutor-General was receiving clear, persistent signals from the top ranks of power in Ukraine: “Hands off Yushchenko if you know what’s good for you.” Investigators were advised not to question Yushchenko further. Nevertheless, one investigator wrote a letter to Parliament Speaker Ivan Plyushch on the eve of deliberations on the candidacy of the NBU chairman, laying out all the illegal activities of ‘Candidate’ Yushchenko and requesting that the Speaker acquaint himself and MPs with the letter’s contents before making their choice. Yet, the MPs approved the candidacy of Viktor Yushchenko, who magically escaped corruption charges. The Prosecutor-General of Ukraine never followed through on its interrogation.

It should be noted that all this was happening at a time of extreme hardship for ordinary Ukrainians. Financial whiz-kid Viktor Yushchenko and his accomplices in the banking sector’s commanding heights were creaming millions off unsupervised transactions while Ukraine experienced hyper-inflation and its currency changed three times (from ruble to kupon to karbovanets to grivna). Furthermore, the ultimate collapse of Bank Ukraine became one of the most tragic scandals in post-Soviet Ukrainian history, and caused millions of ordinary citizens to lose their savings.

The Myth of Premier Yushchenko

Supporters of Yushchenko will dismiss the above as minor sleaze, pointing to his tenure as prime minister, when he allegedly paid arrears in wages and pensions to Ukrainians. Again, a closer look at the record reveals another picture. The payment of arrears in pensions and wages actually began under Yushchenko’s predecessor, Valery Pustovoitenko, 3-4 months before Yushchenko became head of government. The “peak” of pension arrears payments and social support was in March 1999, when it reached over 2.362 billion grivnas [the currency introduced in 1996]. By April it had declined to 2.282 billion. The steady decrease in the total sum continued until November when it was 1.208 billion. All the while, the grivna was decreasing in value.

In the first month of Yushchenko’s premiership, December 1999, the amount of pension arrears payments was over 1.310 billion grivnas. According to the Pension Fund of Ukraine, the amount then fluctuated so that by January 2000 it was over 1.263 billion, increasing to just over 1.406 billion by February, and 1.310 billion by April – well below the payments made during Pustovoitenko’s tenure. The period from 2000-2002 witnessed a further rise in the Pension Fund’s resources, to over 6.312 billion grivnas. But this had nothing to do with the Yushchenko government. Rather, it was the result of two presidential decrees issued in 1997 and 1998.

The first of these decrees required commercial banks to make up shortfalls to the Pension Fund, and the second instituted mandatory national insurance. Further revenue was to be obtained from currency exchanges, automobile sales and value added from jewelry production. As a consequence of the ratification of the 1998 decree in 2000, a law was passed on increased rates of collection from processed tobacco products, real property purchases, and satellite telecommunications operation. These factors played a decisive role in the increase in payment of pension arrears rather than the maverick populist decisions made by Viktor Yushchenko. In fact, Yushchenko strongly criticized the government’s pension policies and initiated a court case to reexamine the amount of the average pension in 2002. While still prime minister, on 30th August 2000, Yushchenko submitted a project to the Verkhovna Rada (parliament) on the Law on General Obligatory State Pension Insurance. This law envisaged an increase in the age for receiving pensions to 65 for males and 60 for females; no increase in pensions for current pensioners, and, for a period of 10-15 years, legal force for the old existing pension legislation, placing strict limits on pensions.

The “peak” of wage arrears was reached on 10th August 1999, at over 7.192 billion grivnas, after which cancellation started. When Yushchenko entered the government, wage arrears were over 6.570 billion. At the time of his ouster in April 2001, the figure stood at 4.602 billion. From April to the end of 2001, under the government of Anatoly Kinakh, the arrears decreased to 2.484 billion grivnas (i.e., by 2.118 billion). The decrease continued after Kinakh. In 2003, under Yanukovich, it was down to 1.95 billion grivnas.

On top of all this rests the reality that, whatever wage or pension arrears were paid under Yushchenko’s government, the cost of living actually increased during this time. The average pension in 2000, in real terms, decreased in value by 11.8%. The real wage fell by 0.9%. An increase in real wages only occurred at the beginning of 2001, with rapid increase starting only after Yushchenko’s ouster in 2001. The real average wage then increased by 19.3%, in 2002 by 18.2%, and in 2003 by 15.8%. Again, none of this appeared to have anything to do with the activities of Yushchenko as premier.

A Candidate for the New World Order

What is obvious is that the West’s preference for Yushchenko stems not from his democratic credentials or his championing of the rights Ukrainians, but precisely the opposite: from his contribution to increasing the cost of living in Ukraine. Prime Minister Yushchenko succeeded in selling off several regional electricity distribution enterprises (<>oblenergos<>) in western Ukraine to foreigners, including to the American company AES. Those familiar with AES’s history in the ex-Soviet republic of Georgia will know that the privatization had disastrous results for the electricity sector there, and left many Georgians in the dark and cold in winter. This sort of change – privatization, scarcity, increased prices – is why Yushchenko’s candidacy is really valued in the West, not for democracy, “civil society,” or any of the other slogans the West trumpets. Apparently, despite Yushchenko’s support among the “enlightened” urbanites of Kiev who long to be “cool” and “Western,” and despite the control that pro-Yushchenko supporters have been able to exercise over the electoral process and machinery in Kiev and much of western Ukraine, a majority of Ukrainian voters in the 2004 election nevertheless remembered Yushchenko’s true legacy, and chose not to return to it.

Perhaps it was a sense that the Ukrainian populace was becoming content that has made Yushchenko and the opposition resort to more extreme rhetoric and measures in the election of 2004. Viktor Yushchenko, lauded by the West for his reformist credentials, ran as the staunch “opposition” candidate in 2004 using harsh language to criticize the regime. But he was handicapped in his attempts to portray himself as a radical. During the anti-Kuchma protests in March 2001, Prime Minister Yushchenko had described the demonstrators as “fascists,” and in 2002 Yushchenko’s campaign described itself as “neither pro-presidential nor extremist opposition.” So half-hearted was the opposition stance adopted by “Our Ukraine” in 2002 that the campaigns of the Socialists and Communists went so far as to identify “Our Ukraine” as just another “party of power.” In 2004, therefore, when Yushchenko decided to run as the “people’s candidate against the bandit government,” he was bound to experience a backfire. His failure to win the election in the first round – when he could count unconditionally on Western support – was an indication that things were not going as well as they should have been.

As with Mikheil Saakashvili in Georgia, Washington has clearly groomed Viktor Yushchenko for the Ukrainian presidency for many years. Yushchenko’s wife, Yekaterina Chumachenko, is an American citizen from the Ukrainian Diaspora, her parents having emigrated from Ukraine at the time of the Second World War. In the 1980s, Ms. Chumachenko worked as assistant to the US Assistant Secretary of State for Human Rights and Humanitarian Affairs, then in different capacities in the White House Office of Public Affairs and the Department of the Treasury. From 1994-99 she was head of the Ukrainian representation at Barents Group LLC, which acted as a consultant to the National Bank of Ukraine when Yushchenko was chairman. It was at this time that she met Yushchenko and her influence over her husband is said to be enormous. While increasing numbers of Ukrainian politicians are denied visas to America, Yushchenko has little to worry about if he ever wishes to visit the United States.

In the final analysis, Yushchenko fits the New World Order bill like a glove. Can it be any wonder that George Soros – reviled in Ukraine – has offered his support so heavily to the pro-Yushchenko cause? The Soros world agenda centres largely on the idea of a financial-administrative elite and a global central bank, or World “Gosbank,” whose commanding heights will be the new nomenklatura. Who could be better suited for such a role than former Soviet Gosbank apparatchik Viktor Yushchenko? Unless something goes seriously wrong with the West’s plans in Ukraine, Yushchenko can be expected to appear shaking hands with George W. Bush in the White House in a matter of months. His ally, the gas industry oligarch Yulia Timoshenko (rumored to be a billionaire from Russian gas sales), should be joining him. For although she is wanted on an Interpol warrant in Russia for bribery, her name has recently disappeared from the Interpol website, presumably due to her vigorous support of the Orange Revolution. Evidently the Western scales of justice can be tipped by piling enough cash onto them.

This article is translated from the Russian and is available at:

Ukraine minister found shot dead

On Monday December 27, 2004, one of Mr Yanukovych’s staunchest supporters, and one of Yushchenko’s most outspoken opponents, Ukraine’s Transport Minister Heorhiy Kyrpa was found shot dead at his holiday home near Kiev with a gun next to his body.

According to the BBC, there are no reports linking his death ‘to Mr Yanukovych’s defeat by opposition leader Viktor Yushchenko in Sunday’s presidential poll re-run’.

Heorhiy Kyrpa’s apparent ‘suicide’ conveniently clears the way for Yushchenko to implement reforms in the face of dimished opposition.