Gleb Bazov · @gbazov

23rd Mar 2015 from TwitLonger

#KOLOMOISKIY—On Benito Kolomoiskiy’s Gamble—My Napkin Prose on the Subject

On Benito Kolomoiskiy’s Gamble
(a more complete version of this analysis will appear at

A few responses to Cassad’s note at, or why I disagree with his ultimate conclusions, though not with most of the points he makes:

(1) I don’t disagree that Kolomoiskiy’s own security apparatus and financial potential are dwarfed by the combined monetary power and military forces of Ukraine. I also agree that the US has made its choice and has given orders to proceed.

(2) However, Poroshenko’s hesitance in moving against Kolomoiskiy is telling and suggests a few flaws in Cassad’s analysis. Thus, despite Kolomoiskiy’s open and unrepentant challenge to central authority (the raid on UkrNafta, which he still retains) has drawn zero actual response from the government, except in statements and on Facebook.

(3) Where Cassad and I differ is in his bias toward the omnipotence of US, specifically in that goings-on in Ukraine. While I agree with him that the US is the primary agent of influence in Ukraine, almost to the point of the Ukrainian government being its colonial extension, my intuition about the unfolding events and the impression I get from the behaviour of both in relation to Kolomoiskiy’s demarche is that the US has lost the strings of control over the unraveling chaos and disintegration of Ukraine. As a result, despite the fact that the US obviously controls state agencies and all the important government actors, the Ukrainian state apparatus appears to be paralyzed vis-à-vis Kolomoiskiy. They have not gone beyond verbal threats. In a sense, Yanukovich once faced a similar situation, where, even though he was formally in control, and no one in the government spoke out against him openly, there was still a palpable delay and sabotage in the implementation of his orders. This is not because Kolomoiskiy controls the state security agencies, but because they are, to an extent, paralyzed (by lack of legitimacy, authority, payroll, you name it).

(4) I also agree that Kolomoiskiy’s actions have been defensive. Where I disagree with Cassad is whether this signals that Kolomoiskiy will necessarily lose. Kolomoiskiy does not want to win, per se. He would be perfectly satisfied with, and, in fact, wants a return to the pre-conflict status quo. He operates his business, makes his money and functions better in the context of the United Ukraine. Accordingly, it is not in his interests to force the situation to come to a head. On the contrary, he would like the processes to slow down. The entire charade with UkrNafta and the Kolomoiskiy republic is an act of blackmail, not a show of force. He is saying—stay your hand, Poroshenko or else.

(5) Although Poroshenko’s military assets surpass those of Kolomoiskiy, the latter does not have the war in Donbass to deal with. Kolomoiskiy’s retreat from Donbass and from Odessa would create, to some extent, areas of power vacuum and threaten Ukraine’s integrity further. Similarly, Kolomoiskiy is the sole supplier of fuel to the Ukrainian army, and lack of supplies would imperil Poroshenko vis-à-vis the NAF. Finally, the Ukrainian banking system could collapse if PrivatBank suspends operations. These are just three of Kolomoiskiy’s bargaining chips.

(6) More importantly, Kolomoiskiy, controlling four of Ukraine’s richest regions (not including DPR and LPR, obviously), could, unless he is defeated from within, mount a successful defence. He does not need to do much. All he needs is to withstand the first flush of attacks. Once Poroshenko’s power is shown to be at a critical low, all hell could and most likely would break lose. NAF would have no reason not to commence an offensive. Troops that were keeping control in Kharkov, Odessa, the rest of Ukraine, no longer would be available to stem public unrest. At this late stage in Ukraine’s process of collapse, morale and confidence are paramount. Once the king is shown to be naked, there is no telling where the fabric of statehood would rip.

(7) There is a lot more to say, but I will save it for later, while we see how the events unfold. The key point I am trying to make is that, whatever the influence US has in Ukraine (and I think it’s clearly dominant), it is not US troops, politicians and strategists that fight in Ukraine—all the actors on the ground are Ukrainian, and US must exercise its influence through them. That is why I see chink in the armour of American presumed omnipotence. Critically, all Kolomoiskiy has to do is hold out long enough for confidence in Kiev’s rule to be compromised. He does not need to win the war with Kiev; he only needs to start a fight and keep on his feet for a round and a half. That is Kolomoiskiy’s real blackmail—give me back the status quo, or I will throw you down into the wastebasket of history, together with your United Ukraine, and follow you there myself. The only question that remains is who will blink first? Will Poroshenko call his bluff? Except, of course, I do not think it is really a bluff.

(8) There is also the question of an exit strategy. If Kolomoiskiy flees to Israel, in my opinion there is little chance anyone could get him there. As well, I am certain that he has hidden his money well enough to make it mostly untraceable, and will continue moving it for as long as it takes (from my experience with such litigation, hiding money is not all that difficult for someone with means). In fact, Kolomoiskiy stands to lose everything if he backs down in Ukraine—in which case all that he will have left is the money he has already squirreled away offshore. That means he is not risking much in making his stand (also eliminates US financial pressure on him). For all these (and many others, which did not make it in here) reasons, I think it is much too early to call this fight, let alone to compose requiems for our oligarchic Nazi, Benito Kolomoiskiy.

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