ANALYSIS: Yushchenko picks Donetsk businessman as national security and defense chief (10/29/06)

ANALYSIS

Yushchenko picks Donetsk businessman as national security and defense chief

by Oleg Varfolomeyev
Eurasia Daily Monitor

On October 10 President Viktor Yushchenko appointed one of Ukraine's most influential businessmen, Vitaii Haiduk, as secretary of the National Security and Defense Council (NSDC). Mr. Yushchenko had reportedly been about to choose either opposition leader Yulia Tymoshenko or former prime minister Yurii Yekhanurov for this post, but eventually preferred Mr. Haiduk. Like Ms. Tymoshenko, Mr. Haiduk has significant experience in the energy sector, both as a businessman and as a government official.

Mr. Haiduk co-owns the Industrial Union of the Donbas (ISD), which is based in Donetsk, like the System Capital Management firm of influential member of Parliament Rynat Akhmetov. The two are rivals in both politics and business, and Mr. Haiduk's appointment is widely seen as President Yushchenko's attempt to counterbalance the growing clout of Prime Minister Viktor Yanukovych, who has been backed by Mr. Akhmetov. Mr. Haiduk has been skeptical of several energy projects undertaken together with Russia, and he opposed the January gas trade accords with Russia, so his appointment may not be welcome in Moscow.

The post of President Yushchenko's chief security adviser was effectively vacant after May when Anatolii Kinakh, who had been NSDC secretary since September 2005, was elected to Parliament. Volodymyr Horbulin, who had worked in this position under President Yushchenko's predecessor, Leonid Kuchma, filled in only temporarily, as he had reached retirement age. Mr. Horbulin will continue to serve in President Yushchenko's office as one of his advisers.

Mr. Haiduk was one of ISD's co-founders in the mid-1990s, when the ISD was one of the main rivals of Yulia Tymoshenko's United Energy Systems on the domestic natural gas market. Since then, ISD has grown into one of Ukraine's biggest corporations controlling lucrative metallurgy assets not only in Ukraine, but also in Hungary and Poland. ISD also holds significant interests in the media, agriculture, coal mining, construction and tourism sectors.

From 1994 to 1997, Mr. Haiduk worked as deputy chairman of the Donetsk Oblast Council and then deputy to then Donetsk Administration Chairman Yanukovych. He came to the central government for the first time in 2000 as vice minister of energy in the Cabinet of then Prime Minister Yushchenko. When Yanukovych first became prime minister in 2002, he promoted Mr. Haiduk to vice prime minister. Mr. Haiduk fell out with Messrs. Yanukovych and Kuchma in late 2003, when he opposed two big projects promoted by Russia: the reversal of the Odesa-Brody oil pipeline, originally built for carrying Caspian oil to Europe, and the formation of a Russia-dominated gas transportation consortium.

Unlike Mr. Akhmetov, who backed Mr. Yanukovych during the Orange Revolution in 2004, Mr. Haiduk's ISD was rather on Mr. Yushchenko's side. Mr. Haiduk clashed with pro-Russian interests again in December 2005, when Mr. Yushchenko was about to appoint him vice prime minister in charge of fuel and energy. Mr. Yushchenko unexpectedly changed his mind on Mr. Haiduk, and on January 4 the accords on gas trade with Russia, which Mr. Haiduk had opposed, were signed. Later on, ISD unsuccessfully disputed the gas accords in Ukrainian courts.

Predictably, Mr. Yanukovych's team has not been very happy with the news of their rival's appointment to supervise national security. Fuel and Energy Minister Yurii Boiko, whom Mr. Haiduk confronted over the Odesa-Brody pipeline several years ago, did not conceal his emotions at a recent press conference. He said that Mr. Haiduk is a billionaire and recalled Mr. Yushchenko's promises to separate business from government, apparently hinting that Mr. Haiduk may continue to pursue his business interests in the new position.

At his first briefing as NSDC secretary on October 10, Mr. Haiduk promised to employ professionals and to facilitate President Yushchenko's work as chairman of the NSDC. His own appointment has been one in a series of personnel decisions, some of them rather unexpected, taken by Mr. Yushchenko in order to beef up his team to withstand Prime Minister Yanukovych's growing appetite for power.

On October 9, Mr. Yushchenko appointed the former head of his office, Oleksander Zinchenko, as his adviser. This provoked a stormy reaction from Mr. Yushchenko's party, Our Ukraine, which issued a statement asking Mr. Yushchenko to drop Mr. Zinchenko from his team. It was Mr. Zinchenko whose sensational accusations of corruption against several key members of Our Ukraine provoked a political crisis in September 2005, which triggered the dismissal of Ms. Tymoshenko as prime minister and Petro Poroshenko as NSDC secretary.

President Yushchenko also appointed Oleksander Semyriadchenko as head of his information policy service and Ihor Pukshyn as deputy head of the Presidential Secretariat. Mr. Semyriadchenko shaped news coverage at the private ICTV television company during the Orange Revolution, when ICTV strived to remain professional and neutral amid the political passions of the period. Mr. Pukshyn's legal firm, Pukshyn and Partners, reportedly has been helping the Yushchenko administration in a continuing property dispute with Victor Pinchuk over the embattled Nikopol Ferroalloys plant. Mr. Pukshyn should strengthen the Yushchenko legal team, which has been widely seen as quite weak.

Sources: Channel 5, October 10, 13; Delo, Ukrayinska Pravda, October 11; For-ua.com, October 13.

The article above is reprinted from Eurasia Daily Monitor with permission from its publisher, the Jamestown Foundation, www.jamestown.org.

| Home Page |