Ukraine Bans All Russians From Massive Moscow-Style State Selloff

KYIV, Ukraine—All Russians will be banned from taking part in a huge new selloff of Ukrainian state-owned companies, a senior official has told The Daily Beast.

The move is intended to bolster Ukraine’s economy while freeing it from the tentacles of Russian influence on the 30th anniversary of its independence.

President Vladimir Putin ordered up to 100,000 troops to the border of Eastern Ukraine earlier this year and Russian investors and pro-Russian oligarchs continue to try and increase their influence on Kyiv.

Ahead of President Volodymyr Zelensky’s meeting with President Joe Biden in Washington later this month, Ukraine is moving ahead with an anti-corruption plan that will take more than 3,000 companies out of the hands of state officials, encouraging foreign investors to help create a more modern, Western-looking economy.

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The head of the State Property agency—who will oversee the mass privatizations—studied various models of transforming developing democracies in the U.S. “We need Biden to help us speed up and finish the reforms not in 30 but in three to five years, that is why we need the U.S. support so much,” Dmitro Sennychenko told The Daily Beast. “America needs us because we have lots of natural resources, including rare minerals including titanium, magnesium, lithium. Our main goal is to open our economy—right now we have around 3,600 ineffectively managed state companies.”

To make Ukraine more attractive to foreign investors, Kyiv is fighting corruption wars on several fronts. Earlier this month, Zelensky declared the beginning of the “de-oligarchization” of Ukraine, so that post-Soviet tycoons would no longer exert so much influence on politics.

Of course, it is easier to make these sorts of announcements than it is to rid Ukraine of the links between the oligarchs, organized criminals, and secret agents.

Daria Kaleniuk, director at the Anti-Corruption Action Center, told The Daily Beast the country was finding it difficult to root out corruption—and Russian influence. “We are struggling to reform our court, security and management systems,” she said. “[The Ukrainian secret service] SBU had strong ties with Russian FSB, they still find Russian citizens at the agency.”

Reformers are convinced Western politicians can help Ukraine open up for investors and recover from the malaise of post-Soviet corruption.

One of the country’s biggest paradoxes is Dmytro Firtash, a Ukrainian billionaire who owns 70 percent of Ukraine’s regional gas network and has been indicted in the U.S. on charges of scheming to bribe.

Firtash, who has reported links with organized-crime groups and alleged ties to Putin, is under house arrest in Austria fighting extradition to the U.S. He became notorious in the U.S. in recent years for his entanglement with Paul Manafort, President Trump’s former campaign manager.

Sennychenko said Ukraine was trying to drive out his influence. “We act to change the old system managed by the oligarchs. Just a few days ago, the State Property Fund of Ukraine won a court case against Firtash, who owned 49 percent of a titanium-magnesium factory. He promised to invest $110 million and did not, so we bring 49 percent back to the state.”

Kyiv has also imposed sanctions on the billionaire. Firtash denies the allegations.

Zelensky will travel to the White House on Aug. 30, feeling aggrieved after Biden gave the green light to the Nord Stream 2 pipeline, which will allow Russia to pump natural gas directly into Europe without paying transit fees to Ukraine.

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The following day, Aug. 31, Ukraine starts its “big privatization” project. Sennychenko claims he already has 14 foreign buyers coming to Ukraine to invest more than $20 million each. Factories, electricity generators, real estate, mineral ores and even two ports are among the assets on sale.

The Ukrainian secret services will be asked to ensure there is no hidden Russian money or influence masked by off-shore investments.

“We banned the direct participation of both Russian capital and Russian beneficiaries in privatization, our intelligence will study every participant deeply,” Sennychenko said.

Kyiv is even concerned about a potential full-scale invasion, especially after Putin’s latest declaration that the two countries should integrate. “I said that Russians and Ukrainians were one people—a single whole. These words were not driven by some short-term considerations or prompted by the current political context. It is what I have said on numerous occasions and what I firmly believe,” Putin wrote in an article last month, which terrified readers in Kyiv.

One of the key battles to reduce Russian influence in Ukraine will be in the energy sector.

Yuriy Vitrenko, the head of Naftagas, the Ukrainian state gas company, told The Daily Beast that they have been squeezed by Russian agents and criminals who have become more influential in running the gas pipelines over the past decade. “Its goal was to subjugate Ukraine through the gas business,” Vitrenko said. “If Russia is not ready to stop using gas as its geopolitical weapon additional sanctions should follow.”

Vitrenko made a similar case during a trip to Washington, D.C., earlier this summer. His pleas to U.S. officials to stop Nord Stream 2 may have fallen on deaf ears, but Ukraine is desperately hoping Biden will do more to help. Without U.S. support against Putin’s aggression, many fear Ukraine will not manage another 30 years as an independent nation.

Editor’s note: Dmytro Firtash is facing charges of scheming to bribe in the U.S. A previous version of this report stated he faced bribery charges. Firtash denies the allegations.

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