Publication: Monitor Volume: 8 Issue: 5

A scandal has erupted in Ukraine over allegations about the involvement of top officials in illegal arms exports several years ago. On December 21, the Verkhovna Rada (parliament) requested the Prosecutor General’s Office (PGO) and the Security Service (SBU) to check reports alleging the involvement of National Security and Defense Council (NSDC) secretary Yevhen Marchuk, former SBU chief Leonid Derkach and his son, people’s deputy Andry Derkach, in illegal arms trade. On January 4, the PGO announced that it had launched an inquiry into the allegations. It is not quite clear, however, why the Derkachs were mentioned along with Marchuk. So far, only Marchuk has had a difficult time fending off the allegations contained in reports run by the media under Andry Derkach’s control.

Ukraine has often been accused in Western media of circumventing UN sanctions to sell arms illegally in hot spots across the world. But each time such allegations have arisen, the Foreign Ministry in Kyiv has duly denied them. This time, however, the accusations are too serious to be brushed aside. The scandal was ignited in December by a series of reports in the weekly Kievsky Telegraph, the web site Versii and Era TV–all of which are somehow associated with Andry Derkach. The reports quoted sources in Italy saying that prosecutors in Turin suspected Marchuk of having organized an international group that sold Kalashnikovs and ammunition from Ukraine and Belarus to the Balkans in 1992-1994 in violation of UN sanctions. According to these reports, businessman Dmytro Streshynsky, one of the main suspects in the case being prosecuted in Italy, said that the sales were authorized by then Ukrainian President Leonid Kravchuk. Kravchuk, Streshynsky claimed, was misled by Marchuk, who had advised him to endorse the sales.

Kravchuk, asked to comment by the Ukrainian television station ICTV, admitted that Ukraine did indeed once sell arms to Streshynsky, who then resold them to the Balkans. But Kravchuk defended Marchuk, saying that it was the SBU, which Marchuk then headed, that had aided international secret service organizations in tracking down and laying hand on Streshynsky after his play had been determined foul. Marchuk, meanwhile, denied that he had ever advised Kravchuk to do business with Streshynsky and suggested that “some structures backed by the people who are also backing Kievky Telegraph” wanted to discredit him. According to Marchuk, the NSDC uncovered irregularities in the privatization of the Mykolaiv Alumina Plant and Eksimnaftoprodukt (an oil-trading company), after which “some fraudsters” wanted “to distract attention from themselves.” Marchuk hinted that Andry Derkach was in some way connected to both and said more definitively that, despite the “smear campaign,” he was not going to resign.

The matter is too sensitive to be ignored. Official Kyiv views it as a serious threat to Ukraine’s international image. Ukrainian media sympathizing with Marchuk, such as Inter TV (controlled by the United Social Democrats), are inclined to present the case as a foreign conspiracy to weaken Ukraine as a competitor in the international arms market.

Marchuk’s predecessor as NSDC secretary, Volodymyr Horbulin, also stepped in to defend him. The allegations against Marchuk served “short-term political purposes,” Horbulin told journalists on December 20. But Horbulin is scarcely impartial. First, he left the NSDC after a conflict with the Derkach family. Second, he currently heads the state commission for military-industrial complex, which supervises arms exports.

The timing of the scandal seems tied to the race to the March 31 parliamentary elections: Streshynsky’s affair is nearly ten years old, but has been unearthed only now, just as the campaign is heating up. Marchuk and the Derkachs belong to rival centrist camps competing for the same pro-presidential electorate and the administrative resource. Marchuk, as well as Kravchuk, is linked to the USDP. Andry Derkach is a prominent member of Labor Ukraine, which belongs to the For United Ukraine bloc. The two groups also reportedly have competing economic interests. The USDP has recently suffered significant losses on the political front: it lost governors in several regions and its leader, Viktor Medvedchuk, lost the deputy speaker seat in the Rada. Marchuk’s possible resignation would further weaken the USDP and strengthen its rivals (ICTV, December 4, 17, 2001; Kievsky Telegraph, December 17, 2001; UNIAN, December 20, 2001; RFE/RL, Inter, January 4; Ukraina Moloda, January 5; see the Monitor, December 18, 2001).