Publication: Eurasia Daily Monitor Volume: 3 Issue: 192

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

Hayduk co-owns the Industrial Union of Donbas (ISD), which is based in Donetsk, like the System Capital Management firm of influential MP Renat Akhmetov. The two are rivals in both politics and business, and Hayduk’s appointment is widely seen as Yushchenko’s attempt to counterbalance the growing clout of Prime Minister Viktor Yanukovych, who has been backed by Akhmetov. Hayduk has been skeptical of several energy projects undertaken together with Russia, and he opposed the January 2006 gas trade accords with Russia, so his appointment may not be welcome in Moscow.

The post of Yushchenko’s chief security adviser was effectively vacant after May 2006, when Anatoly Kinakh, who had been NSDC secretary since September 2005, was elected to parliament. Volodymyr Horbulin, who had worked in this position under Yushchenko’s predecessor, Leonid Kuchma, filled in only temporarily, as he had reached retirement age. Horbulin will continue to serve in Yushchenko’s office as one of his advisers.

Hayduk was one of ISD’s co-founders in the mid-1990s, when the ISD was one of the main rivals of 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, Hayduk worked as deputy chairman of the Donetsk regional council and then deputy to then Donetsk governor Yanukovych. He came to the central government for the first time in 2000, as deputy energy minister in the cabinet of then prime minister Yushchenko. When Yanukovych first became prime minister in 2002, he promoted Hayduk to deputy prime minister. Hayduk fell out with Yanukovych and Kuchma in late 2003, when he opposed two big projects promoted by Russia — the reversal of the Odessa-Brody oil pipeline, originally built for carrying Caspian oil to Europe — and the formation of a Russia-dominated gas transportation consortium.

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

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

At his first briefing as NSDC secretary on October 10, Hayduk promised to employ professionals and to facilitate 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 Yushchenko in order to beef up his team to withstand Yanukovych’s growing appetite for power (see EDM, September 27).

On October 9, Yushchenko appointed the former head of his office, Oleksandr Zinchenko, as his adviser. This provoked a stormy reaction from Yushchenko’s party, Our Ukraine, which issued a statement asking Yushchenko to drop Zinchenko from his team. It was 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 Tymoshenko as prime minister and Petro Poroshenko as NSDC secretary.

Yushchenko also appointed Oleksandr Semyryadchenko as head of his information policy service and Ihor Pukshyn as deputy head of his secretariat. Semyryadchenko 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. Pukshyn’s legal firm, Pukshyn and Partners, reportedly has been helping Yushchenko’s government in a continuing property dispute with Pinchuk over the embattled Nikopol Ferroalloys plant. Pukshyn should strengthen Yushchenko’s legal team, which has been widely seen as quite weak.

(Channel 5, October 10, 13; Delo, Ukrayinska pravda, October 11; For-ua.com, October 13)