Ukraine’s richest man plays both sides of frontline _ propping up government and rebel regime

By NATALIYA VASILYEVA, Associated Press

KRASNODON, Ukraine (AP) — In this town deep in eastern Ukraine’s rebel heartland, about a quarter of the population works in the coal mines owned by billionaire Rinat Akhmetov, Ukraine’s richest man. Here and elsewhere in territory controlled by the separatist insurgency, the tycoon keeps the lights on and people clothed and fed, with a mixture of jobs, electricity and aid.

At the same time, Akhmetov operates factories on the other side of the frontline, powering Ukraine’s economy and pouring hundreds of millions in taxes into government coffers. His steel products, which are finished in rebel territory, are then shipped to the West — where they bring in billions in revenue for Akhmetov that then indirectly props up the separatist government.

The billionaire is able to straddle the frontline by using his fortune and business empire as leverage. His companies provide more than 300,000 jobs across Ukraine, most in the rebel-held east. Meanwhile, his control over utilities that provide electricity and heating to both sides allow him to dictate terms to the government as well as the rebels. Cracking down on Akhmetov’s factories in government territory would threaten Ukraine’s depressed economy, while a collapse of utilities in the east would undermine the rebels’ grip on power.

It makes for a striking picture of economic cooperation between enemy areas: Coal produced in Krasnodon mines, on rebel territory, travels to the Avdiivka coking plant on the government side. Coke is then shipped back to rebel lands, to a metals smelter in Yenakieve, and the metals produced there are transported to government territory on the Azov Sea — for shipping to the West.

Meanwhile, Western purchases, which account for the most of Akhmetov’s profits, are helping to keep the rebel territory afloat by fueling economic activity. Akhmetov’s Metinvest metals and mining holding posted revenues of $1.8 billion in the first quarter of the year, a 6 percent increase over the previous year, with Europe accounting for 35 percent of sales and North America for 3 percent. Steel works in rebel-controlled Yenakiyeve accounted for a quarter of the company’s steel output in the first quarter.

After separatist leaders occupied parts of the Donetsk and Luhansk regions, the Ukrainian government said anything that is produced there should be classified as contraband. But Kiev gave the green light for Akhmetov’s empire — which stretches from coal mines and metal smelters to power plants — to trade with the rebel-held areas and export its products just as it did before the war.

When the insurgency erupted in 2014, the Ukrainian government set about shutting down Ukrainian businesses in the east, and most private businessmen fled. The war has killed more than 8,000 people, but also erected barriers between suppliers and customers. Only Akhmetov — worth $6.7 billion according to Forbes magazine — has been allowed to operate on both sides.

Neither Akhmetov nor the rebels acknowledge that he is propping up the separatists. But there is little doubt that his factories, and the back-and-forth of trade over the frontline, are critical to the rebel regime. Admitting any cooperation with the rebels would be the end for the 48-year-old billionaire: His company would be in violation of international law and shut out of Western markets.

Metinvest and Krasnodonugol, Akhmetov’s coal company, say they neither pay taxes to the rebel government nor directly finance the separatists.

“We tell them that right now we cannot comply with the demands that the (Luhansk separatist) republic is putting forward because complying with them would mean the enterprise would have to shut down,” Krasnodonugol director Alexander Angelovsky told The Associated Press.

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