The war has contained the Ukrainian oligarchs, at least for now

For weeks they repelled Russian attacks, trapped in a huge steel mill under barrages of rockets and mortars. And when Ukrainian forces defending the Azovstal factory finally surrendered in May 2022, the mill was reduced to rubble and twisted metal.

The fighting at Azovstal, in the besieged city of Mariupol, was a defining moment in the early months of Russia's large-scale invasion of Ukraine.

It was also a major setback for Ukraine's richest man, the factory's owner.

With the destruction of Azovstal, its owner, Rinat Akhmetov, lost an industrial gem that accounted for a fifth of Ukraine's steel production – a billion-dollar loss that dealt a major blow to his long-standing grip on the Ukrainian economy.

Akhmetov's case underlines how, by devastating Ukrainian industry, the war has limited the power of the country's so-called oligarchs, magnates who have long ruled the economy and used their wealth to buy political influence, experts say .

In the first year of the war, the total wealth of the twenty richest Ukrainians shrank by more than $20 billion. according to Forbes magazine. Mr. Akhmetov took the biggest hit, losing more than $9 billion. He is one of only two billionaires left in Ukraine, down from 10 before the war The newspaper New Voice of Ukraine.

Now the Ukrainian authorities plan to use their war powers to try to make a clean break with the oligarchs. The aim is to reduce their influence over the economy and politics, and to prosecute those guilty of corrupt practices, implementing the policies President Volodymyr Zelensky promised before the invasion.

“They are weak, and it is a unique opportunity to achieve justice when it comes to how the country should be governed,” Ukrainian Justice Minister Denys Maliuska said in an interview.

Ukrainian authorities say these efforts are aimed at rebuilding a post-war country that is more democratic and prosperous, and also demonstrate their commitment to fighting corruption, a crucial step in gaining support from Western allies.

The crackdown could eliminate influence buying, but it could also reduce pluralism in Ukrainian politics and sideline some of Zelenskiy's opponents. Before the war, one of the most high-profile investigations into a businessman was against Zelensky's main political rival, former President Petro O. Poroshenko, who made a fortune in the candy industry. Mr. Poroshenko has avoided criticizing Mr. Zelensky since the start of the war, instead portraying himself as a loyalist ready to fight for his country.

Some critics also say that the concentration of power around the wartime government could give rise to a new oligarchy, and analysts say oligarchs still retain significant instruments of influence.

“Oligarchs have all the tools they need to regain their influence,” Maliuska said. “The risk is still there.”

Like other Ukrainian tycoons, Akhmetov made his fortune in the 1990s, when the newly independent Ukraine transitioned to a market economy in which lucrative state assets were cheaply privatized. He took over Soviet-era coal and steel factories and built a business empire that included major interests in agriculture and transportation.

Dmytro Goriunov, an economist at the Kiev-based Center for Economic Strategy, said oligarchs have been a major obstacle to Ukraine's economic development and have hampered competition through monopolies. Before the war, they controlled more than 80 percent of industries such as oil refining and mining. according to one study he wrote.

Experts say Ukrainian oligarchs used their profits to influence politics and the judiciary, and to buy or launch television channels to shape public opinion.

Mr. Akhmetov once owned 11 channels and supported Viktor Yanukovych, the former pro-Russian president who was ousted by the Ukrainians in 2014.

Unlike in Russia – where the oligarchs have fallen to the Kremlin's line largely through coercion or out of self-interest – the rivalry between Ukrainian tycoons and their support for a wide range of politicians have given Ukraine's media and political landscape greater diversity.

Their large industrial and agricultural businesses have also powered the economy, employing hundreds of thousands of people and attracting foreign investment.

But Daria Kaleniuk, executive director of the Ukrainian Anti-Corruption Action Center, said the oligarchs' interests in business, politics and the news media had created a “vicious circle” in which most instruments of power were under their control, fueling corruption.

When Mr Zelensky was elected president in 2019 – with the backing of a tycoon, Ihor Kolomoisky – he promised an all-out attack on the oligarchs. But his efforts, which included overhauling the judiciary and cracking down on corrupt government officials, “did not significantly reduce the influence of the oligarchs at the time,” Mr. Maliuska said.

Then came the Russian invasion in February 2022.

While Moscow's attacks focused on eastern and southern Ukraine, the country's industrial heartland, many oligarchs' factories were decimated.

In Mariupol, Mr. Akhmetov's two gigantic steel factories, including Azovstal, were destroyed. That included the country's largest oil refinery, in central Ukraine, owned by Mr. Kolomoisky. Today, heavy fighting around the eastern town of Avdiivka forced Europe's largest coking plant, another owned by Mr Akhmetov, to close.

“My companies are the most affected by the war,” Mr. Akhmetov said in written answers to questions. Its wind and thermal power plants are “exposed to continued Russian missile and drone attacks,” and its steel and coking plants are “severely damaged or temporarily occupied,” he said.

According to the Center for Economic Strategy, Akhmetov's steel and mining group Metinvest lost almost a third of its assets in the first year of the war. Mr. Kolomoisky's oil assets shrank by two-thirds.

But it was perhaps the oligarch's political influence that was most affected.

In the early days of the war, as the country rallied behind its president, the oligarchs had little choice but to put aside their political agenda and help with the war effort.

Then, Mr. Zelensky signed a decree consolidating all cable news into a single program designed to counter Russian disinformation and boost morale — depriving media-armed oligarchs of a crucial tool of influence. The program has been denounced as a way for the government to stifle criticism.

And by the summer of 2022, many tycoons had relinquished ownership of their media companies to comply with a law passed before the war to curb their power. The law stipulates that anyone who meets three of four criteria – participation in politics, significant media influence, ownership of a corporate monopoly or a fortune of at least $70 million – will be classified as an oligarch and barred from purchasing privatized state assets and financing political parties. .

Mr Akhmetov handed over the licenses for his television and print media to the state in July 2022. “I am now not an oligarch in the legal sense of the word,” he said.

As the war continued, Ukrainian authorities cast a wider net in their prosecution of oligarchs.

In September, police arrested Mr. Kolomoisky on suspicion of fraud and money laundering, and he has been in custody since then. Authorities are also seeking to extradite Kostyantin Zhevago, a Ukrainian oligarch, from France on fraud charges, and another, Dmytro Firtash, on embezzlement charges. Mr Akhmetov is not facing any personal legal proceedings.

“For decades it was unthinkable to have an oligarch in a pre-trial detention center,” said Mr. Maliuska, the justice minister. “Now this is a reality.”

Mr. Maliuska acknowledged that “the power of the state is greater” during the war, facilitating efforts to break away from the oligarchs' control of the economy. But he added that Ukraine's current actions were also aimed at gaining anti-corruption credentials crucial to securing much-needed Western aid.

For example, the European Union agreed last month to open accession negotiations with Ukraine, but has emphasized the need to “build a credible track record of investigations, prosecutions and final judicial decisions in high-level corruption cases.”

It remains unclear what consequences this will have for the power of the oligarchs.

Economist Goriunov said Ukraine remains dependent on many of the oligarchs' businesses. Mr Akhmetov's energy company, DTEK, accounts for two-thirds of the country's thermal coal production.

Mr Akhmetov said in his written comments that he intended to play a role in the country's post-war reconstruction. “As the largest Ukrainian investor, SCM will not remain on the sidelines,” he said, referring to its holding company.

Some in Ukraine also fear that the oligarchs will be replaced by a new oligarchic system resulting from the wartime concentration of power around the government.

Valeria Gontareva, who served as governor of Ukraine's central bank from 2014 to 2017, said she was concerned about the seizure of the oligarchs' assets during the war and how government officials might use them for personal gain.

In late 2022, Mr. Kolomoisky's oil refinery and Mr. Zhevago's company AvtoKrAZ, which makes heavy trucks, were nationalized in what authorities said was a way to secure vital military supplies. But some actions, such as the seizure of Mr Zhevago's shares in mining factorieshave been controversial and criticized as unfair.

“It's state capitalism,” Ms. Gontareva said. “Now the threat is not the old oligarchs, but the new ones who are profiting from the war through the redistribution of assets and business segments.”

Ms. Kaleniuk of the Anti-Corruption Action Center agreed. “In the battle against dragons,” she said, “we must be careful not to become dragons ourselves.”