a geologist by education, prime minister mykola azarov is considered by presidential allies to be of rock-hard character, tough and trusted enough to be the right hand man for ukraine’s former and current presidents. government workers see him as trusted enforcer, saying the no-nonsense technocrat is ideally suited for managing the complicated task of fixing the tax system and steering ukraine on a balanced path between russia and europe.
almost two decades since independence, ukraine’s tax system ranks among the three worst in the world, according to the world bank’s group’s this year’s “ease of doing business” study, which puts the country at the bottom of the list of 183 nations.
ukraine’s judicial system is regarded among the most corrupt in the world, according to the berlin-based corruption-fighting organization, which said in december that it’s almost impossible to get a fair hearing without paying up front.
prime minister mykola azarov deserves much of the credit. former president leonid kuchma asked him to remain the country’s chief tax collector following his re-election in 2000 – a mark of the president’s faith in the tough-talking man responsible for creating state tax administration in 1996.
azarov has since risen to become the country’s most powerful unelected official. he heads the pro-moscow party of regions, the largest faction of the pro-presidential parliament majority, runs the government, and negotiates billion-dollar bailouts with international financial institutions. hundreds of thousands of ukrainians for months have demanded his dismissal, saying he is responsible for passage of the controversial new tax code.
azarov is widely regarded as smart, aggressive, and shrewd, and the rollout of viktor yanukovych’s 2010 presidential campaign bore his imprint. but as a practitioner of the take-no-prisoners politics reminiscent of the kuchma era, he also has detractors, who say he is ruthless and power-hungry, that he will do whatever it takes to come out on top.
viktor lysytskyi, an economist and former government minister, said it is natural that azarov is widely reviled in ukrainian banking and business circles, but said so are the architects of tax systems in most countries.
“he possesses excellent organizational skills and is a disciplined bureaucrat,” lysytskiy said. “my main criticism is that azarov, like all of ukraine’s leaders, has put his political loyalties ahead of efforts to develop the country’s competitive advantage in international markets.”
yuriy andrukhovych, a ukrainian writer, offered a less forgiving assessment. “[azarov] is an avowed enemy of small and medium-sized businesses – and the president’s staunch ally. his favorite pastime: crushing his adversaries. the tax legislation he has proposed, for example, allows tax inspectors to enter people’s homes to search the place. the objective is clear: to bring the middle class to heel, bleed the opposition dry by administrative means, so his henchmen can enrich themselves,” he wrote in an article appearing in august in the frankfurter allgemeine zeitung.
azarov declined oral and written requests to be interviewed for this profile. he has never admitted to using his high posts in government to harass political opponents or scheming with kuchma or yanukovych to rig the 1999 and 2004 presidential election.
political career
azarov is the fifteenth and oldest prime minister in ukraine’s 19-year history and one of the most controversial. first elected to parliament from donetsk in 1994, he briefly chaired the legislature’s budget committee before resigning to head ukraine’s state tax administration, a post he held from 1996-2002.
during his tenure at the sta, tax authorities nationwide functioned more like a protection racket than a fiscal agency, harassing businesses and banks with ties to opposition leaders. at the height of anti-kuchma demonstrations in early 2001, government critics said azarov would be among the first to go to jail if they succeeded in forcing the president to resign. after the protests fizzled out, kuchma instead promoted him.
by 2002, azarov had real chances to become prime minister, but was asked to step aside for the kuchma’s handpicked successor, yanukovych. as deputy prime minister and finance minister, he spent much of 2003 campaigning for ukraine’s accession to a quadripartite free economic zone, also known as the united economic space, with russia, belarus and kazakhstan, saying the pact would boost exports and provide cheaper russian energy supplies.
azarov de facto ran ukraine’s government – up to employing his own son as yanukovych’s adviser – until viktor yushchenko was sworn in as president in january 2005. one of his last official acts was to provide kuchma with a generous pension, including two aides, an adviser, two cars, four drivers and two state residences.
azarov’s political fortunes improved after the orange revolution following the political break-up of viktor yushchenko and yulia tymoshenko. promises to restore friendly ties with moscow and increase pension and social welfare payments paid off at the ballot booth for his party of regions, which in 2006 easily captured a majority (32 percent) of seats in the new legislature. the victory led to the re-appointment of yanukovych and azarov as prime minister and first deputy prime minister, respectively.
the duo repeated the feat a year later in a snap parliamentary poll (party of regions received 34 percent), but a new majority coalition gave tymoshenko back the job.
azarov spent the next two years managing viktor yanukovych’s successful 2010 presidential campaign before being appointed prime minister in march.
azarov’s russian counterpart vladimir putin was one of the first to send congratulations. “i am counting on the closest and most constructive joint work with you and your government to strengthen the multifaceted ties between our two governments,” putin said. “i am certain that your appointment in full measure answers the fundamental interests of the brotherly nations of russia and ukraine.”
sloviansky bank
azarov’s political career almost came to an abrupt end in 2000 after the november 2000 release of hundreds of hours of recorded conversations implicating him and kuchma in a wide variety of unlawful acts. the best documented case is the imprisonment and conviction of sloviansky bank vice president borys feldman on trumped up charges.
the case involving feldman and his sloviansky bank and recorded conversations about it have haunted azarov for the last ten years and explain why many ukrainians consider him to be just as ruthless and corrupt as the communist party officials who ran the soviet union.
feldman said his problems with tax authorities began in december 1999 when tax agents demanded his bank pay a fine of $16 million for alleged misconduct. after the courts ruled the fine unfounded, tax authorities opened a criminal case against the bank and started making arrests.
before being liquidated in 2002, sloviansky bank was ukraine’s most profitable commercial bank, posting hr 83.3 million in profits in 1999 on hr 556.1 million in net assets, the best result among 130 banks belonging to the association of ukrainian banks.
the european court for human rights ruled in april ukraine had violated feldman’s rights to liberty and security and a fair trial. another case, feldman and sloviansky bank vs. ukraine, is pending before the european court.
lengthly recorded conversations made in january, may, june, july and august of 2000 show kuchma and azarov discussing feldman in depth and arranging his conviction on trumped-up charges. during a may 24, 2000 conversation, kuchma suggests that azarov have feldman intimidated into confessing his guilt. “put him in a cell with convicts,” kuchma says. “let them pound [a confession out of] him.”
in a conversation recorded on aug. 30, 2000, azarov tells kuchma that he had arranged with malyarenko [then head of the supreme court’s criminal justice chamber] to have feldman convicted in luhansk. “we agreed with the luhansk court and have already acquainted a court chairman there with the case,” says azarov. “malyarenko and i have talked about adding a bribery charge. we have discussed this there with the judges, whom we can manipulate.”
feldman was arrested on march 13, 2000 in kyiv. he spent the next 18 months in pre-trial confinement. a luhansk district court convicted him for tax evasion, sentencing him in april 2002 to four years’ imprisonment for tax evasion and nine years for embezzling from his own bank. ukraine’s supreme court in 2003 partially upheld an appeal of the convictions, annulling the first charge and halving the prison sentence for the second.
taki spravy
ivan lozowy, who began chronicling harassment by tax authorities as a journalist in the late 1990s, told the kyiv post recently that he has no doubt the conversations between the men are authentic. he described azarov as technocrat who thrived on government corruption, excessively high taxation rates, and hostility to small business. today a partner with @i information network, a kyiv-based company specializing in due diligence and investigation, he called azarov “anti-populist” and “anti-ukrainian.”
lozowy cited a second case involving taki spravy, a kyiv-based publisher raided by tax police more than 30 times in 2002 after printing nearly one million copies of the unofficial biography of yulia tymoshenko, entitled “unfulfilled orders.” taki spravy president serhiy danylov, a former soviet dissident who promoted ukrainian independence under soviet rule, was forced to close and lay off nearly a hundred workers at the printing house after tax authorities froze the company’s accounts. danylov told the kyiv post at the time that harassment was politically motivated, a charge denied by azarov.
reacting to rumors in 2005 that he was being considered for a post in yushchenko’s administration, danylov said: “it’s awful to even to consider that this rumor could be true. azarov was a pillar of the previous regime, which not only obstructed the development of entrepreneurship, but created the tax service, which is regarded as the most corrupt government structure in the country.” danylov died of a sudden and massive heart attack in september 2008. he was 49.
career
one of the most thorough biographies of azarov to date was published in march 2010 by kost bondarenko, a political analyst, the former head of the kyiv-based horshenin institute. the story that emerges from the two-part, 20-page brief is of an accomplished geophysicist who left a distinguished academic post to become ukraine’s most powerful politician.
raised by his grandmother after the end of world war ii in a large industrialized soviet city, he married his high school sweetheart and started a family. he graduated moscow state university in 1971 with a degree in geology and geophysics. his only son, olexiy, was born the same year. after working five years as an engineer for the tulaugol coal mine, azarov returned to moscow to study rock mechanics at a state research and design bureau. he relocated to donetsk in 1984 as deputy director of the prestigious ukrainian state research and development institute of mining geology, rock mechanics and mine surveying.
according to bondarenko, azarov threw in his lot with coal baron yefym zvyahilskiy and the donetsk-based labor party after the soviet union fell apart. the party, which supported economic independence for donbas, helped organize a general strike by hundreds of coal and industrial enterprises in june 1993 that led to kuchma’s premature dismissal as prime minister.
“he is driven by numbers, not religion, ideology, or the accumulation of wealth or power,” bondarenko said, noting that the 63-year old native of kaluga, an oblast 200 kilometers southwest of moscow, had already fulfilled most, if not all, of his career ambitions. “he is more interested in balancing the budget than becoming ukraine’s next president,” bondarenko said.
serhiy taran, director of the international democracy institute, attributed azarov’s political longevity to the fact that he poses no political risk to yanukovych.
“former president leonid kuchma and current president viktor yanukovych promoted him because of his loyalty, not his bureaucratic abilities,” taran said.
azarov’s resume:
1971 graduated of moscow state university, geology and geophysics
1971-76 engineer, tulaugol coal enterprise, russia
1976-84 laboratory chief, moscow design and research coal institute
1984-95 deputy director and director, rock mechanics institute
1994-96 leader of the donetsk-based labor party, parliament deputy
1996-02 state tax administration chief
2001 founder, party of regions
2002-04 finance minister, first deputy prime minister
2006/07 parliament deputy, party of regions
2006-07 finance minister, first deputy prime minister
2009 presidential campaign manager
2010 prime minister since march 11