Zelensky: Lifting Nord Stream 2 sanctions is big defeat for US, big win for Russia

Volodymyr Zelensky gave his anniversary press conference on May 20, marking his second year as Ukraine’s president.

The press conference took place in a symbolic setting — inside a hangar at the Antonov aircraft manufacturing company, with the Ruslan AN-124 cargo aircraft in the backdrop. The plane was lacking engines and wheels.

During the three-hour press conference, Zelensky hinted at new sanctions against oligarchs, expressed his disappointment with the U.S. decision to lift tough Nord Stream 2 sanctions, and said that his predecessor Petro Poroshenko was involved in corruption daily.

Here are the highlights of the press conference:

On Rinat Akhmetov

One of the surprises of the press conference was Zelensky’s displayed hostility towards Rinat Akhmetov, Ukraine’s richest man and most influential oligarch.

Zelensky has recently announced a major de-oligarchization campaign, yet the only oligarchs who felt it so far are Viktor Medvedchuk, who was stripped of his assets and charged with treason, and Ihor Kolomoisky, whose alleged embezzlement of PrivatBank and state company Centrenergo are being investigated.

While he didn’t mention Akhmetov by name, Zelensky made clear hints that the state means to cut his influence in two areas that proved very profitable for the oligarch: raise the low iron ore extraction fee that his companies enjoy, and end his energy lobbyism that made regulators prioritize more expensive coal-sourced electricity over the cheaper state-produced nuclear energy.

As a result, the state nuclear energy producer Energoatom suffered losses.

“There are many (influence) groups involved, and not only Ukrainian ones,” he said.

Answering a question from Vasyl Holovanov, a TV host on Akhmetov’s Ukraina channel, about raising taxes for Ukrainians, Zelensky accused him of manipulation.

“I understand whose TV channel you work for,” he said. “You could be asking a question, but (instead) you’re passing me information, and I know from whom. Don’t manipulate. Regular Ukrainians and small and medium businesses won’t be paying more taxes. As for big business, we won’t let anyone make 200–300% profits using the natural resources of Ukraine,” he said, referencing the low iron ore extraction fee paid by Akhmetov’s companies that the government seeks to raise.

Akhmetov’s companies pay a 12% iron ore extraction fee counted from the prime cost. The government seeks to link the extraction fee to the market price of iron ore.

On fighting oligarchs

Zelensky revealed some details about the bill that his office and the Security Council are developing that would define the criteria of an oligarch and limit their influence.

However, Zelensky was vague about the bill and contradicted himself, first saying that the draft was fully ready and then, that it’s still not finalized.

“There will be no influence on politics, on state officials, on the media. The people who do it will get the label of an ‘oligarch.’ This will harm their assets abroad, decrease their value. They will be in this register (of oligarchs) and some sanctions will be applied to them.”

He said that a person who falls under the criteria will be banned from being a lawmaker.

“The law will give them time to readjust. There won’t be a dead end for them. This is a normal law that respects big business,” he said.

Zelensky didn’t give a direct answer to the question on whether the Security Council will issue sanctions against oligarchs Ihor Kolomoysky and Dmytro Firtash.

“You can expect many more interesting decisions from the Security Council,” he said, adding jokingly: “Watch our show every Friday.” The council meets on Fridays.

He added that he hopes he won’t be facing the oligarchs alone.

“I demonstrated that I have the will (to go against oligarchs). Next, I’ll need the support of law enforcement. And I’m hoping I won’t end up facing these influence groups alone.”

On Nord Stream 2

Zelensky didn’t hide his disappointment with U. S. President Joseph Biden’s decision to waive some Nord Stream 2 sanctions and said that he feared that Russia can pressure the U.S. to waive all sanctions, allowing the completion of the pipeline.

“The risk is very high that Russia will pressure the U.S. into lifting the Nord Stream 2 sanctions,” said Zelensky.

“I think it will be a defeat for the United States, and a personal defeat for President Biden. It will be a serious geopolitical win for Russia and will lead to a new redistribution of power and influence.”

He said that Ukraine will welcome a big group of U.S. senators in June and will discuss Nord Stream 2 with them.

“It’s a big game. The U. S. can do it if they are doing it in exchange for something very serious. And I have to be honest, I’m anxious about this situation,” said Zelensky.

On Naftogaz

According to Zelensky, Naftogaz showed deplorable financial results forcing the government to fire CEO Andriy Kobolev.

“They forecasted Hr 11 billion ($407 million) losses this year. I’m sure that now there won’t be Hr 11 billion losses,” said Zelensky.

The president came under fire from energy experts and foreign diplomats for this decision. The experts said the decision to oust the head of a major state company undermines the corporate governance reform.

“Despite the corporate governance reform, the government remains the largest shareholder of Naftogaz,” said the president defending Kobolev’s firing.

“Naftogaz was told to show at least $500 million in profits in 2021, and at least $1 billion in 2022. You’ll see, they will fulfill it,” he added.

According to Zelensky, such a dire state of the once profitable oil and gas monopolist was a result of the company’s questionable investments.

Zelensky said that Naftogaz paid lobbyists and paid for media articles that would promote the company’s leadership.

“There are media stories, paid for by Naftogaz, fake stories that say that the Nord Stream 2 sanctions were being reversed because of the change in the leadership of Naftogaz,” said Zelensky. “We know (the author) works as one of the lobbyists of Naftogaz. I think he’s even the chief U.S. lobbyist for them.”

Zelensky could have been talking about Vadym Glamazdyn, who was an official lobbyist for Naftogaz until last week, lobbying against Nord Stream 2. He authored an opinion piece in Europeiska Pravda, a Ukrainian news outlet, tying Kobolev’s firing to the easing of sanctions against Nord Stream 2.

On Donbas

A large chunk of questions, unsurprisingly, concerned Russia’s war against Ukraine and the Russian-occupied territories of Crimea and eastern Donbas.

According to the president, the only way out of the conflict is to hold talks with the aggressor.

“I insist on a direct dialogue with Putin,” said Zelensky.

Asked by the Kyiv Post why Zelensky isn’t switching to the long-promised “plan B” to reach peace in Donbas.

“Plan A isn’t dead yet,” said Zelensky. “We can’t risk and just end the Normandy Format.”

According to the president, Germany and France are deeply invested in the current format and Ukraine can’t leave the talks without reputational risks even as the format clearly doesn’t work.

In early May, Russia announced that it issued over 527,000 passports to residents of the occupied Donbas, cementing its presence in the region.

“We can’t influence the issuing of Russian passports in other ways than diplomatically,” said Zelensky, acknowledging that Ukraine has little power over Russian decision-making.

Meanwhile, Zelensky’s next steps include bringing the U.S. into Ukrainian-Russian peace talks and bringing the question of Crimea back on the table through the Crimean Summit.

“It’s not a simple summit. Important documents will be signed there,” said Zelensky. “Many foreign countries will be represented,” he added, acknowledging that Russia will try to derail the initiative.

“Russia is reacting very sensitively to the Crimean Platform.”

On Oleg Tatarov

 When asked about Oleg Tatarov, Zelensky’s controversial deputy chief of staff who was charged with bribery, Zelensky defended him and at the same time tried to distance himself from Tatarov.

“It’s up to (Chief of Staff) Andriy Yermak to assess his work,” said Zelensky. “But he thinks — and I think so too — that Tatarov is a professional.”

Commenting on Tatarov’s remarks about the National Anti-Corruption Agency being dependant on foreign forces, Zelensky dodged the question.

“I’m not well informed about what Tatarov said,” he said.

When the journalist asking the question reminded the president that his deputy chief of staff called participants of the EuroMaidan Revolution criminals, Zelensky ignored it.

In a later comment, Zelensky mentioned “controversial people” that he has to work with, without naming them.

“I can’t fight against the whole world. This is why I’m holding on to some people with controversial reputations. Because it’s hard to fight against a system that was under construction for ages.”

On Sheremet murder

In early May, authorities released Andriy Antonenko, one of three people suspected of killing journalist Pavel Sheremet in 2016.

They were arrested in December 2019 in a highly publicized operation, led by Interior Minister Arsen Avakov and endorsed by Zelensky. But soon, it became evident that investigators lacked evidence, and the three suspects were released from arrest. Antonenko was the last one to be sent under house arrest.

He spent a year and a half in jail.

The case became the pinnacle of public dissatisfaction with Avakov. Calls intensified for Zelensky to fire the interior minister who has served since 2014.

The case against the three suspects is being heard in court.

“I don’t know if these people (the suspects) are guilty,” said Zelensky. “If they are proven to be not guilty, there will be a serious conversation with Avakov.”

Zelensky revealed that he’s texting with Yana Dugar, one of the three suspects. He showed a few texts on his phone to one of the journalists as proof but didn’t say what he was discussing with the person charged with helping murder the journalist.

When asked whether he personally knows or guesses who was behind the murder, Zelensky said he didn’t.

“If I knew who the killers were, I would have done everything, even beyond what the law allows, to have them arrested immediately,” he said.

Surprisingly, Zelensky answered positively when asked about one specific agency’s possible involvement in the murder.

“Yes, I think there is a possibility that the counterintelligence unit (of SBU) was involved,” he said, not going into detail.

On Poroshenko

Zelensky didn’t miss a chance to attack his predecessor, Poroshenko.

He said that Poroshenko was trying to strike a deal with Zelensky — he didn’t specify what it was. “He’s not trying anymore,” said Zelensky.

“They all want to make deals with me. It’s a staple in Ukrainian politics.”

According to Zelensky, Poroshenko “did many things that are really horrible.

“We know what he did and for whom. I know that it was happening every day. It’s a nightmare, what they were doing,” said Zelensky.

“I don’t want to talk in detail about their dealings, their business, how they used artificial blockades to make money. There was a lot of everything. The most horrible thing about Poroshenko is that a human being is nothing for him — and he doesn’t even understand it,” he added.

On Klitschko standoff

Asked about the ongoing investigations into alleged corruption of top officials from the Kyiv City Council close to Mayor Vitali Klitschko, Zelensky denied that the investigations aimed to undermine Klitschko as a political competitor.

“My chief of staff doesn’t take bribes, so we aren’t competitors,” said Zelensky, likely referring to Klitschko’s associate Artur Palatnyi, who is under investigation.

He added that Klitschko’s circle should blame themselves for the investigations.

“They shouldn’t have stolen money from the budget,” he said.

Charges against Klitschko’s associates weren’t yet made public.

“In the past, people on my team wanted Klitschko gone. He approached me, and I said, ‘Ok, keep working, but these people around you who are reportedly stealing money from the budget, they need to go’,” said Zelensky.

Klitschko allegedly didn’t follow the advice.

Zelensky said that Klitschko has been trying to talk to him lately.

“He keeps texting me, calling me, coming to the administration without an invitation to meet me,” said Zelensky.

Klitschko denied it later, saying he would never come anywhere uninvited.