UkraineAlert

Western pressure on Ukraine to fight corruption has never been greater. But the pressure has been one-sided and focused on Ukraine, which isn’t fair. The West bears some culpability, too. Ukrainians flee criminal prosecution and receive political asylum in the West, and they use Western banks to launder capital from Ukraine. It is time to close down these two avenues for corruption facilitated by the West and make the fight against corruption a two-way process.

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If Moscow is genuinely innocent of all the misdeeds attributed to it, why does it always seem to get the blame?

The Kremlin attributes every new allegation to Russophobia. This excuse has proven ideally suited to the varied terrain of hybrid warfare, serving as a one-size-fits-all explanation for virtually any charge. Whether the claims relate to Russian soldiers in Ukraine, Russian trolls on social media, or Russian chemical weapons in England, Moscow dismisses it all as the work of desperate and irrational Russophobes whose obvious prejudice renders their conclusions null and void.

The term itself is nothing new and first appeared in the nineteenth century, but references to Russophobia have skyrocketed since 2014. It has become one of the buzzwords of the fake news era and a significant information warfare weapon in its own right. Accusations of Russophobia are most common in the Russian media and official Kremlin parlance. According to the Atlantic Council’s Digital Forensic Research Lab, Russian Foreign Ministry statements mentioned Russophobia just three times in 2013. By 2017, the figure had climbed to 56.

What has happened over the past four years to make Russia the villain de jour of international opinion?

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For the second time in less than a month, a ceasefire in eastern Ukraine was agreed to. The pause in shooting was to have gone into effect just after midnight Thursday, March 29.

That’s not particularly unusual; many ceasefires have been declared since the conflict began in the spring of 2014. And like the others, it failed to hold. The previous ceasefire started on March 5, and within hours the two sides began firing at each other.

However, recent trends suggest that the intensive cycles of violent firing following a ceasefire are declining.

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The launch of Ukraine’s e-declaration system—one of the world’s most advanced—remains among the country’s biggest post-Maidan achievements. It has been a groundbreaking step toward the transparency broadly supported by the country’s Western partners. Yet ever since its inception, electronic asset declarations for officials has been under continuous sabotage and has been attacked on a wide range of fronts.

Despite significant funding from the budget and international donors as well as the strong backing of leading civil society organizations, the country’s leadership has gone out of its way to block effective verification of the declarations.

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Ukrainians are still trying to digest the shocking news of an averted military-style coup plot led by war hero and parliamentarian Nadiya Savchenko.

The story broke on March 8 when Ukraine’s Security Service (SBU) apprehended Volodymyr Ruban as he was illegally crossing a checkpoint in a van loaded with heavy weapons. Ruban, a volunteer prisoner exchange negotiator known for his shady dealings with the separatists in eastern Ukraine, claimed he was just the driver moving furniture and had no knowledge of the weapons. He denied his involvement in the plot and said he was framed by the SBU. In early 2017, the SBU forbade him from traveling to Ukraine’s occupied territories because he had helped Savchenko, a former high-profile political prisoner held by the Russians, visit Ukrainian POWs in the Donbas without authorization.

The story took an unexpected turn when the prosecution accused Savchenko of plotting to overthrow the government of Ukraine.

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My article about Ukraine’s new electricity tariffs aroused quite a few interesting comments, which deserve responses. Since these comments are private and many from people in high positions, I shall not mention their names. The arguments circle around pricing, ownership, privatization, investment, and taxation.

The natural start is ownership. No one favors state enterprises. They generate worse results than private ones and involve greater corruption risks. The state owns minority shares in many of the regional distribution companies. Since each of these companies is effectively controlled by one or two big businessmen, the government should just sell its minority shares at a minimum price set by the state to the only interested buyer. This was partly done last year, and the government has put up ten minority stakes for sale in its recent privatization law.

These stakes will hardly rise in value and have no positive effect of any kind. Corporate governance in Ukraine is poor and will remain so for some time. While trying to improve it, concentrated ownership of enterprises is the best means to avoid fruitless owner conflicts.

Ukraine has also a national security problem in its grid.

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Corruption is still a major challenge in Ukraine, and the energy sector is particularly vulnerable to illegal activity. But although it is tempting to view corruption as a problem indigenous to Ukraine, outside actors—sometimes tolerated or even supported by the government in Kyiv—play a leading role in perpetuating corruption inside Ukraine.

A key illustration of this problem is Dmytro Firtash, a prominent Ukrainian oligarch with ties to infamous Russian mafia boss Semion Mogilevich. Despite living under house arrest in Vienna and facing extradition charges by the United States for international crimes, Firtash is able to use his connections to manipulate multilateral organizations in order to gain personal profit; at the same time, he is fueling corruption in Ukraine’s energy sector, utilizing a corrupt system of gas intermediaries inside Ukraine.

Naftogaz estimates that Firtash’s arrangements with the Ukrainian government have netted him an astonishing $2 billion in 2017 alone. This sum includes a loan from the World Bank granted to Ukraine to purchase natural gas, and assistance from the International Monetary Fund that was supposed to pay for gas subsidies for the poor. Rather than reaching their intended targets, these loans and assistance found their way into the hands of Firtash due to the non-transparent system of payment.

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On March 21, the hearts of reformers and journalists sank when Mohammad Zahoor sold the crusading Kyiv Post to Odesa businessman Adnan Kivan. Many were convinced that the new owner would soften the editorial line of Ukraine’s top English language newspaper.

But in an interview March 25, Kivan said he bought the newspaper because of its English speaking, mostly foreign, audience and because he believes in its mission to fight for democracy and against corruption in Ukraine.

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Since 2014, privatization in Ukraine has made little progress. Well-connected oligarchs could no longer dominate the privatization process, as had often been the case in the past because of strengthened public scrutiny and involvement of international donors, yet vested interests were still powerful enough to block privatizations and the lingering problems associated with the country’s business climate prevented the participation of foreign investors.

Last year’s attempts to restart a privatization drive failed despite the government’s increased openness to international advice and absence of obvious manipulations with privatizations. The head of the State Property Fund had to resign after two futile attempts to sell the chemical giant Odesa Portside Plant. The range of unresolved disputes around the company deterred investors despite substantial price reductions. The only large privatization of 2017 was the sale of a minority packages of shares in energy distribution companies, which was purchased by Ukraine’s richest man Rinat Akhmetov, who already held stakes in these companies. This has not brought more outside players to the market, which was what the government had hoped to achieve.

But this time may be different: Ukraine is serious this time.

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A crucial program that identifies Kremlin methods of disinformation has come under attack. Alarmingly, one of the key accusations is that its activities constitute an attempt to restrict freedom of speech. The situation could not be more absurd. 

The program running into such controversy is the East Stratcom Task Force and the EU vs Disinfo website that the task force runs. Back in March 2015, EU heads of state decided to create the task force, to be run by the European External Action Service, in response to Russian disinformation campaigns.

Russia’s “information war” had escalated in 2014, with disinformation and virulent propaganda used to justify its annexation of Crimea and military aggression in eastern Ukraine. It was probably the downing of MH17 on July 17, 2014, with the death of 298 passengers, that served as a wake-up call to the West, 

While establishing the task force in response, however, there was disagreement between the twenty-eight member states, with those nearest to Russia supporting broader measures, while others wanted a narrower scope in order to avoid antagonizing Russia. 

As a result, the task force has been under-resourced and under-staffed, and it is an enormous credit to its team that they have achieved so much.

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