December 19, 2014
Measuring Ukraine’s War on Corruption: Key Signs to Watch in Early 2015
By New Atlanticist
As Ukraine’s new government has taken office and vows to clean up endemic corruption—publicly perceived as Europe’s worst, according to Transparency International—here are some leading indicators of its progress, as suggested by the Atlantic Council’s Kyiv-based senior fellow, Brian Mefford. You can find his full essay on this at his own blog.
While it will take years to fully evaluate the effectiveness of the reforms now promised, some leading indicators will be visible by summer 2015. If the reforms listed below are felt and noticed by the Ukrainian people, it will boost confidence that the Ukrainian government is committed to its Western course—and that it has truly broken with its Soviet legacy. These steps can be implemented quickly, largely through administrative orders. While the list is hardly comprehensive, it is a good start. (Note: these steps are only leading indicators, and not the major reforms themselves.
Some of these steps would improve utterly basic facts of life for millions of Ukrainians. Others would enhance critical first impressions of foreign visitors to a country trying to improve its engagement with the world, notably Europe. These visitors, of course, will include potential investors. (While their decisions about participating in Ukraine’s economy will rely on many factors, it cannot help Ukraine’s integration with the West to make its airports a punitive experience.)
Stop bribe-taking by the traffic police. Using Georgia’s experience, an immediate end to the shakedown of drivers would go far to convince ordinary Ukrainians that the country has improved. Ukraine’s traffic police are notorious as the ‘bottom feeders’ of bribe-taking, letting drivers avoid real or perceived traffic-violation penalties. Training professional police officers, paying them well enough that they don’t need to have their hands out to drivers, and enforcing a zero-tolerance policy for bribery would be the key steps. Creating a hotline for the public to report cases of traffic police soliciting bribes would be useful and easy. This hotline could be run under the prosecutor general’s office to enhance its independence.
Stop bribery over health care and disabilities. A starting point to improving the health care system is to reform the “disability commissions,” which decide whether a person is physically able to work or not. These commissions frequently demand bribes from applicants to declare them invalids, a ruling that makes an applicant eligible for cash payments, subsidized utilities and transportation, as well as other perks. Members of these commissions are bribed so often that they are less likely to approve the applications of the truly disabled. (Approving help for those who actually are needy offers the officials no financial gain and would lower their overall bribery fee.) Here, too, a bribery hotline for the public—and a process of fast investigation by prosecutors—are the steps to quickly and dramatically slash a corrupt practice that blights many lives and Ukrainians' sentiments about their government.
Cut the perks for parliament. In a country where the members of the Verkhovna Rada come largely from the richest class of society, they (and their families) also receive free health care at the country’s finest medical facilities, and virtually free vacations at the nicest state-owned resorts. As the new Rada begins work with a bloc of reform-minded legislators, an interesting early test—with a real potential impact on public opinion toward the government—will be the parliament’s willingness to scrap these perks and pay their own way.
Professionalize controls at Boryspil International Airport. The simple checking of passports at the country’s main airport for years has been unfriendly and punitive. Visitors must wait long periods in disorganized queues, complete obscure forms, and answer accusatory questions from passport control officers. At customs, the use of x-ray machines and professionalization of customs officers and searches would improve security and end officials’ current practice of hand-searching bags for items that might be used to extort bribes. While the war indeed requires careful security, Ukraine should adopt the consciously friendly approach of Georgia, which like Ukraine contends with Russian occupation of its territories. Visitors to Tbilisi Airport complete the entire passport control and customs procedures in thirty minutes or less. In late 2012, they were even presented bottles of Georgian wine and a smile from passport control officer upon their entry!
Streamline visas for “low-risk” Westerners. Visitors from the US, UK, Europe, Canada, Japan and Australia pose no risk of illegal immigration (and even if they did, Ukraine has the world’s fastest-declining population, so the influx could be useful). So visas for longer stays should be made more easily obtainable. These country’s citizens are fined 800 hryvnas upon departure (and delayed at the risk of missing their flights) if they have stayed more than ninety days consecutively or 180 days in a year. A streamlined procedure could let citizens from “low-risk” countries obtain long-term visas for a reasonable fee.
Starting with government agencies, pay salaries on the books. With at least half of Ukraine’s economy operating in the shadows, the system must be overhauled to legalize transactions and thus create revenues for the state. For this, the government must simplify the creation of business and the reporting of taxes.
It is common Ukrainian practice—even in government agencies, as well as in business—for an employer to pay a worker an officially recorded salary of, say, 1000 hryvnas, and then pay 2000 hryvnas more in cash. This starves the tax system and the Ukrainian state of revenue needed for social benefits, national defense, infrastructure, etc. These off-the-record salaries must be ended first of all in government ministries and agencies. Business will follow the example.
This reform could begin with a broad tax amnesty linked to a one-time payment to the state based on an organization’s number of employees. Going forward, businesses should then be required to pay and report salaries officially. Already, one financial success for Ukraine in 2014 is that tax revenue collection is up five percent from last year. This came despite a harsh recession, Russia’s annexation of Crimea and its occupation of much of Donbas, an industrial and economic engine of the nation. So why were revenues up? Because of Ukrainians’ patriotic instincts, and the belief that, finally, their taxes would go to something tangible (i.e. the soldiers defending the country) rather than to the pockets of corrupt public officials. Think about how much more the tax revenues could be increased if all salaries were paid officially—even just by the government alone.