Returning the US-Ukraine relationship to normalcy

The election of Joe Biden raised the welcome prospect of a return to normalcy in the US-Ukraine relationship after his predecessor Donald Trump tried to use it for political advantage. But the first two months of the Biden administration has also demonstrated that this return to the norm is proving to be complicated.

While Kyiv has signaled its interest in starting a relationship with the new US administration at the highest level, there has still not been a phone call between President Zelenskyy and President Biden. It is true, as Ambassador Bill Taylor has observed, that the relationship does not require a presidential call. American and Ukrainian interests can be served without it.

Biden put down a marker in his first call with President Putin that Moscow’s aggression in Ukraine was a major obstacle to an improvement in US-Russian relations. This was a clear signal of strong American support for Ukraine in thwarting the Kremlin’s ongoing aggression in eastern Ukraine’s Donbas region.

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Perhaps if Ukraine had not appeared as an issue in the recent US presidential election, the call between presidents Biden and Zelenskyy might have already taken place. But these unusual circumstances have also yielded some good results.

The Biden administration has indicated that reform and the fight against corruption are a priority. And over the past few months, partly in an effort to hasten the presidential call, the Ukrainian president has taken more reform steps than at any time since he removed his reformist prime minister, Oleksiy Honcharuk, and most of the cabinet, one year ago.

Indeed, the process started before the inauguration, after the US Treasury Department sanctioned seven Ukrainians including Oleksandr Dubinsky, a senior MP in Zelenskyy’s Servant of the People Party and close colleague of Ukrainian oligarch Igor Kolomoisky, for interfering in the US presidential elections on behalf of Russia. Zelenskyy quickly had Dubinsky removed from his party’s parliamentary faction, and then from the party itself.

More important was the decision taken by Ukraine’s National Security and Defense Council to ban three television stations controlled by the Ukrainian politician and close Putin associate Victor Medvedchuk. While some argue that this step was a violation of press freedoms, the decision was taken on national security grounds that these stations have been a regular conduit for Kremlin disinformation and were at least partly funded by assets from Kremlin-occupied Donbas.

Washington had sanctioned Medvedchuk in March 2014 because of his role in Russia’s occupation of Crimea, and had thought his relationship with former Ukrainian President Petro Poroshenko peculiar. Zelenskyy has now rectified this.

The steps against Medvedchuk were followed by the leveling of fraud charges against the former CEO of Privatbank, Oleksandr Dubilet, and two of his deputies. Privatbank was taken away from oligarch Igor Kolomoisky in 2016 and nationalized after long-standing allegations of massive fraud at the bank.

These recent charges were interpreted as a major blow against Kolomoisky’s efforts to regain ownership of Privatbank, or to receive “compensation” for losing it. In early March 2021, Washington announced visa sanctions against Kolomoisky and his family, a move which was taken very seriously in Ukraine.

Given the strength of entrenched interests in Ukraine, Zelenskyy’s strong steps have occurred in the face of major opposition and counter-steps. Even as the authorities go after senior Privatbank employees allegedly involved in fraud, a case has also been opened against Kateryna Rozhkova, First Deputy Governor of the National Bank of Ukraine, who played an important and laudatory role in the nationalization of Privatbank.

In fact, Rozhkova is being charged with “treason” and embezzlement precisely for her role in that effort. While serving as a timely reminder of the urgent need to reform Ukraine’s prosecution service and court system, this case also cuts against Zelenskyy’s efforts to woo Washington.

So, too, does the case brought by brothers Hrihoriy and Igor Surkis, who seek USD 350 million from the Ukrainian government that they allegedly lost as shareholders of Privatbank when the bank was nationalized. This case is widely viewed as a dress rehearsal for Kolomoisky’s own efforts to either regain Privatbank or receive compensation.

The Surkis brothers won their suit in Kyiv’s notorious Pechersk Court last year. However, a subsequent Supreme Court ruling temporarily blocked the execution of the court decision. The case is returning to court this month. A decision to confirm the earlier Pechersk Court ruling would likewise resound in Western capitals.

Zelenskyy has consistently sought to clear the decks for a better relationship with Washington. Given the overlap of interests and values between the US and Ukraine, bilateral relations are going to get closer as the Biden administration settles in; but issues like the Rozhkova prosecution and the disposition of Privatbank assets can slow down Zelenskyy’s charm offensive. That would not serve US or Ukrainian interests.

John E. Herbst is Director of the Eurasia Center at the Atlantic Council and a former US ambassador to Ukraine.

Further reading

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

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Image: The national flags of Ukraine and the US on display outside Kyiv in this file photo from 2016. (REUTERS/Valentyn Ogirenko)