Fighting corruption in Ukraine to keep the Russians out

Article by Pieter Cleppe, Independent publicist, based in Brussels. Non-resident fellow of the Property Rights Alliance

Tensions have been building between Russia and Ukraine, with allegations made by the Ukrainian President about a coup plan involving Russians as only the latest troubling sign. Russia and Ukraine are the two most corrupt countries in Europe, according to Transparency International’s Corruption Perceptions Index (CPI). Since taking office in 2019, Ukrainian President Volodymyr Zelensky has passed a number of reforms to deal with this signally corrosive aspect of Ukrainian society. One measure was to appoint Georgia’s ex-President Saakashvili as a top adviser, in 2020. The appointment was controversial, but Saakashvili has a strong track recordof reform in his home country, where he is currently locked up after having returned there. Saakashvili managed to dramatically improve Georgian corruption standards by drastically reducing the role of the state in the economy.

Large-Scale privatization is also on Zelensky’s agenda. At the end of October, he signed a law abolishing a 20-year-old list of more than 1,000 state-run companies that were not allowed to be privatized. Despite the difficulties in privatising such entities effectively, this offers significant potential to reduce the scope for corruption. Private investors tend to be more careful with their assets than government bureaucrats. At least, that’s what Georgia’s experience has shown.  

At the same time, Zelensky introduced measures intended to curb the influence of so-called oligarchs. Ukraine has more than its share of powerful business figures with significant sway over political parties and media channels that are often owned by them. Some even have judges and senior civil servants in their pocket and many enjoy close connections with the Kremlin. The law prohibits them from taking part in the new privatization process.

One of the most notorious of those oligarchs is Viktor Medvedchuk, a close friend of Russian President Vladimir Putin, who is godfather to his daughter. He is the leader of the pro-Russian Party For Life, and was sanctioned by the Obama administration after the conflict broke out in 2014. For a long time, he has been tolerated by Ukraine’s political class, as they saw him as an important channel to the Kremlin. That seems to have changed under Zelensky, as Medvedchuk has been under house arrest since May, having been accused of financially supporting the Russian rebels in Eastern Ukraine that have been waging a secessionist war since 2014. Medvedchuk and three of his TV stations were already sanctioned by the Ukrainian President in February, having been accused of spreading Russian disinformation. His wife has also been accused of funneling the profits of a Russian oil facility to the separatists.

One of Medvedchuk’s biggest supporters has been former President Poroshenko, another oligarch, who was in office during the period Medvedchuk is accused of supporting the separatists, and who continues to publicly defend him. Poroshenko is facing a series of investigations and prosecutions since leaving office himself, which he has unsurprisingly dismissed as politically motivated. 

Poroshenko facilitated the construction of Medvedchuk’s  pro-Russian media empire, according to the Kyiv Post. His administration also gave Medvedchuk a green light to purchase a number of mines in separatist-held territory, providing them with much needed financial support. Medvedchuk’s channels reportedly also helped Poroshenko during the last election, to no avail. It is astonishing how close Ukraine’s former President seems to be to Medvedchuk, Putin’s key ally inside Ukraine.

There are a couple of reasons Zelensky feels empowered to take such drastic action against the pro-Russian Ukrainian oligarchy. Firstly he is a native Russian speaker, elected with strong support from the country’s Russian-speaking regions. That gives him some cover. Secondly, the imminent threat of Russian invasion has focused minds inside and outside of Ukraine on the need to neutralise powerful interest groups that might switch sides in the event of Russian action.

Putin does not accept that Ukraine is and should continue to be a separate sovereign nation. A reformed and successful Ukraine would be a significant threat to domestic stability in Russia, as it may be seen as a template to follow, given the cultural similarities. This has strengthened Putin’s resolve in the matter. Zelensky needs to walk the tightrope of reducing the power of the oligarchy without triggering further Russian aggression. However, it is clear he will never be able to secure prosperity and stability for his people unless he succeeds in his fight against corruption.