Wednesday, May 25, 2016


Ukraine

IMF Demand For Ukraine Reform Just Latest Red Flag For Poroshenko

Ukrainian President Petro Poroshenko (left) and Christine Lagarde (right) were all smiles at this meeting in September but the IMF head has since had some very harsh words for the Kyiv administration.
Ukrainian President Petro Poroshenko (left) and Christine Lagarde (right) were all smiles at this meeting in September but the IMF head has since had some very harsh words for the Kyiv administration.
By Tony Wesolowsky

A stinging rebuke from the head of the International Monetary Fund (IMF) has underscored the precarious spot in which Ukraine finds itself despite Kyiv's repeated pledges to tackle corruption and enact major reforms.

IMF head Christine Lagarde's call on February 10 for "a substantial new effort" from Ukraine's leadership carries particular weight due to fears that the fund could suspend its $17.5 billion portion of an international bailout to help the country kick-start its economy, stay on a democratic track, and weather an ongoing conflict with Russia. 

The IMF's stark language set off alarm bells in Kyiv, where President Petro Poroshenko quickly telephoned Lagarde to assure her and allies such as the United States that he recognized the need to "reboot" the government. 

The government's approval ratings have tumbled and it could face a no-confidence vote in the coming days, ushering in more uncertainty for a country already on a war footing.

But Poroshenko's quoted remarks to Lagarde also appeared to highlight the risk in the current climate of dramatic showdowns in Ukraine, whose economy and currency have collapsed since unrest in 2014 unseated a pro-Russian president and unleashed invasion plans in Moscow. Poroshenko reminded critics of the desire to avoid "snap elections, which would only deepen the political crisis and worsen conditions for carrying out reform," according to a statement on Poroshenko's website. 

Plummeting Ratings

As the stakes in Ukraine have risen -- along with the notion that Ukraine is a testing ground for Western resolve in the face of a newly assertive Russia -- expectations have mounted that Kyiv must implement market and democratic reforms to justify outside support.

But most Ukrainians will find discouragingly little in the IMF chief's criticism of Kyiv's reform effort that they didn't already suspect. 

"There's been little action, only words," one young Kyivan told RFE/RL. "It seems to me some work is being done, but the results have been meager, especially given the scope of the problem."

Polling in December showed Poroshenko's approval rating had fallen so low that he was less popular than his ousted predecessor Viktor Yanukovych, and the prime minister and his cabinet are faring no better.

Another indication that endemic corruption and a failure to establish rule of law plague reform efforts arrived on February 3, when Lithuanian-born Economy Minister Aivaras Abromavicius announced he would resign over what he called a "sharp escalation in efforts to block systemic and important reforms." He likened recent developments to "the style of the old authorities."

Abromavicius has since said he is supplying evidence of wrongdoing involving key government officials to anticorruption investigators. 

Rotten To The Core?

Tackling corruption in Ukraine is daunting, experts agree. Bribery and cronyism have been facts of life since Kyiv gained independence with the collapse of the Soviet Union in 1991. The situation only worsened during the last four years under Yanukovych, when $11 billion was siphoned yearly through the abuse of public procurement tenders alone, according to post-Yanukovych Justice Minister Pavlo Petrenko. 

There has been some success, including plans to take public procurements online -- a big boost for transparency, antigraft activists say. But that was largely the work of outgoing Economy Minister Abromavicius.

In his public letter of resignation, Abromavicius said he could no longer endorse what he claimed was corruption in the president's inner circle. He highlighted his feud with Ihor Kononeko, a business partner of Poroshenko's and an influential member of the political grouping Petro Poroshenko Bloc. 

Abromavicius expressed outrage over attempts by the presidential administration to impose a new deputy who would have been responsible for financial flows and supervising strategic state enterprises.

Tiny Few Or 'Majority'?

Abromavicius previously voiced his eagerness to clean up state enterprises, where oligarchs have held considerable sway, often behind the scenes. That made him powerful enemies, says Andriy Marusov, head of the Ukrainian branch of Transparency International, a global anticorruption watchdog.

"[Abromavicius's] resignation happened right now because his plans...to reform, to reorganize state-owned enterprises, to privatize them afterwards -- they ultimately ran into the resistance of the majority, I would say, of the political class of Ukraine," Marusov told RFE/RL.

Abromavicius is not the first official in Poroshenko's government to quit after voicing similar frustrations. Agriculture Minister Olekseiy Pavlenko and Infrastructure Minister Andriy Pyvovarsky made fruitless attempts to prosecute Yanukovych-era officials before throwing up their hands and walking away.

Anticorruption campaigners point to the controversial appointment in February 2014, at the height of the Euromaidan furor, of sexagenarian Prosecutor-General Viktor Shokin. 

Shokin previously served in the same post under Presidents Leonid Kuchma and Viktor Yushchenko, and in his new tenure has proposed a number of Yanukovych-era holdovers for key functions, making him the ultimate political insider in the eyes of critics. 

Poroshenko has ignored repeated calls to sack Shokin, including from more than 100 members of parliament. 

"Presidents in Ukraine -- and this unfortunately is valid in the post-Maidan Ukraine as well -- manage the state of affairs through the prosecutor's office," Balazs Jarabik, a Ukrainian expert and visiting scholar at the Carnegie Endowment for Peace, told RFE/RL.

Same Old Story

While prosecutors appear to look the other way, officials are upping their graft game. Several Western company executives told Reuters on January 27 that "organized graft has given way to a free-for-all where bureaucrats grab what they can, while they can."

"The system of corruption has become more chaotic, more haphazard," the director of a major industrial company told Reuters. "Before some issues could be resolved without money, but now these options don't exist -- everyone is on the take."

Pyvovarsky, the infrastructure minister who announced his resignation in December, told Ukraine Today TV on February 5 that "the system does not change in one day."

He added: "You can't make a corrupt bureaucrat wake up one day and say suddenly, 'Because of the revolution, I will not take bribes.' Of course for 24 years a lot of people were benefiting from bribes, and that was the only source of income for them."
 

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