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In Odesa, Ukraine's Reform Agenda Faces Crucial Test

Former Georgian President Mikheil Saakashvili (left) was brought in by Ukrainian President Petro Poroshenko (right) to clean up Odesa, but many feel that he has made scant progress on that score. (file photo)

ODESA, Ukraine -- To many of those living or doing business in this otherwise laid-back slice of southern Ukraine, even a whiff of the salty Black Sea breeze can't mask the smell of corruption.

It is a persistent problem that rankles Kyiv and figures prominently in the Ukrainian leadership's Western-backed push for cleaner government and national unity, key factors in the country's pitched battle against armed separatism farther to the east.

With that significance in mind, Ukrainian President Petro Poroshenko in May recruited Mikheil Saakashvili, a Georgian ex-president with a pugnacious reputation, to become Odesa's governor.

Half a year later, a perceived lack of progress and concerns that Saakashvili's real aim is to use Odesa as a stepping stone to national prominence have conspired to cast doubt on the process.

By virtually all accounts, there is plenty of work ahead to achieve real reform in this city of 1 million and its surrounding region.

A case in point is the bright-eyed, 26-year-old head of customs whose appointment drew sharp criticism, Yulia Marushevska. A former literature and history student who shot to fame at the height of the Maidan unrest thanks to her appearance in an überpatriotic (but Western-made) YouTube video titled I Am A Ukrainian, Marushevska joined Saakashvili's team over the summer and was tabbed in October to tackle corruption plaguing the city's bustling commercial port.

Some have suggested it's the toughest customs job in all of Europe.

Her boss, Saakashvili, built a reputation in his previous political life as the blunt-speaking face of reform and anticorruption while president of his native Georgia. And still, his appointment in May by Ukraine's oligarch-turned-president Petro Poroshenko raised eyebrows.

Marushevska, on the other hand, was immediately derided following her appointment for a perceived lack of notable qualifications or any record of achievement battling corruption.

But now two months into her job, she seems undaunted and is adamant that their shared goal is to usher in a wave of young reformers who can finally clean up one of the country's most corrupt cities.

"The scale of the corruption here is unbelievable," Marushevska says during an interview in the two-story building near downtown Odesa that houses the customs authority. "But seeing the extent of it all is also inspirational, because now I know how much we can pay people if we clean up corruption. People could actually earn normal salaries."

Odesa's residents aren't necessarily buying it.

"It's a temporary show by Saakashvili to prove that he's made changes," Oleksandr Zakharov says from his seat in a dimly lit cafe near the shore. Zakharov is a former businessman who now heads a confederacy of freight forwarders in Odesa. "No one knows who this girl Marushevska is. Where did she come from? What does she know about this place?"

Laying The Groundwork?

The stakes are high, as Odesa is Ukraine's biggest port and the largest passenger port on the Black Sea. According to the port administration, around 8,000 employees from 400 state and privately owned companies are directly employed at the ports. They currently handle more than 25 million tons of dry cargo and 25 million tons of liquid cargo annually. Some 100,000 more people -- around one in 10 people -- are indirectly involved and earn money from the ports' commercial activities.

The numbers point to a massive potential for bribery, from business licensing to what insiders suggest is perhaps the most lucrative sector, direct money transfers for container processing.

One of the earliest initiatives has been the digitization of as much of the ports' and city's administration as possible. The idea is to replace as many human-to-human interactions as possible with computers to reduce the likelihood of bribes.

Critics have questioned whether 26-year-old Yulia Marushevska has the requisite qualifications to be Odesa's head of customs.
Critics have questioned whether 26-year-old Yulia Marushevska has the requisite qualifications to be Odesa's head of customs.

Natalia Shyrpa and Lyuba Shipvich are two members of the team implementing the digitization plan. Both left cushy jobs in the United States -- Shyrpa as a digital project manager and Shipvich as a software engineer -- to volunteer in Odesa. They say they came to Odesa inspired by Saakashvili's message that corrupt systems can be changed.

"We're putting up a community website where citizens can voice complaints about corruption specifically to Yulia [Marushevska]," says Shipvich. "We've also digitized the Odesa package of reforms so that it shows all the bills included in the proposal. It's built so that lawyers can give their legal opinions on proposed bills, and citizens can then suggest iterations on the bills."

Passage and implementation, however, are another matter.


A key cog in Saakashvili's plan was to have been Sasha Borovik, a native of the western Ukrainian city of Lviv who became a corporate lawyer after immigrating to the United States. Borovik moved back to Ukraine after the Maidan unrest unseated President Viktor Yanukovych in early 2014, and he served as an adviser to the Economic Development and Trade Ministry. He quickly found himself butting heads with staffers before being plucked out by Saakashvili to join the effort in Odesa.

But the scheme suffered a setback in October when Borovik, running as a Saakashvili ally, failed in his bid to become Odesa's mayor. Instead, voters reelected incumbent Mayor Hennadiy Trukhanov, a former member of the ousted Yanukovych's Party of Regions.

Sitting in the backseat of an SUV as it speeds through the Ukrainian capital, Kyiv, not long after his electoral defeat, Borovik looks exhausted. "Odesa could be a mixture of Hamburg, Barcelona, and San Francisco," he says, staring out the window. "You could take Hamburg's efficiencies in the port, the tourism of Barcelona, and establish the city as the IT hub of Ukraine, like San Francisco."

His tone grows more serious and frustrated. "But what is it, in reality? It's a city that's been run by a criminal syndicate for the last 25 years. It's a city full of poor people who've been brainwashed to believe you can't change anything."

Square One

Volodymyr Dubovyk, a professor of international relations at Odesa's I.I. Mechnikov National University, suggests that Saakashvili's greatest success has been to bring hope of a normal future. "If Saakashvili stays," he says, invoking the widespread belief that the governor's real designs are on Kyiv, "then maybe he'll really clean it up -- but it seems he has his eyes on a larger goal."

But Saakashvili's hints of swelling national-level ambitions -- including boisterous public clashes with Prime Minister Arseniy Yatsenyuk and Interior Minister Arsen Avakov -- are welcomed by some Odesans.

Proponents of reform say Odesa could be the Hamburg of the Black Sea if the city government could just get its act together.
Proponents of reform say Odesa could be the Hamburg of the Black Sea if the city government could just get its act together.

Freight-forward confederation boss Zakharov says Saakashvili's departure for a bigger political stage might be just what it takes to fix the city.

"Extreme changes of the law are required to fix the problems here," Zakharov says. "This area is tied to central Ukraine, to Kyiv, so there's no chance to change it [from here] because you can't change the taxation system or the administration. Kyiv has all the power -- so first you need to change Ukraine and then you can change Odesa."

Not everyone agrees with that assessment.

Saakasvhili hasn't earned the right to move on because he hasn't achieved anything tangible in Odesa, says resident Hanna Shelest. "He is still deconstructing rather than constructing new realities," Shelest says. "He's all about words, rather than deeds. Five months after [he took office], there's a total mess in his own office, where plenty of volunteers run around who are not responsible for anything, and new deputies [and] advisers were hired while old staff were fired without any institutional-memory transfer."

Who Cares?

Despite their distance from the so-called line of contact that separates eastern areas held by armed pro-Russian separatists from the rest of Ukraine, the fate of reforms in Odesa and other major cities is seen as crucial to reconciliation efforts and pushback against perceptions that Kyiv has badly failed Ukrainians since independence. Such views help kindle Moscow's narrative in its opposition to Ukraine's central government, which has included soldiers and supplies to the pro-Russian separatists in the ongoing conflict raging in eastern Ukraine.

U.S. Ambassador Geoffrey Pyatt told a joint press conference during a meeting with Saakashvili in July that "in many ways [Odesa] is the front line for that second war," which he described as "against corruption ... for reform, the war to move Ukraine towards the standards of modern European democracy." The U.S. ambassador noted the need to move "from proclamations to action," however.

Failed mayoral candidate Sasha Borovik
Failed mayoral candidate Sasha Borovik

Pyatt has suggested Odesa could provide a model for the rest of country, "a symbol of success in the new Ukraine," that might shed corruption to "come clean" and reap investment and opportunity as a result.

Failed candidate Borovik, who's also a U.S.-educated lawyer, is not awash with optimism.

"You are supposed to fix the problems, right?" Borovik says as he leans in over the table at a Kyiv cafe. "But what happens when you can't arrest the people who make problems because you don't have control over the prosecutor's office? And even if you somehow managed to get an investigation under way, you'd realize the court is controlled by the gangsters. Odesa is like Chicago was when it was controlled by [notorious crime boss Al] Capone."

It's a sentiment that Zakharov shares with Borovik, despite their substantial differences. "You cannot work without corruption in Odesa," he says. "You either work with corruption or you simply don't work. I wouldn't recommend investing in Odesa to anyone."

National public-opinion polls have repeatedly indicated that Saakashvili is the most popular politician in Ukraine -- remarkable for someone who was only granted citizenship, reportedly by presidential decree, earlier this year. His anointed candidate's failure to win office in October and his increasingly frequent forays into the national limelight, however, hint at the sustained effort it will take to retool this historic city on Ukraine's Black Sea coast.

The attraction of an outsider can play well for a while in any political arena, but a maverick governor trying to take on the familiar grip of a corrupt system in Odesa could be about to test its limits.