For Ukraine, it’s either now or never. With war, a grave economic crisis and political deadlock all happening at the same time, the need for rapid change has never been more acute. The country will either reform its corrupt Soviet ways or falter.
“We have been talking for years about what the government needs to do, but now there is a different degree of urgency,” Elena Voloshina, International Financial Corporation head of operations for Ukraine, said at the Kyiv Post Tiger conference on Nov. 19.
The same message came from many speakers at the third annual event, this one focused on the Nov. 21 anniversary of the start of the EuroMaidan Revolution that toppled President Viktor Yanukovych on Feb. 22.
“The greatest single risk factor in Ukraine is business as usual. It’s a bigger threat than Russian tanks and Chechen mercenaries,” says Geoffrey Pyatt, the U.S. ambassador to Ukraine.
The desire not to live in a poor, corrupt country propelled the revolution. But change has come slowly.
While Ukraine has had a May 25 presidential and an Oct. 26 parliamentary election that have ushered in a distinctly pro-European set of political leaders, conflicts and a lack of a unity have sparked doubts about the new government’s ability and will to act swiftly in a nation facing a Russian-led war and a deep recession.
Dmytro Shymkiv, deputy head of the Presidential Administration, told the audience of more than 300 people that the slow pace is partly because of Ukraine’s complicated divisions of power and partly because “each reform is a project” that needs money from the West
Many in the audience strongly disagreed. Several business people expressed frustration with the same old excuses for why deep structural changes to the energy, defense, courts, banking and electoral systems – to name just five areas – could not be done more quickly when the solutions are clear.
“Good people in the government are afraid to take unpopular decisions. They don’t have the time or the resources to explain them,” said Yuriy Vitrenko, managing director for Naftogaz Ukraine.
His own state company, a mammoth oil and gas conglomerate, bleeds money and has been rife with corruption. It needs to be broken apart, sold off and allowed to hike gas prices to market levels.
Naftogaz’s budget deficit this year can run up to 7.8 percent of the nation’s gross domestic product, which was only $180 billion last year and shrinking, according to International Monetary Fund estimates.
“We tried to explain to the government: we can wait with reform, but it means that every month you write at least a half-billion-dollar check,” Vitrenko said, more than the defense, education and health budgets combined.
He also said that many Naftogaz reform proposals were taken into account in the coalition agreement that is currently being negotiated by the newly elected parties in parliament, but “unfortunately, there were seven rounds of softening.”
The coalition agreement itself has been the subject of harsh criticism for its slow pace in taking shape since the Oct. 26 election.
“We’re facing one of these useless parlor games. How many parties should there be in the coalition? How should the coalition make decisions? Who should get what portfolio? Enough! If the current Ukrainian leaders do not reach an agreement fast, there might no longer be any Ukraine to discuss,” prominent economist Anders Aslund wrote in an angry blog entry on Nov. 19. “The draft coalition agreement at present contains no strategy and it focuses on no primary goals. It fails to mention that Ukraine is subject to an existential military threat from Russia, that its financial crisis can lead to a meltdown within a few months.”
Apart from energy reform, the primary goals should be fighting corruption and cutting state budget expenses, Aslund argues.
Ihor Smeshko, head of the intelligence committee under President Petro Poroshenko, said that corruption is the top issue for internal security. But moves to fight corruption have been slow and unconvincing.
Pyatt said top officials have to go to jail to show that the fight against corruption is real.
Corruption in the Defense Ministry also remains an issue and one reason why the West has been reluctant to help Ukraine military, according to Lt. General Mark Hertling, former commander of U.S. troops in Europe.
Smeshko agreed, saying Russia has undermined the nation from within. “Unfortunately, our enemy has a lot of ‘ins’ in Ukraine, especially through corruption that goes to the highest level,” Smeshko said.
Ukraine’s armed forces remain woefully unprepared. Ukraine has been spending ridiculously little on defense in the past few years, just 0.8 percent of GDP. As a result, the army needs everything.
Joseph LeGasse, an intelligence and defense expert and former special adviser to the White House, summed it up succinctly and ominously: “You’re not ready for war with the Russians. If the Russians go in here, you’re finished,” he said.
Many Ukrainians, however, are more optimistic. They have been raising private money for the army, volunteering to fight and taking more active roles in defending the nation.
Pavlo Klimkin, the foreign minister, told the Tiger Conference that Russia underestimated Ukraine’s ability to fight and defend its interests.
Yevgeniy Utkin, founder and CEO of Kvazar-Micro, an IT company, said that, despite everything, Ukraine is moving in the right direction.
“The good news is that Ukraine is moving in the right direction,” Utkin said. “The bad news is the speed.”
Editor’s Note: Kyiv Post+ is a public service offering special coverage of Russia’s war against Ukraine and the aftermath of the EuroMaidan Revolution. All articles, investigative reports and opinions published under this heading are free for republication during Ukraine’s time of national emergency. Kyiv Post+ is a collaboration of the Kyiv Post newspaper and the affiliated non-profit Media Development Foundation.
