The country’s international friends started to grow impatient with President Petro Poroshenko and the government of Prime Minister Volodymyr Groysman for obstructing the corruption fight and backsliding on reforms. Ukrainians were growing increasingly impatient as well.
Oligarchs continued to control significant swaths of the economy, while political leaders attempted to undermine the country’s anti-corruption agencies, and tainted judges found their way onto the Supreme Court.
EU-Ukraine relations improve
In June 2017, Ukraine got the ability to travel visa-free to the European Union, fulfilling the dreams of the nation. Those with biometric passports could finally travel to all EU member-states, except the United Kingdom and Ireland.
It was a tangible accomplishment in the difficult quest for European integration. Additionally, the trade component of Ukraine’s association agreement with the EU, signed in 2014, helped reorient the nation’s economy to the West, even though many of the provisions have not been adopted yet.
Financial aid
In 2017, Ukraine also received $3.9 billion in loans from the International Monetary Fund. It was part of a $17.5 billion lending commitment agreed upon in 2015 and scheduled for disbursement over the following years.
Ukraine’s need for credit was acute. The year before, the state had to nationalize and recapitalize PrivatBank due to an alleged $5.5-billion fraud scheme by its former owners.
Across the Ukrainian banking sector, taxpayers needed to pay $15 billion because of bank insolvencies, largely caused by fraud and insider lending.
The IMF and Western partners pushed the government to create an independent anti-corruption court. They also demanded that the government raise household gas prices to market level.
The U. S. Congress also chipped in with $350 million in security assistance, including lethal and non-lethal equipment, training and technical help on the condition of transparency in military spending.
Other types of foreign assistance also started coming in. The European Bank for Reconstruction and Development, for example, contributed a 100-million-euro loan to increase energy efficiency and reduce greenhouse emissions in the country’s public sector.
Energy independence
With Ukraine fighting to defend its border in the east, it was also struggling for energy independence from Russia. The country was looking for alternative sources of energy imports, while also trying to boost its own production.
U.S. companies also began to challenge Russian dominance as suppliers of nuclear fuel and coal to Ukraine. The first ever shipment of 700,000 tons of U.S. coal arrived in Ukraine in December in a purchase worth $80 million. The first shipment of U.S. liquefied natural gas was also delivered to Ukraine through Poland around the same time.
Ukraine also turned to the European Union for natural gas in 2017, with 100% of its imports coming from countries like Romania, Poland and Slovakia that year. Some of those imports, however, still originated from Russia.
Business struggles
2017 was also a year in which Ukraine continued to struggle with its oligarch-dominated economy, stalling the country’s market liberalizations and obstructing its deeper integration with the EU.
PrivatBank spent a lot of time at the heart of business scandals this year. The government did not investigate or prosecute the oligarchs Ihor Kolomoisky and Gennadiy Boholyubov, the founders and co-owners of the bank, suspected of embezzlement on a massive scale.
Billionaire oligarch Rinat Akhmetov lost control of 40 of his factories in the Russian-occupied territory of eastern Ukraine. But his company DTEK still managed to net huge profits from the controversial Rotterdam+ scheme for coal pricing, which brought him $1 billion throughout the year.
Due to IMF requirements, the Ukrainian government started to privatize its national network of electricity distribution companies, only to sell a quarter of state-owned stakes to Ukraine’s richest man, Rinat Akhmetov, who already owned a majority stake in the same companies through DTEK Holding Shares.
It was seen as a step backwards for a country trying to achieve fair competition and energy security. As of 2019, the vast majority of Ukrainian electricity supply companies are still tied up in the shady holdings of Ukrainian or Russian oligarchs.
Saakashvili case
One of the defining disputes of the year was a bitter conflict between Poroshenko and former Georgian President Mikheil Saakashvili.
In 2015, Poroshenko gave Saakashvili Ukrainian citizenship and appointed him as governor of Odesa Oblast. But Saakashvili soon turned into a political enemy for Poroshenko and started accusing him of blocking reforms.
Poroshenko rescinded Saakashvili’s citizenship in July 2017 while he was out of the country. The former Georgian president says this was an unlawful political reprisal. In September 2017, he returned to Ukraine from Poland by breaking through the border with his supporters.
In December, the Prosecutor General’s Office arrested and charged Saakashvili with complicity in an alleged scheme by tycoon Serhiy Kurchenko’s criminal group. Kurchenko was close to ousted former President Viktor Yanukovych. Saakashvili was allegedly receiving money from Kurchenko to finance protests against Poroshenko. Saakashvili says the case was fabricated and politically motivated.
The prosecutors’ alleged evidence against Saakashvili was dismissed by independent lawyers as weak, and he was released from custody by Pechersk Court Judge Larysa Tsokol.
Incumbent Corruption
The National Anti-Corruption Bureau of Ukraine, or NABU, went after its first high-profile suspects in 2017. State Fiscal Service Chief Roman Nasirov, ex-People’s Front party lawmaker Mykola Martynenko, Deputy Defense Minister Ihor Pavlovsky and Interior Minister Arsen Avakov’s son Oleksandr were charged in corruption cases by the NABU.
However, the cases have not resulted in any convictions. Nasirov, Martynenko and Pavlovsky are still on trial, and the Oleksandr Avakov case was closed by prosecutors despite video evidence of his involvement in the scheme.
Control over the NABU
Another prominent feature of the year was an apparent attempt by the authorities to obstruct the NABU, which was the only body relatively independent of President Poroshenko.
In November, the Prosecutor General’s Office and the Security Service of Ukraine disrupted a NABU corruption investigation into the State Migration Service by publishing the personal data of NABU undercover agents, blowing their cover. The agents were arrested and charged with provoking an official to take a bribe. Pro-government lawmakers on Dec. 6 also submitted a bill that would enable parliament to fire NABU chief Artem Sytnyk without an audit of his performance. The bill was later removed from the agenda after Western criticism.
NAPC debacle
The National Agency for Preventing Corruption, which is supposed to check officials’ electronic asset declarations, turned out to be a major failure in 2017. It failed to find any criminal or administrative offenses in any of the top officials’ declarations.
Hanna Solomatina, a top officialsof the NAPC, said in November that the agency was involved in large-scale corruption and completely controlled by the Presidential Administration. The NAPC denied the accusations.
Supreme Court
The selection of judges for the new Supreme Court also drew sustained criticism in 2017.
Poroshenko appointed 115 new Supreme Court judges. Out of these, 27 judges violated ethics and integrity standards, according to the Public Integrity Council, a civil society watchdog.
Members of the Public Integrity Council have also lambasted the High Qualification Commission for its arbitrary methodology and accused it of rigging the selection of Supreme Court judges. The High Qualification Commission denied accusations of wrongdoing.
