Swiss corruption investigators have pronounced their verdict on Ukraine
By Alexander Donetsky, Strategic Culture Foundation, June 11, 2015, part one
In May 2015, the Global Studies Institute of the University of Geneva and the Swiss-based Organized Crime Observatory (OCO) published a major study (available in English) on the state of corruption in Ukraine. It is titled, Ukraine and the EU: Overcoming criminal exploitation toward a modern democracy? The authors worked on this 185-page document from September 2013 until January 2014, based on material from previous years. It is in many respects already outdated because of the drastically altered political situation in the country after the overthrow of the government last year. However, the study’s authors worked hard to identify the reasons why Ukraine has become the utterly corrupt state that it is today, and the investigators also looked into the history of how corrupt ties have developed in Ukrainian society.
As to whether what they have described in their report has any relevance to the situation in today’s Ukraine, the authors are open about their doubts: “We had a long reflection about the pertinence to continue this report among the OCO staff and given the chaotic situation in the country, the large amounts of money, technical and human assistance, that are delivered by western countries to Ukraine, and the current level of corruption, violence and administrative chaos, we reached the conclusion that this report can bring some information that can be useful during this standpoint in time which policy makers, from any country, can rely on for organizing further judicial, political and anticriminal policies and administration.”
While comparing the level of corruption in the country before and after the [February 21, 2014] coup, they draw conclusions that are quite shocking to the residents of Ukraine, who have grown accustomed to Europe’s official propaganda: “Public corruption and conflicts of interest have remained a significant problem for Ukraine, then and now. Any party engaging with Ukraine will have to interact with groups that are linked to oligarchic structures. If we observed a trend to a stronger verticalization of power driven by the former President Yanukovych, the public corruption would have gone completely out of control after the collapse of the former regime.”
The Geneva investigators gave high marks to the steps taken by the ‘tyrant’ and ‘extortionist’ Yanukovych to combat bribery, noting that many of the legislative acts passed during his administration made life much more difficult for Ukrainian grifters, including highly placed officials. The main argument in favor of this position has been, however, the one-sided application of the anti-corruption measures, which have been used primarily against the former president’s political opponents. In the text of the report, there is no trace of the usual condemnation of the indictment of former Interior Minister Yuri Lutsenko that is typical in the European press, and the corruption dossier of Yulia Tymochenko was issued as a separate chapter in the Addendum to the document.
The difference between the corruption of public officials under Yanukovych and corruption under Poroshenko, according to the investigators, is that previously, state funds were embezzled using tenders, auctions, tax revenues, and foreign-exchange earnings, while now “the situation has only changed in that the money which now falls into this category does not come from the Ukrainian industries and services anymore, but more and more from foreign help: first it was coming from Russia, now it’s coming from the EU, the US, and the international organizations such as the International Monetary Fund, the World Bank, the EBRD, or the multilateral financial aids.” The core of the corruption has increased dramatically due to new trends, “such as corporate raiding and corporate fraud [which] are relatively new developments in the country. The collapse of the institutions from May-June 2014 since now have boosted and diversified the traffics not only in criminalized goods [drugs, weapons, and human trafficking – A. D.] but also in basic consumption goods.”
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The authors of the document believe that groups of oligarchs and influence are the most significant factor in Ukrainian corruption, and also, accordingly, the scope of the corrupt practices, which is predicated on their proximity to the government in power: “The alliance between the oligarchs and the state has become entrenched at the highest levels of government, while at the local level, judges, police, local government officials and politicians have organized themselves into a corrupt network of mutual enrichment at the public expense.” Moreover, many of these groups have ties to Soviet and post-Soviet organized crime groups. For example, the investigators take a hard look at the associations between Dmitry Firtash and the organized crime boss Semyon Mogilevich, as well as the links to the criminal activities of former Prime Minister Pavel Lazarenko.
However, the coup d’état and subsequent events have also changed the corrupt connections of Ukrainian oligarchs: “The civil war in the east, and episodically on the south of the country, have now exacerbated the tensions among the oligarchs, some of them seeing the war as an opportunity to seize further assets, redistribute the ‘cards’ by gaining more and more power and control over production tools, i.e. steel, coal, gas, electricity, communication, railways, etc.” According to an unnamed NATO official working in Ukraine, currently five oligarchs who “acquire assets on the cheap” are being supported by the central government.
Examples are listed of some opportunities for corruption that have now opened up for the oligarchs and industrialists as a result of the fighting. One example involves providing gasoline for the military, whose needs have grown 150%. After adopting a simplified tender procedure for the army, it became possible to enter into contracts without public bidding. As a result, a company owned by one of the oligarchs charged 50% more for the kerosene it sold to the Ukrainian army, compared to the pre-war price. In May 2014, a company belonging to the same oligarch sold military technology for the army at a huge margin, “and even received the authorization of the Council of the Ministries of Ukraine to import military helmets with a price 16% above the competitors”.
Speaking about the Defense Ministry on TV Channel 5, Ukraine’s assistant minister of defense, Yuri Biryukov, was quoted as saying that approximately 20 to 25 per cent of the money intended for defensive needs was being stolen. He said this came to “about 450 million USD stolen from the Ukraine’s military”. According to the authors of the study, “every 81 USD out of 100 USD spent was stolen on one defense factory”.
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In the battle against corruption, the current government is primarily wagering on specially created public anti-corruption agencies. But even without knowing that the fight against corruption in today’s Ukraine immediately turned into nothing but a new pork barrel for that corruption, the Swiss criticized the very approach that was taken, in which instead of a single authority, two similar agencies – an Anti-Corruption Committee and an Anti-Corruption Bureau – were created. In their view, this only serves to fragment those efforts and introduces discord.
Even more criticism was directed at the lustration program, which was approved under a law adopted by the Ukrainian parliament, because “the lustration in itself does not cope with corruption through any rule of law, but merely applies an extra-judicial political process, which in turns reinforces the dependence of Justice to the political power”.
Referring to the decision of the Venice Commission, the authors of the document note that “the lustration law contained some serious flaws; it called for revision of the lustration criteria, administrative decisions on lustration to be postponed, and that information on who is subject to lustration should only be published after a final court ruling was issued”. Considering the draft of the law, they noted, “All three drafts are overly broad and vague and may set the stage for unlawful mass arbitrary political exclusion.”
The Swiss researchers warn: “The lustration program might prove to be a disaster for Ukraine, especially in the law enforcement sector.” The same applies to the judiciary: “Imposing the lustration inside the judicial apparel is a major political mistake.” This was explained as follows: “First, because it sacks out most of the indispensable professionals needed to ‘run the machine’, but because it replaces a political allegiance by another one, under the will of building a more independent and corruption-free judicial administration. In fact, it just replaces the older officials with new ones that are submitted to the exact same rules, and everybody knows that the same causes will produce the very same effects.”
By and large, the lustration of judicial employees will not produce the desired effect and could even exacerbate the situation: “The old sacked one will have no other possibility to turn even more corrupt if they want to survive economically and socially in a new Ukraine. This will undermine again the legitimacy of the judicial administration and make it even worse than it was before.”
Swiss corruption investigators have pronounced their verdict on Ukraine
By Alexander Donetsky, Strategic Culture Foundation, June 12, 2015, part two
The experts from the Global Studies Institute of the University of Geneva have issued even more scathing conclusions about how the European Union is affecting events in Ukraine and what that means for the EU.
According to the Swiss investigators, “The positive effect of the EU integration policies is obviously highly questioned: although it may have worked out in certain countries, it was catastrophic in other countries such as Romania and Bulgaria. However, the EU has always had a stabilizating [sic] role in all of these countries where the tense economical situation in fragile economies could have strongly destabilized the social and political structure in many occasions. We shall also notice that Ukraine can be considered as the second major failure of the EU foreign policy after Yugoslavia because the Union was not able to impede the war.” This is because “democracy cannot be ‘imposed’ from outside, and that crime without control can lead an entire geographical zone and a massive population to a disaster of war, hate and cruelty, scratching to the end the fine glaze of civilization humanity has taken over centuries to build”.
For that reason, it is possible that “Ukraine might be the ‘nemesis’ of Europe”, as a sort of comeuppance for its violation of social and moral standards. And that includes more than just the fears of sharply heightened competition on the European labor market after a possible influx of Ukrainian “guest workers”. “As it happened with the integration of the Eastern European countries (including Poland), the massive emigration toward Western Europe countries created huge problems not only in terms of criminality exportation but also in terms of ‘political machine’ and unfair competition in the labor markets”.
European qualms are much more serious. They worry that the leaders of Ukraine will take their cue from Georgia’s tactics for fighting organized crime and force Ukrainian underworld groups to shift their operational bases into “the very heart of European institutions” – in other words, colonizing the most prosperous countries in Europe. “However, the situation is more dangerous for Europe than for Ukrainians. Of course, the Ukrainian population is suffering from privations, violence, corruption and arbitrary ruling in the countryside, suburbs etc. But this situation forces many Ukrainians to flee their country to the EU, some of them bringing in their luggage improved criminal activities and know-how. This flow of new criminal [sic] on saturated and organized illegal markets will force the existing criminal groups within the EU to reorganize and share the pie with another actor. If this will lead to an increase of the capacities of the EU organized crime groups (Ukrainians can bring lots of capacities, in weapons, in man work, in corruption schemes and economical crime), there will be also tragedies and killings in local mafia wars throughout the EU.”
The Swiss experts also reached an interesting conclusion in regard to the spin that European propaganda puts on events in Ukraine: “The war also exacerbated the ‘media’ and propaganda war. The official media, the internet and the private media, in Ukraine but also in the EU, the US on one side and in Russia on the other side started an image fight, aiming at legitimizing its own position. But the ‘media war’ has had a direct impact on the populations of the EU because it challenged also the legitimacy of the EU institutions themselves on the matter, their independence, their quality, their capacities to bring to their customers a reliable information with intelligent comments and analysis.”
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The authors highlighted their recommendations about how to proceed in Ukraine, because events there are increasingly reminiscent of accounts from the former Yugoslavia. As such, the potential aftermath of the EU’s policy toward Ukraine could be similar to the repercussions suffered in Yugoslavia: “The EU shall not repeat the mistakes made in the Balkans to stop the war and ensure the positions of extremists. We have now more than 15 years of experience to analyze the outcomes of such disastrous policies: widespread corruption, continuous high unemployment, ecological disasters and creation of ‘mafia-states’ or closed extremists communities, booming of any illegal trafficking, hardly developing infrastructures and misery among educated populations.”
These findings in regard to Ukraine’s present and future are quite damning, including the verdict on the government: “The current institutions are not efficient at all. They give the impression to hold only because of the war. As we have seen these early days of March 2015, the respect of the Minsk agreements which have effectively seen a withdrawal of the heavy weapons along the ceasefire line have lighted other fires in Kiev almost immediately: polemics, disputes, fights, etc. As it is, the future shows signs to slip over a more autocratic government in order to control the forces that are currently ruling the country (including organized crime groups) and to avoid a total chaos. This will lead or to a soviet-style totalitarianism, or to an extreme nationalism. It seems currently, with the help of some EU members, that the path looks more the second than the first option.”
Of course, Ukraine’s slide into a neo-Nazi state is being given the trappings of various democratic formalities, but those efforts come to naught: “The Ukrainian state legitimacy moves through elections also seems to be ‘medical patches’ to a deeper cancer.” And against a backdrop of civil war, “the direct implication of foreign countries such as the EU, Poland, Germany, France, the United States, Israel and Russia in Ukraine’s destiny turns the possible outcomes even more difficult, uncertain and dark”.
The conclusions of the study’s authors are even more categorical in regard to the prospects of a unitary Ukraine: “It seems that in a mid-term future, Ukraine will never be in the capacity to be a centralized state. Indeed, the institutions shall leave more space to the regions and create a true federation such as Germany, the US or Switzerland.” But they do not feel that even an integrated, federal Ukraine could promise a solution to all the problems: “We believe that future cannot be acceptable for Ukraine. Even if the country shall split in two different countries, the situation and challenges will remain the same: how to ensure a viable prosperity framework for the populations.”
However, the question of the country’s future, ravaged by civil war and now sliding toward fascism, is one that is being determined far outside of Ukraine itself. And the Swiss researchers are not shy about admitting this: “As it was reminded to us in February 2015, the future of Ukraine hardly depends on the Ukrainians.”