Defeating Ukraine’s other enemy: corruption

For all our admiration of the heroism and grit of Ukrainians, we cannot escape the fact that Ukraine’s post-war recovery and promise for the future depend on ending corruption. In 2015, The Guardian called Ukraine “the most corrupt nation in Europe.” In 2021, Transparency International ranked Ukrainian corruption at 122 of 180 countries, alongside the likes of Pakistan, Liberia, and Russia itself. Ironically, Putin’s aggression presents an opportunity for fundamental Ukrainian reform.   

Ukraine will need up to a trillion dollars’ worth of aid for reconstruction. The West should furnish the bulk of this, provided Ukraine adopts and implements reforms that will defeat that old enemy and ensure that aid is well used. Alternately, massive infusion of funds could refuel the corruption that has long pervaded the Ukrainian government, economy and daily life, in which case reconstruction will suffer. 

Conditionality has long been a potent policy of the World Bank to ensure that aid induces reform so that aid can work. While it means withholding aid until conditions are met, this strategy has helped shrink global poverty. A similar strategy is essential if Ukraine is to eradicate corruption and get on with rebuilding — and also to build political consensus in the United States and Europe in favor of robust aid  

Although it is natural to be cynical about ending kleptocracy in Ukraine, the chance to do so could be better now than before the Russian invasion — indeed, better than ever. If President Volodymyr Zelensky and other Ukrainian leaders are as determined to reduce corruption as to combat Russia’s invasion, their leadership will be cause for measured hope. Moreover, parasitic Ukrainian oligarchs who thrived on corruption may have become less influential. As patriotism has surged, independent civil society groups opposed to corruption have gained sway. Some concrete progress is being made. With Western nudging and support, Kyiv has stood up a National Anti-Corruption Bureau and a High Anti-Corruption Court.

Such straws in the wind may be insufficient, however, without the West’s “tough love.” Bluntly put, the United States and European Union will have leverage to cause and help Ukraine to reform. When Ukraine became independent in 1991, the West’s priority to rid it of nuclear arms was higher than cleaning out former Soviet practices which fed corruption. Now there is a new opportunity. It must not be lost.   

Western and Ukrainian governments are debating whether and how some $300 billion in frozen Russian assets might be used to fund much of Ukraine’s reconstruction. While we think these assets can and should be used, a strategy of linking aid to anti-corruption reform makes sense regardless of the sources and amounts of aid.

Likewise, investment by European and American companies could complement aid programs. With its abundance of natural resources, size, and untapped human potential, Ukraine ought to be of interest to Western firms looking for locations from which to serve global markets. Yet, foreign direct investment in Ukraine over the years has been anemic — less than in Romania and Azerbaijan, for example. In many cases, U.S. companies have passed over Ukraine lest they run afoul of the bribery prohibition of the Foreign Corrupt Practices Act. Also, lumbering state-owned enterprises are sumps of corruption. These should be in the crosshairs of Ukrainian reform and Western support of it.

The EU recently elevated Ukraine to the status of membership candidate. Reconstruction — and the struggle against corruption — might benefit if Ukraine joined sooner than later. But Western and Ukrainian leaders should be clear that this will remain a mirage unless Kyiv takes bold action. Conversely, Ukrainian defeat of corruption should make it an attractive EU candidate.

An all-or-nothing approach to making aid and investment contingent on slashing corruption and opening the economy is neither necessary nor smart. Nonetheless, Ukraine will benefit most from reconstruction if it moves soon to make judicial and law-enforcement institutions and practices more professional and independent and if it allows more scope for the private sector. Additionally, Ukraine and its supporters could select a visible and vital sector for early reform action. Rebuilding the battered national transportation system could be a good option. Success in it could help Kyiv build domestic and international consensus support for larger-scale efforts.

Both the World Bank and the European Bank for Reconstruction and Development have important expertise to offer, including experience in applying conditionality reasonably but firmly to optimize both development and reform. With their know-how, government resources, and Zelensky’s leadership, Ukraine can be rebuilt without corruption. 

Some members of Congress have voiced concern about writing Ukraine a “blank check.” Those of that persuasion should be ardent supporters of pledging ample aid if it is used effectively and helps end corruption. American bipartisanship will be important.

Some Ukrainians and their supporters might see the linkage of reconstruction aid to anti-corruption as a bitter pill; because it will help defeat an old enemy and brighten the future, it must be swallowed.

David Gompert has been Acting Director of National Intelligence under President Obama and Special Assistant to President George H. W. Bush for Europe and the Soviet Union.