Thursday, November 13, 2014

Ukraine’s Real Problem is Corruption

Corruption is the World's root problem.

Ukraine’s Real Problem is Corruption:

NATO acknowledged yesterday that Russian troops and armaments are crossing into eastern Ukraine en masse, but a predatory Russia isn’t Ukraine’s only problem. Corruption is so endemic in the country that many analysts attribute the failure of the past two revolutions to it. Most state jobs are underpaid, and everybody expects that the difference between their government wages and the cost of living will be made up by graft. Political seats have an openly discussed price, and members of the Rada (Ukrainian parliament) are formally immune from prosecution.

It doesn’t end there. A recent FT op-ed by the owner of The Kyiv Post describes a the sorry state of Ukraine’s judiciary:

[...F]iling litigation is often more akin to a tendering process with mediators openly running around saying, ‘the other party has quoted a certain figure they are going to pay the judge, will you be able to beat that offer?’ Frequently, the merits of the case aren’t even discussed.
A recent Bloomberg article sheds some light on the extent of the problem. Not even Ukraine’s almost life-or-death energy deals are untouched by corruption. After Ukraine’s President Poroshenko, contra Prime Minister Yatsenyuk, was involved in scrapping a deal to buy expensive but useful South African coal in lieu of some Russian coal or oil, investigations into the matter found that,

There may be another reason for the spat [between Poroshenko and Yatsenyuk]. “The coal market is being redivided in Ukraine today,”  said Vladimir Zinevich, director of state-owned company Ukrinterenergo, which is responsible for the coal imports. “It looks to me as though the coal deliveries from South Africa are a nuisance to somebody.”

Separate investigative reports from and suggested that the “somebody” in question could be Sergei Kuzyara, a coal trader with close ties to Ukraine’s deposed President Viktor Yanukovych. Kuzyara’s plans to buy coal from Russia and the rebels in eastern Ukraine had found support in the Poroshenko camp. Such an arrangement could be lucrative. The rebels, despite the assistance they receive from Russia, need funds and would be willing to accept low prices for the coal they seized from the warehouses of state-owned mines.

At the same time, companies owned by Rinat Akhmetov, Ukraine’s richest man and a Yanukovych ally, continue to export coal. At a recent Energy Ministry meeting, an Akhmetov representative explained that his company had long-term contracts to honor and needed the hard currency. Any purchases by the Ukrainian government would be paid in hryvnia, which has been losing value.
Even a country that didn’t have Russian tanks rolling over its border would be in dire trouble over to this level of corruption. Ukraine’s future as a state will depend on its ability to put its dismayingly dysfunctional house in order.