If the war in Ukraine can be said to have a silver lining, it is the bringing together of a nation once sharply divided along linguistic, geographical, and class lines. Since Russia’s invasion in February, ordinary Ukrainians and oligarchs alike have rallied to support their country amidst an unprecedented national crisis. In fact, as Ukrainian counter offensives make progress in key regions, it seems the world may soon witness a modern retelling of David’s triumph over Goliath.
But Western countries must look past this remarkable outpouring of national unity and strength and recognize the enormous challenges facing post-war Ukraine. Even the rosiest estimates of the war’s damage paint a bleak economic picture. A hastily compiled report released on August 1 by the World Bank estimated that the cost of rebuilding Ukraine would be at least $350 billion—a number arrived at before many of Russia’s attacks on Ukraine’s civilian infrastructure or the Ukrainian counteroffensive that subjected large swathes of eastern Ukraine to a second round of destructive shelling. In July, a report by the Ukrainian National Recovery Council estimated a reconstruction cost of $750 billion—a figure Ukraine could never hope to raise on its own.
Some commentators have suggested that much of the post-war funding could come in the form of war reparations from a defeated Russia, requiring the invader to pay indemnities for its indiscriminate shelling of civilian areas and its widely reported war crimes. These commentators further suggest that if the Russian government refuses to pay, Russian bank accounts—such as those of oligarchs, currently frozen under a barrage of Western sanctions—could simply be transferred to the Ukrainian government as reparations. The dubious legality of such a maneuver aside, even the injection of Russian funds is unlikely to fully cover the costs of rebuilding the war-torn nation. In all likelihood, Ukraine’s Western allies, namely the EU and the US, will be asked to foot the bill.
Any potential funders of post-war reconstruction efforts should therefore be aware of Ukraine’s extensive history of corruption, past and present, and correspondingly insist on strict safeguards to ensure that their money is being spent as intended.
As recently as 2015, oligarchs felt empowered enough to effectively declare war on the state: Oligarch-turned-governor Ihor Kolomoyskyi infamously besieged the offices of Ukraine’s state-owned oil company with his personal private militia to protect his business interests. Anti-corruption watchdog Transparency International’s annual Corruption Perceptions Index gave Ukraine a score of 32 out of 100, the second worst score in Europe and in the bottom third worldwide. Russia was the only European country ranked below Ukraine. In a 2017 poll from Ernst & Young, Ukrainian business leaders self-identified as the 9th most corrupt nation out of 53 surveyed, worse than Malaysia and the Philippines. More recently, 36 percent of respondents in a 2020 survey said that corruption was “a component of social traditions,” and approximately two in three Ukrainians admitted to either paying or receiving a bribe for government services. When pressed as to whether they would report such incidents, 75 percent stated that they would not. The majority believed that it would “make no difference.”
Perhaps the most egregious case of corruption yet to be addressed is that of Oleh Tatarov, the current deputy chief of staff for the President. Tatarov was credibly accused of bribery in 2020 in relation to a contract for the construction of new military barracks. Under Ukrainian law, all cases of corruption must be prosecuted by the National Anti-Corruption Bureau (NABU). However, then-Prosecutor General Iryna Venediktova broke with procedure and took the case away from NABU, instead reassigning it to the Security Service of Ukraine (SBU), a government body with little expertise in corruption prosecution and far more prone to political interference. Unsurprisingly, SBU prosecutors failed to meaningfully investigate the case, resulting in the dismissal of all charges after prosecutors missed a procedural deadline. These proceedings were widely seen as a deliberate attempt to sabotage the prosecution of a figure within President Zelensky’s inner circle, indicating that even an allegedly “reformist” administration was reverting to old habits of graft.
A contemporary example of overcoming Ukrainian resistance to anti-corruption reforms—and one that the West should see as instructive—is the case of Oleksandr Klymenko, who was recently appointed the head of the Specialized Anti-Corruption Prosecutor’s Office (SAPO). The position had been vacant for two years after the resignation of its previous occupant, as the panel tasked to find a qualified replacement ran into obstacles almost immediately. Western experts had refused to rubber-stamp the government’s recommendation of a pro-Zelensky lawmaker because he was not seen as meeting basic integrity standards, which led to an intractable impasse. Government-appointed members of the panel refused to be present at meetings and vetoed nearly every independent candidate. Even when the aforementioned Klymenko managed to garner the requisite number of votes from panel-members after nearly 18 months’ delay, pro-Zelensky government officials attempted to further delay his appointment through procedural maneuvers. He was finally approved by the committee on July 19 of this year, two short days after President Zelensky, bowing to pressure from a speech by European Commission President Ursula von der Leyen, urged the committee to name a winner. Given a choice between incurring further ire from the West and appointing an independent watchdog, the Zelensky government opted for the latter. Klymenko received an official appointment on July 28.
Klymenko’s rapid appointment after EU intervention should make clear that Ukraine’s ossified state systems can be reformed in response to Western pressure. The Western funds that will be disbursed for post-war reconstruction can thus serve two aims: firstly, to rebuild a devastated country; and, secondly, to score lasting victories in the global battle against state corruption.
Most immediately, the largest tranches of reconstruction funding should depend on a top-down reform of the justice system, which allows corruption to flourish with impunity and has few oversight mechanisms. The strengthening of anti-corruption bureaus such as the NABU and SAPO should also be requirements. The West is already familiar with this mode of effecting state change, as IMF bailouts are frequently contingent on economic and governmental reforms in recipient states.
Policymakers should also ensure that every dollar given in aid is earmarked for procurement of specific materials or items. Open-ended grants are an invitation for corrupt officials to skim funds off the top and present a nightmare for independent fraud watchdogs and auditors. If time and cost benchmarks are not met, Western experts should work collaboratively with Ukrainian anti-corruption units to determine the causes of delays and prosecute any instances of corruption or malfeasance. Furthermore, contractors should be screened for connections to oligarchs or corrupt entities, and any firm associated with an oligarch should not be endowed with Western money. Exceptionally sensitive or expensive work may be outsourced to trusted Western firms, which are less likely to squander funds and materials.
Ukraine’s post-war reconstruction may prove to be the largest project of its kind since the Marshall Plan. Western policymakers should therefore be extraordinarily vigilant in ensuring that their funds-in-aid end up where they ought to. The Western world stands behind Ukraine in her fight against a violent aggressor, but that is no excuse to ignore the reality of corruption that pervades the Ukrainian state.
[Editor’s Note: This article was published in the Fall issue of the BPR magazine.]