How to Get a Breakthrough in Ukraine
The Case Against Incrementalism
The second anniversary of Ukraine’s Euromaidan is a time for reflection about whether ordinary Ukrainians improved their lot by throwing out President Viktor Yanukovych. For observers at the time, the answer was a resounding yes. Yanukovych, the thinking went, was as corrupt as they come. Sympathizers hoped that by removing him from power and electing Petro Poroshenko instead, Ukrainians would open the way for a transparent and honest democratic government ready to improve ordinary people’s lives.
Amanda Paul, senior policy analyst at the European Policy Center, proclaimed in a 2014 op-ed that “Ukraine has changed forever.” Western governments were no less enthusiastic. In a statement released two days after Yanukovych’s ouster, the German government called the event “a chance for democracy” and German Chancellor Angela Merkel welcomed the “overall extremely encouraging development.” Poland’s foreign minister at the time, Radosław Sikorski, was likewise positive. “I hope Ukraine creates the kind of government which starts implementing difficult, necessary reforms that will prevent bankruptcy and hopefully put Ukraine back on the European track,” he told CNN.
Two years after the revolution, however, even those pundits who were most hopeful seem full of doubts. For instance, in a 2016 Foreign Affairs article, University of Alberta’s Taras Kuzio wrote of Ukraine’s “Euromaidan Dreams Deferred.” Ukrainians apparently concur. A recent nationwide Gallup poll revealed that only 17 percent approve of Poroshenko’s performance—fewer than supported Yanukovych before he was ousted. Meanwhile, only eight percent approved of the work of the country’s cabinet, which is headed by another Euromaidan leader, Arseniy Yatsenyuk. Some 36 percent of Ukrainians who were questioned by Gallup in another poll said they were “suffering.” This constituted both the highest percentage among former Soviet republics and the highest percentage found in Ukraine by Gallup since 2007.
Of course, the hard times, including Ukraine’s economic woes, stem in part from the conflict with pro-Russian separatists in the east. But the standard of living and quality of governance in Ukraine have been consistently low for a decade now, no matter the leader in control. If measured in constant 2005 U.S. dollars, Ukraine’s GDP per capita has been hovering at a meager $2,000 since the first Ukrainian revolution in 2004. Further, Ukraine is the only post-Soviet state whose GDP per capita, if measured in terms of purchasing power parity in 2011 dollars, has yet to reach the Soviet level. Neither have Ukrainians’ real wages been growing. Real wages in the country dropped by 6.3 percent in 2014 and another 19.3 percent in 2015, according to the Economist Intelligence Unit. The Economist predicts that wages will drop by another 3.5 percent this year.
Rival factions within the country’s ruling elite have simply been too busy fighting and expanding their business empires to build a healthy economy that would allow common Ukrainians to prosper. Instead, they’ve taken turns plundering the country—and doing so fairly successfully at that. In a 2013 research brief by IREX, the U.S.-based nonprofit, the authors estimated that 100 individuals among Ukraine’s political elite—or 0.00003 percent of the total population—controlled 80–85 percent of Ukraine’s wealth as measured by GDP. The picture is only slightly better today. As of 2015, oligarchs still controlled about 70 percent of Ukraine’s economy, according to estimates cited in Newsweek.
The drive for self-enrichment gets put on hold only during elections or revolutions, when rival clans organize into camps to woo votes with either pro-Western or pro-Russian slogans. Once the vote has been won, the looting resumes. Viktor Yushchenko’s presidency was a showcase in that respect. Elected in the wake of the 2003–04 Orange Revolution, Yushchenko embodied hopes for a new Ukraine that would be prosperous and free of corruption. But these hopes turned out to be misplaced. “Where was his leadership on fighting corruption, which flourished under his tenure? Did he improve governance, put Ukraine on a sustained path toward democracy and rule of law?” Kyiv Post asked in a September 2011 editorial on Yushchenko’s presidency, a year after he was resoundingly defeated in an election.
Just like in neighboring Moldova, where some members of the elite managed to syphon the astounding equivalent of eight percent of GDP away from local banks in November 2014, none of the longtime factions in the Ukrainian ruling elite have clean hands. No wonder international watchdogs consistently rank Ukraine so high on lists of most corrupt countries and so low on lists of best-governed countries.
There were high hopes that things would be different after Yanukovych. But signs of trouble have already emerged. Ukraine’s reform-minded economy minister Aivaras Abromavicius resigned to draw attention to alleged efforts by Poroshenko’s ally Ihor Kononenko to install his protégés in key posts in government agencies and state-owned firms. Meanwhile, Poroshenko has held on to his business interests, including the Roshen confectionary empire, which he is said to have promised to sell when running for president but never did. He instead transferred his shares to a blind trust earlier this year. Prior to that transfer, the company’s confectionary facility in Kiev posted a 789 percent increase in net profit in 2014, according to a recently reported disclosure by Ukraine’s securities commission. That same year, Ukraine’s GDP declined by 6.8 percent, according to World Bank, and Ukraine’s food industry grew by a mere two percent. As of last year, Poroshenko was eighth on the Forbes list of Ukraine’s richest people, with a fortune of 750 million dollars. He held the same ranking in 2014.
In a similar vein, even months of public Western pressure didn’t convince Poroshenko to fire his top prosecutor and ally Viktor Shokin, who was widely accused of stalling corruption investigations. The president’s ultimate call for Shokin’s resignation came only after the International Monetary Fund suspended loans without which the current Ukrainian government could not survive. Shokin heeded the request. That’s a positive development, but the pool of potential replacements is cause for worry. One prosecutor from the prosecutor general’s office, Alexander Matushka, allegedly tried to get a post in Ukraine’s new anti-corruption bureau by offering a $10,000 bribe.
Unfortunately for Ukraine, all this is par for the course. It doesn’t matter whether leaders shout pro-Western slogans or pro-Russian ones—they have typically only been pro-elite. What the country needs now is a leader who is pro-Ukrainian, someone who can keep his or her promise to sell off business assets and who owes the country’s rich no favors, someone who can pursue deep systemic reforms to replace the rule of oligarchs with a real democracy and develop a market economy in which all play by the same rules. Unfortunately, after three presidential elections and two revolutions in 12 years, there has yet to be such a leader. Even if Ukraine boils over again, it seems unlikely that anything will change.