Reading the Dec. 11, 2020 announcement of the memorandum of cooperation between the Ukrainian World Congress and the Cabinet of Ministers of Ukraine, followed by another with UkraineInvest, I thought it appropriate to make some recommendations for action, in particular as pertaining to the economy. First let me assert that the items of cooperation outlined in the memorandum are commendable.
Certainly, there is no reason to oppose the key items of cooperation outlined in the memorandum: Defending Ukraine’s international interests; development of the Ukrainian nation; development of Ukraine’s trade and economy; involvement of diaspora in the state-building process; attracting investments into Ukraine; protection of Ukrainian citizens illegally detained by the Russian Federation; development of relations between Ukraine and the diaspora; obtaining international recognition of the Holodomor.
However, the memorandum should be used to apply the influence of the diaspora on the core of Ukraine’s present problems.
The greatest threat to the development of Ukraine as a properly functioning country today is the rampant corruption in the country. This corruption is abetted by a totally dysfunctional justice system and effective oligarchic control over industry, media and politicians. It is further being promoted by both external and internal measures by Russia to disrupt the normal functioning of the country through military aggression, cyber attacks, and disinformation. The result has been a total cessation and partial erosion and even reversal of the reform process which has advanced sporadically under both past and current regimes. This has the potential of disrupting Ukraine’s further integration into the Western political and economic system and falling back into Russia’s despotic control.
Thus, under the defense of Ukraine’s international interests, the UWC, for example, should be promoting international sanctions, freezing of assets and prosecutions for money laundering by corrupt oligarchs, judges, bureaucrats, and politicians. The object of such efforts should be both to recover funds that have been illegally removed from the country and to bring to justice the perpetrators. For example, the UWC should support efforts to recover the $5 billion in funds that audits have revealed were illegally taken from the accounts of PrivatBank by its controlling oligarchs. Similarly, the UWC should support the efforts to extradite individuals involved in corrupt practices to face justice in Western jurisdictions. Such actions in Western countries would strengthen the efforts to fight corruption in Ukraine which are under severe pressure today.
In the involvement of the diaspora in the state-building process, UWC should not only offer but also demand that legal expertise which is available in the diaspora including lawyers, judges and constitutional experts be involved in the reform, most urgently, of the Constitutional Court. The recent outrageous findings of the Court with regard to asset declarations threaten the entire fragile structure of corruption control which was won through extensive civil society and Western pressure. Failure to address this issue has already delayed and possibly may eliminate, the financing provided by the International Monetary Fund. This financing is crucial to avoid a financial crisis, particularly in the downturn of the pandemic, but also to provide a signal to financial markets that Ukraine has not abandoned the path of reform and the rule of law.
If cooperation in the development of trade and the economy of Ukraine is to be undertaken, the UWC should be actively promoting the economic reform process which is currently stalled. The reform areas which are in urgent need of support are the privatization process, the land reform process and the rationalization of the energy system. Reforms in all of these areas are under threat from entrenched oligarchic interests. While privatization efforts are being made, the results to date continue to be minimal and are being hampered by various legislative initiatives. The land reform process which achieved a modicum of success is far from realizing its full potential in the farming sector. The energy system is plagued by monopolistic practices in coal pricing, restriction in electricity generation and resistance to the unbundling reforms of Naftogaz. Failure in achieving economic reforms, as required by the European Union Association Agreement and international financial institutions will lead to the failure of Ukraine to achieve significant growth and prosperity. Today, this reform agenda is gravely threatened by populist rhetoric.
If the UWC is to be involved in attracting investments into Ukraine, in cooperation with InvestUkraine, this activity should be conducted with openness and integrity. Cooperation should include efforts to advance the attractiveness of Ukraine’s investment climate. At present, the extensive corruption and lack of protection under the law within Ukraine has resulted in the confiscation or harassment of many of the investments made by the diaspora. This occurs through the demanding of bribes by officials, by extortion through tax inspectors, by “corporate raiders” and corrupt registrars, by false registrations of liens, by failure to enforce contracts, by corrupt judicial processes and numerous other corrupt schemes. Efforts need to be made to help eliminate such practices through cooperation with other international organizations, such as the IMF and the World Bank, to create pressure and support of diaspora and other international investors. Simply enticing capital to invest in Ukraine through trade shows and conferences has proven to be an ineffective measure as the paltry levels of foreign direct investment have shown.
In summation, the UWC should use the opportunity of the memorandum of cooperation to promote policies that would involve the diaspora in a constructive manner in advancing the above goals. There is widespread concern about the commitment of the current government of Ukraine to act decisively on the problems outlined. The diaspora must not be lulled into an acceptance of the status quo and collaboration with those elements of Ukraine who are not working toward progress but toward regression.
Basil Kalymon is professor emeritus of Ivey Business School in London, Canada.
