Entrenched corruption and the absence of long-awaited reform in Ukraine’s judiciary are harming the country’s international image and scaring away investors, according to analysts who study Ukraine and Eastern Europe.
Analytics firm CEIC Data found that Ukraine’s foreign direct investment showed practically no growth last year.
The amount of foreign investment in Ukraine is close to bottom, and something has to be done about the judicial system,” said Anders Aslund, a senior fellow at the Atlantic Council, during a Jan. 27 webinar titled “Ukraine in 2021.” The event was a partnership of the U.S.-Ukraine Business Council and the Kyiv Post.
Aslund said it’s impossible to invest seriously in Ukraine. He urged the Ukrainian government and law enforcement to ensure conditions needed for investment growth, particularly respect for property rights. “Ukraine has good macroeconomic stability and can raise direct international money and my guess is that we can see 5% growth in this year,” he said.
Anti-corruption infrastructure
Experts agree that the fight against corruption should remain a key priority for the country. The corruption problem is still enormous — it hurts Ukraine’s credibility and ability to be a reliable partner.
Ukraine’s response or lack thereof will define its future.
“Unless the key topics are tackled, nothing is going to change in the country,” said Oleksandr Danylyuk, Ukraine’s former finance minister.
Danylyuk said that the country made the right decision to build an entirely new anti-corruption infrastructure in 2014. Right now, it includes the National Anti-Corruption Bureau of Ukraine, the National Agency for the Prevention of Corruption, Special Anti-Corruption Prosecutor’s Office and High Anti-Corruption Court of Ukraine.
“I believe an independent and professional special anti-corruption prosecutor is missing, otherwise Ukraine has everything in place in anti-corruption infrastructure to show results,” said Danylyuk.
The energy sector
Market reform is also critical. Experts said that Ukraine should focus on bringing in more players from the U.S. and Europe. This will help build up anti-corruption institutions and improve the judiciary.
“The reason to bring international players into gas production is to create demand for a level playing field,” said Yuriy Vitrenko, Ukraine’s acting energy minister.
He added that if the business scene is dominated by players who don’t need the rule of law, it will be hard to build up Ukraine’s institutions. The entire energy sector depends on transparency, according to Vitrenko. “We really need integration into a bigger, more liquid market with transparent rules if we want to have a proper and efficient energy market,” said Vitrenko.
Experts see domination by oligarchs and dependence on Russia and Belarus as the biggest challenges in the energy sector.
