aaus-list @ ukrainianstudies.org -- [aaus-list] UKRAINE's VIRTUAL STRUGGLE AGAINST CORRUPTion

[Taras Kuzio <t.kuzio@utoronto.ca>]

RADIO FREE EUROPE/RADIO LIBERTY, PRAGUE, CZECH REPUBLIC
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RFE/RL Crime and Corruption Watch
Vol. 2, No. 31, 6 September 2002

Reporting on Organized Crime and Corruption in the former
USSR, East Europe, and the Middle East



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UKRAINE'S VIRTUAL STRUGGLE AGAINST CORRUPTION AND ORGANIZED CRIME

By Taras Kuzio

Ukraine's paradox is that it has a record of committees and
legislation, decrees, and resolutions that have all ostensibly dealt
with corruption and organized crime. If legislation and committees
are in place, then, why is there little or no progress in combating
corruption and organized crime in post-Soviet Ukraine?
    Nearly a decade of experience under such measures suggests
that only small-time offenders and politically disloyal individuals
have been targeted.
    Vasyl Onopenko and Serhiy Holovatiy understood the gap
between official declarations and the lack of official commitment to
the struggle against corruption and organized crime. They each
resigned as minister of justice, a post they occupied between
November 1991-August 1995 and September 1995-August 1997,
respectively. Both were subsequently elected to the current
parliament as members of the radical, anti-presidential Yuliya
Tymoshenko Bloc.
    An uncompromising struggle against Ukrainian corruption and
organized crime was first announced by then-Prime Minister Leonid
Kuchma in December 1992. With little privatization under President
Leonid Kravchuk (1991-94), the main avenues for corruption and
organized crime lay in Soviet asset stripping and large profits on
the gap between low domestic and high international prices for raw
materials and energy.
    In November 1993, the Coordinating Committee to Struggle
Against Corruption and Organized Crime was established and chaired by
President Kravchuk. The Coordinating Committee has been in place ever
since, although its effectiveness leaves much to be desired. The
first legislation to deal with corruption and organized crime was
adopted on 5 October 1995. In April 1997, the categories that were
classified as liable to corruption charges were expanded to include
parliamentary deputies and local officials.
    During the 1994 presidential campaign, Kuchma promised to
struggle against corruption and reduce the size of the shadow
economy, which already represented about 50 percent of the
country's gross domestic product. Eight years later and as the
end of Kuchma's second term in office looms, the size of the
shadow economy remains the same, according to Minister of Internal
Affairs Yuriy Smirnov and Tax Administration head Mykola Azarov. A
presidential decree based on a 25 January 2001 National Security and
Defense Council resolution was adopted to "eliminate" the shadow
economy.
    A large shadow economy means a huge proportion of funds is
diverted from the state to private hands, a process that in turn
fuels criminality and corruption. Objective factors in the continued
presence of such a large shadow economy remain in place. These
include a large bureaucracy of 250,000 officials, many of whom also
work "part-time" elsewhere; frequent changes to legislation; 100
state bodies that have a right to inspect a business; and high tax
rates.
    With the onset of privatization after 1994, the potential for
corruption and organized crime expanded greatly. The formerly
high-ranking Soviet Ukrainian nomenclature transformed its Soviet-era
political influence into economic power. This new economic power was
institutionalized as political power and influence through control of
private media (state television is controlled by the executive
branch) and "pragmatic" centrist parties that first made their
presence felt in the 1998-2002 parliament. These new centrist
parties, or older genuine ones taken over by oligarchs, are largely
based on regional clans.
    The former Soviet Ukrainian elite therefore became the
bedrock of the government's support through its control of
business, the media, and access to state and budgetary funds. In
return for political loyalty, officials turn a blind eye to
corruption in what has been termed a "blackmail state." If these
oligarchic allies go into opposition, politically motivated charges
of "corruption" are leveled against them, as with those against
Tymoshenko.
    A lack of transparency between state actors, pro-regime
businessmen, and their political parties bears all the
characteristics of a corporate state. Last year, Yevhen Chervonenko,
former head of the State Reserve Committee, complained that state
reserves "have been a source for many political campaigns" for
oligarchic parties. The most sought-after government positions are
those that distribute state funds (e.g., portfolios like Social
Policy, Health, Education, Privatization, Natural Resources).
    Aside from the Coordinating Committee, which is attached to
the executive, the 1994-98 parliament created its own committee to
"struggle against organized crime and corruption." According to its
current head, Our Ukraine member Volodymyr Stretovych, this committee
started its work in the newly elected parliament from scratch as it
had not received any documents from its predecessor. Stretovych told
"Ukrayina moloda" of 1 August that corruption is rampant in the
presidential administration, government, and parliament.
    On 24 April 1997, the Coordinating Committee established the
National Bureau of Investigation, modeled on the FBI. Parliament
never supported its creation, and it was shut down in December 1999.
Ukraine already had departments to combat corruption and organized
crime within the Ministry of Internal Affairs (MVS) and the Security
Service (SBU). But their usefulness has also proven to be minimal as
they have themselves become involved in criminal activities.
    The discrepancy between official and actual policies in the
struggle against corruption and organized crime could be seen in the
"Clean Hands" campaign launched in February 1998. "Clean Hands" was
launched under Western pressure after widespread publicity
surrounding the misdeeds that plagued the Lazarenko government (July
1996-July 1997). Not surprisingly, it was quietly forgotten.
    On 28 April 1998, the executive adopted a far-reaching
"Concept For The Struggle Against Corruption" that was to last until
2005, though the plan gave way to further government measures in July
2000 when its ineffectiveness was recognized. Such long-term
Ukrainian programs, which have also been adopted in other fields,
resemble Soviet-era five-year plans both in the way in which they are
constructed and their lack of implementation because of their purely
cosmetic character.

Dr. Taras Kuzio is a resident fellow at the Center for Russian
and East European Studies and adjunct staff of the Department
of Political Science, University of Toronto.


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