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23 June, 2011

The Long Fight Against Corruption Goes On

Ukraine’s 20 years of independence has been marred by corruption, and at the same time the country has experienced how all the many political parties continuously make campaign promises to fight corruption.

It has certainly been proven that it’s easier to declare than to implement the transition from a command economy into a market economy. That is if a demand-supply-driven society is to function, it foremost needs a viable legal system, under which everyone is equal to the law and transparency is enforced by a free and independent press. And in addition, you need trustworthy institutions of checks and balances.

The alternative is the law of the jungle and corruption. Not democracy - but cleptocracy.

In the newborn Ukraine, politics has become a fight for power, not for ideas and values. Privatization became an important tool for enriching yourselves and your entourage. So grabbing power was the goal, not a tool. (Similar developments have been seen in other former Soviet areas.)

I recall that when PACE began monitoring Ukraine many argued that they did not need all this talks about commitment. What they really needed was a better economy.

But a precondition for growth is a stable, transparent framework, not that the smarter people eat the cake. Ukraine has very high potential with its fertile soil and skilled labor force. But Ukraine’s image, and thereby its investment climate, is damaged by widespread corruption.

For many people, the Orange Revolution was a revolution meant to end the abuse of power and to separate politics and business by “doing away with the bandits”.

But by the first anniversary of the revolution, people were already disillusioned (at least they could talk and write about it!). They realized that in 2004, the Orange parties were able to unite against a common foe. However, the good intentions and plans were not followed by real measures and implementation.

I remember very well the meeting I had in October 2006 with - at that time Minister of Internal Affairs - Yuriy Lutsenko (shortly before he resigned), who sadly told us about how all the attempts to keep up to the former promises and investigate criminals and corruption, was stranded on the way to the court, and that the Orange revolution was something he today only could see when he turned on his videos in order to remember how it was and think about what could have been…

So, patiently, people continued to tolerate, that they have to pay under the table for “free” medical care and education. And officials were still accustomed to supplementing their (low) salaries through corruption. To no surprise, in all next election campaigns, the first promises were still to fight corruption.

This continuous talking — while not doing anything — was the main reason behind the unenthusiastic narrow win by Viktor Yanukovych in the 2010 presidential election.

The new President also promised to fight corruption. And he seems to be so firm about it that he, to be certain, took all the power in his own hands and started this corruption fight, ordering trials against former ministers for “abuse of office”.

But where his predecessors could excuse themselves with tug of war about who had power for what, at least now, the responsibility for not combating corruption is crystal clear.

Government agencies are creating artificial fiscal targets for inspection agencies, creating quotas and arbitrarily fining companies. I hear from Danish investors that licensing, taxation and customs are dangerous matters.

I also hear stories about VAT refund. - Some get the refund quick, some slow, and some not at all. It depends on relationships – or the correct political colors.

In December 2010, the OECD Anti-Corruption Network for Eastern Europe and Central Asia adopted its second monitoring report on Ukraine which stated that since 2004 Ukraine has met only one of the 24 recommendations of the OECD. And even this achievement – adoption of the law "On the liability of legal persons for corruption" – is lost, because the new anti-corruption package signed recently by President Yanukovych does not contain the relevant provisions.

“Of all the members of the Network, Ukraine is among the last! But for some reason no one is responsible for developing and implementing strategies to combat corruption", - said an indignant Goran Klimenchich, head of the Slovenian anti-corruption commission and team leader for monitoring Ukraine, when in Kiev.

Documents show that the main shortcoming of the Ukrainian authorities is the lack of a separate state body that would investigate corruption, a lack of regulation in the field of conflict of interest in government service, public control over the expenditure of public funds, and the financing of political parties. These recommendations included the independence of prosecutors from political influence, the recognition of corruption as a criminal offense and the imposition of liability of legal persons for corruption-related violations.

Similar critics have come from the Group of States against Corruption of the Council of Europe (GRECO), which in its recent compliance report downgraded Ukraine regarding several recommendations. This happens very rarely, if at all, among GRECO members.

Among all this sad evidence there is only one positive achievement — the law on access to public information. There is no doubt that this tool is a step in the right direction. It will be interesting to see how this possibility to go behind the scenes will be used to promote new investigative journalism. We must hope that journalists will dare to find out.

Nerevtheless at the same time, a return to the old mixed system of elections is now being prepared without much public debate. This will strengthen the political illness which stems from the lack of influence Ukrainian voters have to vote for persons of their own choice. This is bad, because voters should have a chance to get rid of their representatives, if the latter do not struggle for the goals which got them into office, but only fight for themselves.

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