Corruption in Ukraine and Its Impact on Stability Mr. Donald Bowser Research Fellow Centre for Foreign Policy Studies

Political corruption, ‘is the main obstacle for the further development of Ukraine as a full blown democratic state’. Ukrainian (Razumkov) Centre for Economic and Political Studies 2

Types of Corruption Bribery; Bribery; Theft / illegitimate acquisition; Theft / illegitimate acquisition; Clientalism/Nepotism; Clientalism/Nepotism; Political corruption; Political corruption; Conflict of Interest; Conflict of Interest; Fraud; Fraud; Collusion and Collusion and Theft Theft

Corruption in Ukraine Since independence Ukraine’s political scene has been dominated by “oligarchs” mainly based in eastern and southern Ukraine. Since independence Ukraine’s political scene has been dominated by “oligarchs” mainly based in eastern and southern Ukraine. Yanukovych elected in February 2010, with support of oligarchs from the Donets Basin (Donbas) region of eastern Ukraine. Yanukovych elected in February 2010, with support of oligarchs from the Donets Basin (Donbas) region of eastern Ukraine. Yanukovych regime had massive high-level corruption, committed by the ‘family’ Yanukovych’s own family and close associates. Yanukovych regime had massive high-level corruption, committed by the ‘family’ Yanukovych’s own family and close associates.

Corruption in Ukraine Ukraine was ranked as most corrupt country in Europe. Ukraine was ranked as most corrupt country in Europe. Placed 144 (out of 175) in TI’s Corruption Perception Index in Placed 144 (out of 175) in TI’s Corruption Perception Index in The heights of corruption of Yanukovych demonstrated by the luxurious Mezhyhirya compound. The heights of corruption of Yanukovych demonstrated by the luxurious Mezhyhirya compound. Tetiana Chornovol an investigative journalist first to expose Mezhyhira and during Maidan was beaten badly for it. Tetiana Chornovol an investigative journalist first to expose Mezhyhira and during Maidan was beaten badly for it.

Recent Events Nov Under threat of economic penalties from Russia, Ukraine breaks off plans to sign partnership agreement with EU Nov Feb Large-scale protests in Ukraine, President Yanukovych seeks refuge in Russia, Russia enters Crimea March 2014 Continued Russian occupation of Crimea, U.S. (and allies) impose sanctions

What now? So revolution over and all is well? So revolution over and all is well? No. Corruption is so deep engrained in political and economic culture in Ukraine. No. Corruption is so deep engrained in political and economic culture in Ukraine. Institutions are still weak and the apparatchiki are fighting back. Institutions are still weak and the apparatchiki are fighting back. Institutions matter. Institutions matter.

Institutional Sources of Corruption Institutional Sources of Corruption Corruption depends on three factors: the overall level of public benefits available, the overall level of public benefits available, the risks inherent in corrupt deals, and the risks inherent in corrupt deals, and the relative bargaining power of the briber and the person being bribed the relative bargaining power of the briber and the person being bribed

Institutions and Corruption The level of public benefits available and the risks present in any corrupt deal are dependent on the weakness present in any individual institution. The level of public benefits available and the risks present in any corrupt deal are dependent on the weakness present in any individual institution. Institutions that are weak or present opportunities to engage in corruption are high-risk institutions. Institutions that are weak or present opportunities to engage in corruption are high-risk institutions.

Legitimacy Ukrainians still have no reason to trust the new Government. Ukrainians still have no reason to trust the new Government. Presidential election gave some hope of a representative Government. Presidential election gave some hope of a representative Government. Parliamentary elections offer some hope for increasing legitimacy of Ukrainian state. Parliamentary elections offer some hope for increasing legitimacy of Ukrainian state. Only way to bring back eastern Ukraine is through a counter-insurgency effort. Only way to bring back eastern Ukraine is through a counter-insurgency effort. Increase legitimacy and a responsive State. Increase legitimacy and a responsive State.

“Classic” COIN Theory Legitimate Government that provides justices and basic services and acts as better option than insurgents. Legitimate Government that provides justices and basic services and acts as better option than insurgents. Population, rather than territory centric operation. Population, rather than territory centric operation. Provide security for the people and limit kinetic operations that will have collateral damage. Provide security for the people and limit kinetic operations that will have collateral damage. Provide socio-economic benefits for staying on the side of Government. Provide socio-economic benefits for staying on the side of Government.

What is to Be Done? Establish strong anti-corruption agency that is independent and has teeth. Establish strong anti-corruption agency that is independent and has teeth. Fry a few more big fish. Fry a few more big fish. Strengthen institutions and undertake genuine public administrative reform. Strengthen institutions and undertake genuine public administrative reform. Enforce declarations of assets and go after illicit enrichment. Enforce declarations of assets and go after illicit enrichment.