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52 I Eastern Europe bne November 2023
to stamp out corruption, as it has become an existential issue for Ukraine.
Now it is fairly clear that the West will not authorise handing the roughly $300bn of Central Bank of Russia (CBR) reserves frozen by the West in the first days of the war to Ukraine to pay for its reconstruction.
At the Recovery conference held in London in June Ukraine it became clear that the plan is now to have the private sector come up with the hundreds of billions of dollars that Ukraine needs, not the international
government to court after it reneged on its obligation to pay for the nearly $1bn of power it bought from the new firms. The risks associated with investing
into Ukraine remain extremely high. Attracting the more than $414bn of investment needed to rebuild, according to the World Bank, already looks like an impossible task.
European Commission President Ursula von der Leyen put her finger on the issue during her speech at the event, appealing to the assembled captains of Western industry in London: “Total predictability, clarity and transparency are needed.”
madness, then the united business community is ready to do it,” Mazepa said.
Judicial reforms have also started to appear. The Ukrainian parliament adopted a draft law on changes to the procedure for appointing judges of the Constitutional Court of Ukraine (CCU) in September, which is necessary to meet the European Commission’s EU membership criteria. A key element here is that two of the Advisory Group of Experts that recommend judges have to be proposed by international organisations, something that Poroshenko also resisted.
The reform of the judge selection system for the notoriously corrupt Constitutional Court is one of the seven criteria
from the European Commission, the implementation of which are necessary for further EU accession progress.
Zelenskiy also enacted a decision of the National Security and Defence Council of Ukraine "On accelerating judicial reform and overcoming corruption in the justice system" on July 1 that increases the penalties for court corruption.
Most significantly of all, following
the failure to jail Nasirov for blatant corruption, officials are starting to be arrested and jailed. In the most high- profile case to date, Zelenskiy sacked Ukraine’s defence minister, Oleksii Reznikov, in September, who was widely seen as competent, but was linked
to multiple large-scale corruption scandals such as buying overpriced eggs and winter jackets.
While Reznikov himself was not accused of corruption, his ministry is riddled with it. In a parallel move, Zelenskiy also fired most of Reznikov’s deputies and in a move reminiscing of former Georgian president Mikheil Saakashvili’s’ decision to fire all of the corrupt traffic cops
in Tbilisi, Zelenskiy sacked all of the regional recruitment officers.
He also removed several medical conditions from the list that exempted men from serving in the army to get rid of some of the favoured dodges
for getting out of serving in the army.
“Ukraine has an abysmal foreign direct investment (FDI) record because of the lack of the rule of law and weak property rights”
financial institutions (IFIs) and not the international community.
That is not going to work unless corruption is defeated. Despite the strength of its investment story
– Ukraine remains one of the last unreformed countries of the Former Soviet Union (FSU) with most of its “catch up” growth ahead of it – the country has an abysmal foreign direct investment (FDI) record because of the lack of the rule of law and weak property rights. In several years since the Maidan revolution, Ukraine took in no FDI at all.
In a recent interview, the chairman
of the board of Deutsch-Ukrainische Industrie- und Handelskammer (AHK Ukraine), Reiner Perau, said many German companies are interested in the Ukrainian market, but “active and widespread corruption in Ukraine stops them.” According to Perau, very often officials in local administrations demand a bribe of €500 and more for one or another permit. There are also problems in relation with the Tax Service, Perau said.
In the renewable energy sector, the only sector to attract any significant investment since 2014, the companies that invested had to threaten to take the
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Ukraine is still a long way from that benchmark, but Zelenskiy has ramped up his anti-corruption campaign, which is looking increasingly creditable.
After the specific fight to reign Kolomoisky in, Zelenskiy broadened the campaign with his oligarch speech in March 2021 highlighting the businessmen as a problem.
He followed that up with the oligarch law in September 2021 which effectively created a registrar of oligarchs and banned government officials from talking to them.
Ukraine’s businesses are also starting to react. They have created a register of "raiders and corrupt officers" among law enforcement staff, the Kyiv Independent reports. Investment bank Concorde Capital’s founder Ihor Mazepa announced the creation of
a new platform to track and rate law enforcement officers and judges who use their authority for illegal purposes and called on the president to legislate a ban on using state law enforcement agencies in corporate disputes that do not concern national security.
“If the government cannot end this