WASHINGTON – A top U.S. administration official has taken pointed aim at the wealthiest Ukrainian tycoons, known as oligarchs, accusing them of undermining the country’s anti-corruption reform efforts.
Victoria Nuland, assistant secretary of state for European and Eurasian Affairs, warned on March 15 that, if efforts to liberalize the economy and fight endemic graft fail, Ukraine “risks sliding backwards once again into corruption, into lawlessness, into vassal statehood.”
“The oligarchs and the kleptocrats who controlled Ukraine for decades know that their business model will be broken if the Maidan reformers succeed in 2016,” she told the U.S. Senate Foreign Relations Committee in reference to the uprising that pushed out Ukraine’s pro-Russia government two years ago.
“So they’re fighting back with a vengeance, using all the levers of the old system: their control of the media, state-owned enterprises, [parliamentary] deputies, the courts, and the political machinery,” said Assistant Secretary Nuland, a leading U.S. official on Ukraine.
The comments by Ms. Nuland and those made recently by other officials, including Vice-President Joe Biden, signal concerns that Ukrainian President Petro Poroshenko and Prime Minister Arseniy Yatsenyuk aren’t moving fast enough to overhaul key industries, ministries, and state agencies.
Considered to be among the world’s most corrupt countries, Ukraine’s economy has long been dominated by businessmen who control valuable assets and enterprises, many acquired under dubious circumstances.
In the months following the Euro-Maidan revolution that ousted Viktor Yanukovych as president in February 2014, Poroshenko – himself a wealthy businessman – turned to oligarchs to help stabilize regions in the country’s east, where a Russia-backed separatist movement erupted into full-scale civil war.
As Kyiv has embarked on reform efforts, however, many of those oligarchs have maintained control of their holdings despite public sentiment and international pressure for Mr. Poroshenko to rein them in.
In recent weeks, the government has been roiled by resignations of several reformist ministers, including Economy Minister Aivaras Abromavicius, who has accused a well-connected Poroshenko ally of trying to install his supporters as the heads of important state-run industries.
In addition, Western officials pushed for months for the resignation of Procurator General Viktor Shokin, who was accused of being incapable of reforming his office, seen as one of the country’s most corrupt. Mr. Shokin stepped down in February on the same day that Ukraine’s Parliament narrowly defeated a no-confidence vote in Mr. Yatsenyuk’s government.
The International Monetary Fund (IMF) has warned that the latest installment of its $40 billion aid program, which has been instrumental in stabilizing Ukraine’s anemic economy, could be held up unless changes are made.
“Every week that Ukraine drifts internally, that reform is stalled, IMF and international support goes undisbursed, and those in and outside the country who preferred the old Ukraine grow more confident,” Ms. Nuland said on March 15. “We need to see the next stage in ‘de-oligarching’ the economy.”
Ms. Nuland cited some small economic successes in Ukraine over the past year, including a stabilized currency, growth in wheat exports, and the fact that the country managed to avoid using Russian natural gas this winter for the first time – something she called “pretty miraculous.”
Russia has traditionally been able to use its gas supplies as leverage against Kyiv, but Ukraine managed to draw on European sources in the past year.
Despite her criticisms, the assistant secretary of state gave an upbeat assessment of Ukraine’s ability to move forward with reforms. “We continue to believe that 2016 can and should be the year that Ukraine breaks free from the unholy alliance of dirty money and dirty politics that has ripped off Ukrainians for far too long,” she said.
Copyright 2016, RFE/RL Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave. NW, Washington DC 20036; www.rferl.org (see http://www.rferl.org/content/ukraine-nuland-oligarchs-corruption/27615366.html).