If a fire is raging in a house, discussion of the colour of the replacement carpets is not normally the first priority, so to convene a Ukraine reconstruction conference in the midst of Kyiv’s counteroffensive may seem premature, and even tempting fate. The EU staged a large number of Syria reconstruction conferences premised on the defeat of Bashar al-Assad and look how that turned out.
The UK’s two-day conference starting on 21 June is at least the sixth since Russia’s full-scale invasion. The first was held on 4 July 2022 in Lugano, Switzerland. Germany, holding the rotating chair of the G7, held an event in Berlin on 24 October, Paris got in on the act on 13 December, Warsaw on 13 February and the EU Committee of the Regions held an event just last month, on 25 May.
The proliferation of such symposiums raises questions about whether countries are competing or coordinating over a coherent plan to rebuild Ukraine, and, crucially, whether systems will be in place for when the billions in expected western aid is in Ukraine (ranked by Transparency International in 2021 as the second most corrupt country in Europe, behind only Russia) to stop members of the elite siphoning it off.
The UK claims its event is warranted and different to predecessors since it is focused on how the private sector can take the helm. Estimates of the cost of reconstruction vary and obviously change with every apartment, dam and power station destroyed by Russia. The most cited damage estimate is the World Bank’s assessment of $135bn of physical damage and $411bn in replacement costs.
The British analysis is that hard-pressed public treasuries and even multilateral banks simply will not have such funds available once the guns fall silent. Forms of war insurance, never attempted before, will be required, and few know if the sums will add up.
Hard thinking is needed in many areas. Would the call for local municipalities to drive the recovery come at the expense of the coherence that only the central infrastructure ministry can provide? How much should market forces set priorities, and would local voices be squeezed out? Is it realistic for Ukraine to skip to a net zero coal and steel sector? And how many refugees, especially those who will have lived in western Europe for two years, will ever return?
Some regions face tougher challenges than others. Dr Vlad Mykhnenko, of St Peter’s College, Oxford, told the UK foreign affairs select committee: “All the big cities on the Ukraine-Russia border such as Kharkiv, Luhansk, Donetsk or Mariupol will have to find a new function in this modern, postwar Ukraine. That is a very difficult question that people are still shying away from.”
Olena Halushka, a board member of the Ukraine Anti-corruption Action Center, says the London agenda also needs to include future Nato membership for Ukraine, since without security there will be no investment. She argues that the west has to take complex steps towards confiscating Russian assets, too. She fears concerns over legality and precedent are making the west shy away from seizure, which she says sends a signal to Russia that it can get its money back later whatever damage it inflicts on Ukraine now.
Above all, the private sector is not going to risk an investment if it fears the funding is going into not a proposed new bridge but an oligarch’s back pocket. As a recent USAid report says: “If investors believe they must contend with unscrupulous rent-seeking officials … or rely on a flawed judiciary to protect their rights, they will be less likely to invest.”
So, alongside any reconstruction conference is a discussion, of varying degrees of frankness, about the conditions the west can set to help Ukraine kick the corruption habit. This is not of passing interest to a cadre of US officials who have spent considerable time trying to reform Ukraine, including Joe Biden. He told Brookings in 2015: “The corruption is so endemic and so deep and so consequential, it’s really, really, really, really hard to get it out of the system.”
Of his efforts to expunge corruption when Barack Obama’s vice-president, Biden claims he warned the then prime minister, Petro Poroshenko, in 2016 that if he had not sacked the prosecutor general, Viktor Shokin, before he got on his plane back to Washington, the US was not going to hand over a $1bn loan guarantee. He says Poroshenko rang him on his plane home to say Shokin was gone. Shokin has previously denied wrongdoing.
Some, such as Henrik Larsen, an adviser to EU missions to Ukraine from 2014 to 2019, insists corruption is not an issue that can wait for the war’s end. “Now is the exact right moment to impose time-linked conditionality for aid,” he says.
“From my experience, Ukrainians will not have direct confrontation against western donors. It would be stupid to go into open conflict, so what Ukrainian officials traditionally have done is to undermine reforms by delaying them, or saying it was an independent court that took a decision out of their hands.” The lesson from the previous round of reforms was that the corrupt were not removed from the judicial system, he says.
Josh Rudolph, of the German Marshall Fund, says donors, including the international financial institutions, have to be more assertive in setting conditions. “You cannot come out of this war and hand the political system back over to the oligarchs. But nor can you have a system dominated by the Ukrainian president’s office, as some senior appointees in that office would be inclined to do. They have these inclinations to control the judicial system.”
The conditionality is currently coming from three sources: the seven accession conditions set by the EU last year, the international financial institutions and an informal group of progress-chasing G7 ambassadors based in Ukraine. The hope is that a fourth pressure point is evolving in the shape of a G7 multi-agency donor coordination platform set up in January.
The G7 platform based in Brussels consists of 12 officials overseen by a triumvirate of Ukraine’s finance minister, Serhiy Marchenko, the EU director for the European neighbourhood, Jan Koopman, and the US deputy national security adviser, Mike Pyle.
“For a modern Marshall plan for Ukraine to work, you need a Marshall, someone whose focus is on this from when they get up in the morning, including selling into domestic audiences,” Rudolph says. “There’s a joke that the original Marshall plan was a Marshall plan to sell the Marshall plan.” No such figure exists at present.
Ukraine’s vibrant civil society, just as much as the donors, regards fighting corruption as integral to the war effort. Egor Sobolev, a one-time head of the parliament’s anti-corruption committee and now fighting on the frontline, once said when he was fighting in Bucha that during a lull in the shelling a fellow soldier in another trench yelled over to him: “Egor, do you think when we repel the Russians we can also get rid of corruption in Ukraine?”
Haluskha, explains: “This war is, in part, about Ukraine’s democratic transformation and the rule of law. Putin decided to launch the big invasion when he realised that Ukraine was close to an irreversible step away from Soviet-era corruption and governance.” She says it was not a coincidence that Putin denounced all of Ukraine’s anti-corruption bodies by name in the rambling speech he made two days before the full-scale invasion.
Mykhailo Zhernakov, the director of the Kyiv based Dejure Foundation, also shows little patience with the argument that anti-corruption reforms are best deferred until the war’s aftermath. He points out that surveys show 60% of Ukrainians want the EU to do more to put pressure on the government to fight corruption. “This war is not just about land but about values. If we wanted to remain in a country that is corrupt, we might as well as not fight. Being part of the European family means rule of law. We have to fight on two fronts – the real military battle and the internal one.”
Ukrainian officials also know the war risks being a cover for bad people to reassert themselves. Oleksandr Novikov, the head of national anti-corruption agency, sounded a warning note at a recent OECD anti-bribery conference. “History shows us conflict often leads to the emergence of new oligarchs who exploit chaos for personal gain.”
Many say checking the rise of a new oligarch class has been hampered by the abandonment under martial law of many of Ukraine’s extraordinary transparency measures, including registries of the property and income of public officials. The founder of YouControl, Serhii Milman, is one of many saying these registries should now be reactivated, as “in the absence of open registries, corruption grows exponentially”.
One western lawyer closely involved in Ukrainian extradition cases over the past decade says he is still not sure European politicians quite understand how deeply corruption is ingrained in the political culture. “The corruption itself is one thing, but then politicians, once in power, start corruption prosecutions against the leading figures in the previous regime,” he says. “Allegations of corruption become a tool to defeat opponents.”
Ensnaring political rivals is relatively easy as civil servants and administrators of state-owned enterprises can easily fall foul of contradictory bureaucratic rules. “Judicial reform still needs a lot of work,” says Maria Repko, the deputy director at the Centre for Economic Strategy. “Bad people are pursued but there are also cases that are really questionable.” She knows of one donor helping Ukrainian municipalities to attract foreign funds by producing a 100-page manual on how not to get prosecuted. “The civil service right now could be prosecuted for literally anything,” she says.
Battle-hardened veterans in the anti-corruption war – some have been on this for a decade – say the struggle on the home front is mainly being fought around three main judicial institutions: the supreme court, the constitutional court and the high qualification commission. Each is a test of what kind of a country Ukraine can become after the war.
On 17 May, the then president of the supreme court, Vsevolod Kniaziev, was allegedly caught being given a £2.7m bribe. One reading of his arrest is that someone was prepared to grass him up to the investigators, and that this represents a cultural shift. “There is a new question in the air: what are you doing in the war and how dare you steal money when soldiers are dying to keep you in your comfortable chair,” says Liubov Velychko, an investigative journalist.
But, if proven, the episode also reveals a compromised legal system, bereft of a moral code even in wartime. Elected as recently as October 2021, wiretaps apparently show Kniaziev had established a back office at the court to collate bribes from around the country. Kniaziev denies wrongdoing and has criticised his detention but said he is cooperating with investigators.
The second problem lies with the constitutional court, the body that has legal oversight of parliament and executive, including the timing of postwar elections, reintegration of occupied territories and Euro-Atlantic integration. Volodymyr Zelenskiy’s office has been accused of opening the door to political interference by backing a law in December that the Venice Commission, the judicial arm of the Council of Europe, said it did not establish a credible integrity check for applicants to the court.
The commission has recommended international experts have the casting vote on an advisory group of experts that would screen applicants for the court. The principle of outside judges screening applications for the judiciary has long been accepted.
Sir Anthony Hooper, a former British appeal court judge and member of Matrix chambers, was the British appointee to the Ethics Council, a body that elected judges to the anti-corruption court. Hooper spent many an hour on Zoom cross-examining candidates for the judiciary about precisely how they had found the money for a $80,000 Toyota Land Cruiser.
So far, Zelenskiy has refused to accept the full recommendations from the Venice Commission to give a majority to the international judges that screen applicants for the constitutional court. The dispute remains live.
The third controversy has revolved around the judiciary’s main governing body: the 21-strong high council of justice (VRP). This body was supposed to be ushering in a new era of judicial reform by electing 16 members to the high qualification commission of judges (VKKS), the body that selects judges. There are currently vacancies for 2,500 new judges, so if the selection system is no better than what went before, Ukraine will be embedding a corrupt judiciary for the next decade.
Ukrainian civil society seems to disagree about the quality of the people elected to the VKKS, with some saying they are not “the best of the best”. Others are prepared to wait.
Overall, anti-corruption campaigners say they are making progress and have their clear agenda in hand.
Vasyl Lozinskyi, the deputy infrastructure minister, was sacked in January and put under house arrest after he was accused of inflating the price of winter equipment, including generators, and allegedly siphoning off $400,000. He faces eight to 12 years in prison if convicted but denies wrongdoing. The ministry of defence was meanwhile found flatfooted when Ukrainian newspapers reported that its procurement department had been paying inflated prices for soldiers’ rations, raising concerns about kickbacks.
Many Ukrainian journalists acknowledge that new specialist anti-corruption courts are making progress, but worry the big fish can always swim free. Dmitro Firtash, a Ukrainian businessman arrested in Vienna in 2014, has avoided extradition to the US to face bribery charges for which he denies wrongdoing.
Pavlo Vovk, a Kyiv district judge whose court Zelenskiy closed down in December after Ukrainian anti-corruption authorities compared it to a criminal organisation, has not been successfully prosecuted even though the US placed sanctions on him in 2022. He has called the decision to eliminate his court purely political.
Vladyslav Trubitsyn, a member of the Kyiv council, was recently given permission to travel abroad even though he had twice missed court hearings on bribery charges. He is believed now to be in Poland; Ukraine has issued a warrant for his arrest.
Transparency and a cleaned-up judiciary are seen as the key to stopping corruption. At the London conference, Ukraine will make a heavy sell of how digital transparency can protect the integrity of the reconstruction contracts. One thing Ukraine has shown is that it is hugely resourceful, adaptive and digitally resilient – the Estonia of the east.
Artem Shevalev, a board member for the European Bank for Reconstruction and Development said: “Ukraine is the most decentralised and networked societies in the former Soviet Union.”
It will unveil the Dream ecosystem, intended to allow public monitoring of all stages of postwar reconstruction projects, from initial damage registration to commissioning, financing, procurement, construction and commissioning. Every object from school, hospital to house that will need to be rebuilt will have its own identifier. In theory, every dollar in this digital Marshall plan can be tracked. There are already nearly 20,000 compensation claims registered that eventually will be assessed by local government officials.
Viktor Nestulia, the head of Ukraine’s support, open contracting partnership, and chair of Rise Ukraine coalition, is optimistic. “As a civil society representative, I am not concerned at all about transparency in reconstruction. Ukraine is a champion in transparency. Recently there was a new transparency index and we were number one in the world on public procurement, treasury transaction, asset declaration, beneficial owners, financial reporting of companies, extractive industries, and many other datasets are available all though digital.”
He worries whether Ukraine has the capacity to make the right decisions. The president’s office, used to operating a necessarily secretive and centralised war economy, is going to find it hard to hand the reins back to the people.
“High-level actors come to Kyiv, they go to Bucha and meet Zelenskiy,” says Halushka. “What is missing and what used to be an integral part of a visit was a meeting with civil society before the meeting with officials.”
