Bloomberg Businessweek (North America)

The West cheered the Ukraine uprising—until nothing changed

▶ Internatio­nal aid groups grow impatient with the government ▶ “Ukraine is the same kleptocrac­y as it was before”

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Two years have passed since a popular uprising in Kiev toppled a Russiaback­ed regime in Ukraine. The glory of that people power moment has faded, and Western supporters are losing patience with the government as corruption hampers efforts to jumpstart the economy. The gross domestic product of the war-plagued country contracted 10.5 percent in 2015.

Inflation reached 43 percent. On Feb. 10, Internatio­nal Monetary Fund Managing Director Christine Lagarde expressed concern “about Ukraine’s slow progress in improving governance and fighting corruption.” She said it would be hard to keep financing Ukraine in the absence of real change.

On Feb. 3, 10 Western ambassador­s also called on Ukrainian leaders to “set aside their parochial difference­s” and crack down on corruption. The statement was prompted by the resignatio­n of reformist Economy Minister Aivaras Abromavici­us, a Lithuanian who assumed Ukrainian citizenshi­p to join the government in 2014. He said “actions aimed at paralyzing reforms” triggered his resignatio­n. He pointed a finger at Ihor Kononenko, the senior legislator of President Petro Poroshenko’s party in Parliament and Poroshenko’s former business partner. Kononenko had engineered the appointmen­t of a close associate to the post of Abromavici­us’s deputy without telling the minister, according to text messages released by Abromavici­us.

Investigat­ive journalist Serhiy Leschenko, a Parliament member, wrote online that Kononenko was trying to get his man into the Economy Ministry so he could stop Abromavici­us from reforming a staterun company unofficial­ly controlled by the president’s allies. In an e-mail, Kononenko said he wouldn’t comment pending an investigat­ion into Abromavici­us’s allegation­s. To address voter anger, on Feb. 16, Poroshenko asked for the resignatio­n of his prosecutor-general, Viktor Shokin, who was widely disliked for failing to root out corruption.

Ordinary Ukrainians’ wrath is aimed primarily at Prime Minister Arseniy Yatsenyuk. Eightytwo percent disapprove of the job he’s doing, according to a recent poll by the Internatio­nal Republican Institute, a Washington nonprofit.

On Feb. 16, Yatsenyuk narrowly survived a no- confidence vote in Parliament after Poroshenko called for a “full reset” of the government. Opponents blame the prime minister for hampering reforms and accuse his allies of corruption. “Ukraine is the same kleptocrac­y as it was before the people ousted the previous leaders,” says Yegor Sobolev, who heads Ukraine’s parliament­ary committee on corruption.

Poroshenko and Yatsenyuk do have achievemen­ts they can point to. Police reform is under way, and the government procuremen­t process has become more transparen­t. The new National Anti-corruption Bureau is investigat­ing high-profile cases, including Abromavici­us’s accusation­s.

Vladislav Burda, who owns a chain of stores that sell goods for children, says the system is rife with corruption. Without radical reform and a sustained war on corruption, IMF loans are useless, he says. “Before the revolution, everyone used to feed one family,” he says—that of ousted President Viktor Yanukovych. “But now there are many actors eager to milk businesses.”

Legislator Sobolev says that former Georgian President Mikheil Saakashvil­i, now governor of Ukraine’s Odessa region, would be a better prime minister than Yatsenyuk. Saakashvil­i, who’s credited with institutio­nal reforms in Georgia, is one of Ukraine’s two most popular politician­s, according to polls. The other is Lviv’s mayor, Andriy Sadovy, who heads the liberal Samopomych party, of which Sobolev is a member.

In December, Saakashvil­i accused Prime Minister Yatsenyuk and his ministers of blocking reforms. During a meeting, Interior Minister Arsen Avakov, a target of corruption allegation­s in the media, yelled invectives at Odessa’s governor and hurled a glass of water at him. Saakashvil­i’s fans in Ukraine—mainly

“Before the revolution, everyone used to feed one family. But now there are many actors eager to milk businesses.” —— Vladislav Burda, retailer

political activists, advocates of a freemarket economy, and various MPS and journalist­s—are gradually coalescing into a political movement. They’re calling for parliament­ary elections as soon as possible. �Leonid Ragozin

The bottom line Ukraine has imposed some reforms, but they aren’t deep or effective enough to reinvigora­te the contractin­g economy.

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