Ukraine War | Ukraine: Powder Keg of Corruption
Ukraine has long been unable to survive without foreign aid. The country needs weapons to continue defending itself against the Russian invasion. And money to keep the state and society running. Wladyslaw Rashkovan of the International Monetary Fund estimated Ukraine's monthly need for foreign funds to survive at five billion US dollars as early as 2022. The hundreds of billions for reconstruction will be added on top of that.
Since the Russian invasion three years ago, the Ukrainian state budget has been in massive trouble. Kyiv has to spend almost all of its tax revenue on the military and the purchase of new weapons. Social spending and salaries are supposed to be covered by foreign funds. But this is precisely where problems arise. In the run-up to the reconstruction conference in Rome, which began this Thursday, Ukrainian media reported that the government has so far "found" $23 billion for the coming year, but $42 billion is needed.
The EU is looking for billions for next yearThe EU is attempting to fill this funding gap, which is also due to the US withdrawal. The Financial Times reports from Brussels that they are searching for the missing $19 billion. It won't be easy. "There are growing concerns about next year, and many stakeholders who were counting on a ceasefire this year are having to revise their calculations and realize that there is a hole in the budget no matter what the approach," the Financial Times quoted an EU official as saying.
In Rome, this problem will be kept quiet, and another issue will also not be addressed amid the glittering handshake photos and the boastful statements of solidarity with Ukraine: the slow payment process. Time and again, the promised funds fail to arrive on time. This is a problem for Kyiv, as loans are difficult to obtain and even harder to service, forcing the government to repeatedly dip into its gold reserves. Fears in the Ukrainian media that Kyiv is facing insolvency and could thus slide into national bankruptcy, which have been regularly expressed recently, have so far not materialized.
Ukraine is burdened by gigantic debtsKyiv can use every cent and every hryvnia, given its national debt of $181 billion. According to a forecast by the International Monetary Fund, the debt is expected to exceed the gross domestic product of $203 billion by the end of the year. The hefty salary increase for civil servants of over 20 percent since the beginning of the year aroused even more discontent among the population, especially since other benefits such as pensions grew significantly less and inflation was not offset.
Contrary to popular belief, fewer and fewer Ukrainians believe in a prosperous future.
The biggest problem, however, remains pervasive corruption. Statements like those by Prime Minister Denys Shmyhal, that the fight against corruption in Ukraine has been praised at the highest levels and that Ukraine has "the largest and best anti-corruption infrastructure," amount to a denial of reality. Equally questionable are assessments by the Organization for Economic Cooperation and Development that Kyiv is making tremendous progress in the fight against corruption and is fighting it at the level of other European countries. If that were the case, all of Europe would have a problem.
Lawyer Mykhailo Honcharuk sees a pattern here. Claims that Ukraine is resolutely fighting corruption are as old as the modern state, Honcharuk writes in an article for RBK-Ukraina. However, little to nothing has been done. As if to prove it, the case of Oleksiy Chernyshev is currently gripping the country . The Deputy Prime Minister and Minister of National Unity—a position created specifically for him by President Volodymyr Zelensky—is allegedly involved in a real estate scandal that cost the Ukrainian state one billion hryvnia (approximately €28.5 million at the time) and enriched Chernyshev himself by 14.5 million hryvnia (€300,000).
Fight against corruption remains a toothless sloganTo get an idea of the extent of corruption and its consequences, just take a look at Ukrainian media. The news site Zensor.net even lists "embezzlement of funds" as a separate section.
One of the new arrivals in recent days: Oleksandr Liyev, former head of the Defense Ministry's Department for Defense-Technical Policy, Weapons Development, and Military Technology. He allegedly ordered anti-tank missiles for 90 million hryvnia (around €2.2 million at the time) in 2022 and 2023. What was delivered was unusable scrap.
In Kharkiv, Ukraine's second-largest city, a former deputy mayor is accused of embezzling 5.4 million hryvnia (109,000 euros). He allegedly paid a factory director 30 percent above the market price for defense equipment. The equipment was never installed. This, in part, allowed the Russian army to penetrate the area. Similar to the case of Sumy, where defense equipment is said to be nonexistent.
The list could go on and on, encompassing virtually every area, be it food and jackets for the army or parts for escalators in the Kyiv Metro. Hardly a week goes by without a new scandal.
A new corruption scandal almost every dayThe persistent and widespread corruption and failure of the authorities is not only an embarrassing sign to the outside world, but also a continuing threat to Ukrainian society and ultimately to the state.
In a June survey conducted by the Socis polling institute, 48.5 percent of respondents identified corruption as Ukraine's biggest problem. The ongoing massive Russian attacks were "only" the second biggest problem, with 41 percent.
Such results are a slap in the face for Zelensky's government, revealing a massive loss of trust in the president, who increasingly sees himself as untouchable. Other polls are also likely to be dissatisfied with the presidential office. When asked by the pro-government Kyiv International Institute of Sociology (KMIS) which direction Ukraine is heading, 41 percent of respondents answered: authoritarianism. According to the KMIS, this is primarily due to corruption, restricted freedom of expression, and the increasing concentration of power in the president's hands.
Corruption poses a greater threat to Ukrainians than bombingsUkrainians are also increasingly critical of the government's international presence. Just one in three (36 percent) believe that Kyiv is "doing everything possible for peace," according to a telephone survey conducted by the sociologists' group Rating in early July. In June, this figure was down to just under one in two (48 percent).
Hopes for tangible results from the expected third round of talks with Russia are fading. And with them, hopes for an early end to the war. Contrary to government claims, fewer and fewer Ukrainians believe in a prosperous future within the European community. In an ongoing survey conducted by the KMIS, 47 percent of respondents said they expected Ukraine's situation to be "bleak" in ten years, while 43 percent believe in EU membership. The trend is particularly worrying: In December 2024, 57 percent still saw a European future; a year earlier, the number was as high as 73 percent. Ukraine has reached a tipping point, believes former presidential advisor Oleksiy Arestovych . Further weapons from the USA (and ultimately also funds from Europe) cannot save Ukraine as long as it is unwilling to reform its state and society – meaning its nationalist understanding of society and its brutal treatment of its people. This is how Arestovych commented on the KMIS survey on his Telegram channel.
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