A new Ukrainian law stipulates that all the country’s politicians and higher officials must disclose their wealth and make the information available to the public on the internet. The deadline for compliance was October 30.
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The outcome of the cumbersome provision, so detailed that it covered personal items such as watches, has been astounding to the public. To the amazement of most and disapproval of many, it turned out that Ukraine’s political and administrative elite holds plenty of cash – the amounts exceed the equivalent of $1 million in some cases.
Although the practice may reflect justified distrust in the country’s banking system, such revelations can only exacerbate the citizens’ cynicism about integrity in the political class and civil service.
Ukraine faces scores of problems, but few as daunting as its oversized, dysfunctional bureaucracy and ineffective judicial system. Stemming from these Soviet-era leftovers are inefficiency, corruption and lack of proper protection of property rights.
Courts and governance
For the last few years, the government in Kiev has been trying to address the problems of the law, courts and administration, but entrenched interests have largely frustrated reform attempts. Lately, though, new coalitions for change are emerging in Ukraine’s civil society, particularly in business. Reality on the ground there is such that the implementation of big-ticket reforms requires an additional push to succeed, from both inside and outside the country. Wealth disclosure rules have added to the internal pressure for change.
The external sources have been the European Union and the International Monetary Fund. Prescriptions from the IMF have frequently proven toxic for troubled countries, as the fund’s strict measures tended to overburden their public finances and ignore business and social costs. The IMF’s involvement in Indonesia in the 1990s, for example, was calamitous; also, the fund’s stance on the Greek crisis was questionable. All this said, the IMF’s pressure on Ukraine has been a positive factor. It offered politicians in Kiev an additional justification to push for socially painful reforms, such as streamlining the public sector.
The number-one challenge for Ukraine remains to improve governance – a crucial condition for allowing business to grow and expand, and thus beginning to solve the social problems and reducing poverty. Improvement here would also stop the exodus of talent. Ukraine stands to lose a lot in this respect. For example, it is one of the world leaders in training information technology engineers. As things are now, a lot of the best personnel are leaving the country.
The Russian limit
Aside from IT, there are other branches that could prosper, especially agriculture. Ukraine is famous for its fertile farmland but its agricultural sector remains hampered due to the lack of sufficient property protection rights and privatization.
Another fundamental challenge is the country’s relationship with Russia. Geopolitically, it is clear that Ukraine will not be able to join the European Union. Regardless of what the principles of self-determination say of the rights of nations, Russian power will not allow for that. It is worth remembering, though, that from the 1950s to the 1980s Austria managed to prosper when sandwiched between two political blocks. Ukraine can find its place between Russia and the EU as well.
A stable and prosperous Ukraine is essential for Europe. Kiev deserves all the help it can get from the EU but in the end, Ukraine can solve its problems only by itself.