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1 July 2021

Can Volodymyr Zelensky take on Ukraine’s oligarchy?

The reopening in the pandemic is shedding light on the country's most endemic problem: corruption.

By Ido Vock

Jazz is somewhat incidental to the Leopolis Jazz Fest, which was held in Lviv, Ukraine last month. Despite the star-studded programme, with many performers elated to be playing their first live gigs in close to a year, some attendees appeared more interested in rubbing shoulders with each other than listening to the excellent performances by the likes of the British singer Seal and the American saxophonist Kamasi Washington.
The festival, founded by the Lviv-born oligarch Mikhail Fridman – the eighth-richest man in Russia, according to Forbes –  has been a regular meeting point of the Ukrainian political elite since its foundation in 2011. This year, it was also among the first mass events to be held in Europe since the beginning of the pandemic.
In the festival’s VIP area, regional governors and TV anchors mingled with some of the oligarchs who still dominate much of the country’s economy. Attendees needed to present a negative PCR test (though only about 4 per cent of Ukrainians have received at least one dose of the vaccine, according to figures collated by Our World in Data, a project at the University of Oxford). 
But behind the whitened smiles and elegant outfits, there is a mood of anxiety among elites. Ukraine is still a country at war in its east and that was dismembered after the 2014 Russian invasion, when Crimea was annexed to the Russian federation. Although it didn’t feel like it at the festival, the country remains one of the poorest in Europe per capita, according to IMF data, alongside Moldova and Kosovo, with its growth hit first by the war and later by the pandemic. Corruption is endemic, particularly in the judicial system.
However, the ongoing war in Donbass and Luhansk, the eastern regions controlled by pro-Russian separatists, and the failure of any peace process to make much headway are not viewed generally as the biggest immediate problem in Ukraine. In April, after a Russian troop build-up on the border, some Ukrainians worried the war would tip into large-scale hostilities again – but as long as the conflict remains relatively contained, issues around the rule of law, constitutional reform and corruption are considered more pressing.
“The war is less of an issue than corruption,” according to Roman Shpek, a former economy minister.
Indeed, corruption colours every conversation. The pervasive influence of oligarchs on politics and the economy is considered a barrier to growth and better relations with the West. And last month, US president Joe Biden insisted that Ukraine would only be able to join Nato once it roots out corruption.
To this end, President Volodymyr Zelensky has planned a crackdown on the influence of the ultra-rich via a new “de-oligarchisation” bill. “We are building a country without oligarchs … A country for forty million citizens, not for a hundred of Forbes,” he said when announcing the law.
The law would create a list of people who fit three of four criteria: holding assets worth over around $80mn, being involved in politics, having considerable media influence and benefiting from monopolies. Yet there are plausibly several hundred people the bill could apply to, and the relative vagueness of the criteria have led critics to suggest they could be applied harshly towards opponents of the government and leniently towards its friends.
However, Zelensky’s willingness to prosecute billionaire businessman Igor Kolomoisky, with whom he has long been viewed as close, has raised hopes that he may be sincere. Kolomoisky is a former lead shareholder of PrivatBank, which was nationalised in 2016 after investigators uncovered evidence of fraud worth over $5bn. The US has imposed sanctions on him for alleged corruption and anti-democratic activities, particularly while he was governor of the Dnepr region in 2014-2015.

[See also: What Russian troops on the Ukrainian border mean for peace in Europe]
In another facet of the fight against corruption, officials in the Lviv region, on the border with Poland, speak of disrupting the lucrative smuggling networks reaching into the EU as one of their most intractable challenges.
Ukraine’s border with Poland is one of the EU’s busiest external borders, both for legitimate and illegitimate traffic. A Ukrainian customs officer might make perhaps €500 a month – a small sum compared to the potential returns pliant officials can expect for looking the other way. Even diplomats have been accused of taking part in smuggling operations, which most commonly include goods such as cigarettes and alcohol.
Still, even if corruption in Ukraine remains an enormous drag on the economy, that it is perceived to have increased in recent years is actually positive, according to Olexiy Haran of Kyiv Mohyla University. “Under [former President] Viktor Yanukovych, there was massive corruption, but the TV channels were controlled by the government. There was some freedom but the media mostly tried to conceal the corruption.” This changed after the 2014 Maidan Revolution that ousted Yanukovych, he says. Ukraine’s broadly free media now openly exposes corruption, which has to an extent helped tackle the problem – but at the cost of a perception that it is increasing, not decreasing.
“Ukraine is the most transparent corrupt country,” observes Orysia Lutsevych, a native of Lviv and the manager of the Ukraine Forum at the Chatham House think tank.
With elections due in two years, some observers believe Zelensky needs a grand narrative on which to run for re-election. His party has been sliding in the polls as voters appear to tire of his administration’s failure to follow through on long-promised reforms. Having failed to make much progress on the conflict, he has now turned instead to the “de-oligarchisation” effort.
Whether Zelensky’s reforms live up to his lofty rhetoric will have implications both for his re-election hopes, as well as the prospects for improved relations with the West. Success could cost him support among some of the wealthier attendees of the Leopolis Jazz Fest, though.

Ido Vock was a guest of the Leopolis Jazz Fest. 

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