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19 November 2015

Is Ukraine finally getting to grips with its corruption problem?

Two years of war, illness and economic pain has followed Ukraine’s revolution, and reforms are still slow to arrive.

By Oliver Bullough

If you want to know why Ukraine had a revolution, consider this: it has one of the world’s fastest-growing HIV epidemics, and yet officials deliberately overcharged their own health ministry for anti-retrovirals to make money for themselves. In 2013, about a quarter of the money intended for HIV medicines was embezzled, while more than half the Ukrainians who died of Aids-related conditions lacked access to drugs.

And that was not an isolated example: children lacked vaccines, haemophiliacs lacked clotting factor, diabetics lacked insulin. Patients had to bribe doctors to obtain the drugs the state was supposed to provide for free, while officials and intermediaries secretly got rich via Cyprus-registered shell companies.

Ukraine has finally moved to break the pharmaceutical mafia. Under three deals signed this month, the health ministry has outsourced drugs procurement to two UN agencies and to Britain’s Crown Agents. The drugs available should be better and cheaper – by between 10 and 25 per cent – so more can be bought for people who need them, and those that are bought will be more effective. Meanwhile, the criminals will lose out: it’s a win/win/win.

“We are drastically changing the rules of the game, we are changing a system that has been around for years and years, and which has proven to be inefficient, corrupted, non-transparent,” Deputy Health Minister Ihor Perehinets told me.

Ukraine’s revolution happened almost two years ago. Those have been years of war and economic collapse and the healthcare situation has deteriorated still further. This summer, polio paralysed two Ukrainian children after vaccination rates dropped to just 14 per cent. The only other countries in the world with polio outbreaks are Pakistan, Afghanistan, Madagascar and Guinea. Ukraine’s revolutionaries wanted to move closer to Europe, but instead got a disease found in the poorest parts of the developing world.

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Anti-corruption activists have been highly critical of the health ministry for taking so long to act, but Alexandra Ustinova of the Anti-Corruption Action Centre was delighted it had finally done so.

“Of all the years of healthcare in independent Ukraine, this is the first real reform,” she said. “We have taken 2.3 billion hryvnias ($100m) from the oligarchs and given them to international organisations. It is massive.”

It is of course heartening that officials in Kiev have finally taken a step to fight the endemic corruption that has plagued Ukraine since independence, but it is depressing too. The post-revolutionary government should have been passing much more significant milestones than this long ago. This reform affects just one-third of one part of one ministry’s procurement budget. Other ministries and agencies – among them: the judiciary, the prosecutor’s office, the customs service – are not only unreformed, but are still staffed by officials appointed under the old regime. These people are not just delaying reforms, but actively opposing them.

“Corrupt actors within the Prosecutor General’s office are making things worse by openly and aggressively undermining reform,” said US Ambassador Geoffrey Pyatt in an unusually outspoken assault in September. “These bad actors regularly hinder efforts to investigate and prosecute corrupt officials within the prosecutor general’s office.  They intimidate and obstruct the efforts of those working honestly on reform initiatives within that same office.”

As the second anniversary of the revolution approaches, Ukrainians are increasingly wondering if these saboteurs are winning. Prosecutors have failed to bring any of the corrupt officials of the previous regime to trial, or to persuade foreign states to repatriate their stolen money. And they have the connivance of others. Earlier this month, Justice Minister Pavlo Petrenko accused parliament of deliberately neutering a new law intended to help bring stolen money home.

During the revolution, Sergei Leshchenko was a journalist who specialised in revealing Ukraine’s rulers’ corruption. While the president was amassing a fortune, parliamentarians cut side deals in what Ukrainians referred to as “the biggest business club in Europe”. Leshchenko decided to run for parliament and to try to improve the system from the inside, and won a seat in October last year.

“The direction of travel is correct, but it is too slow. This is a parliamentary republic, and you need consensus,” he says. We were eating lunch in parliament’s canteen, and he indicated his fellow deputies with a sweep of his head. “There are a lot of politicians here who are not motivated. Being optimistic, maybe 25 per cent of us want proper reform. In reality, it’s probably less.”

Although many Ukrainians still back President Petro Poroshenko, at least partly thanks to his response to the Russian destabilisation of Ukraine’s east, support for Prime Minister Arseny Yatsenyuk has collapsed so completely that his Popular Front party did not even stand in local elections last month. Both president and premier insist they are committed to transforming Ukraine into a European country but, when speaking privately, officials often despair of the muddle they have created. There is still no truly independent judiciary, the tax system is a mess, officials remain under-paid, and there has been no purge of the old regime’s corrupt officials.

“I am angry all the time, I feel ready to make a public statement and quit. About 90 percent of the time I think it’s all a disaster,” said one senior official, who asked to remain anonymous so he could speak his mind. “Every day I get approached through friends, through relatives, with offers of money. Any ordinary man would take it, and I’m beginning to think I’m acting like a Greek philosopher, like Diogenes in his barrel or someone. My wife thinks I’m an idiot.”

He was angry as well that European countries haven’t done more to return the money stolen from Ukraine and stashed in Western bank accounts. “They seem to prefer to have people in London buying property, or in Monaco, Austria or Slovenia or wherever, than to help us,” he said. “But then, if nothing is being done in Ukraine, it’s stupid to expect other countries to do it for us.”

Is he worried that the people will take to the streets once more?

“I would love to see that. I would join them in a second,” he said.

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