Ukraine

Europe Report N°247 - Ukraine: Will the Centre Hold?

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What’s the issue?

While the war in Ukraine’s eastern province of Donbas rumbles on, the regions of Polissya and Zakarpattya in the country’s west are corroded by systemic state corruption. Resentment toward Kyiv in these peripheral regions is pushing many into the shadow economies and exacerbating state fragility.

Why does it matter?

Widespread corruption in Ukraine’s western regions demonstrates that state fragility is not limited to areas controlled by Kremlin-backed separatists. This is undermining Kyiv’s capacity to withstand Russian aggression and restore its sovereignty over Donbas, meaning Moscow’s withdrawal from eastern Ukraine will not necessarily lead to national cohesion.

What should be done?

Kyiv must acknowledge that Moscow, while clearly the aggressor in Donbas, is not the root cause of all the country’s challenges. Ukraine’s leaders need to correct their failing battle against corruption. Kyiv’s international backers, in particular the European Union, must attach stricter conditions to financial assistance.

Executive Summary

As Kyiv battles Kremlin-backed separatists in its eastern region of Donbas, it is also waging a half-hearted war against corruption whose mismanagement risks further undermining national stability. While several million Donbas residents live under separatist rule, Ukrainians elsewhere are losing faith in the country’s laws and institutions. The result is a dramatic weakening of the state: millions of dollars bypassing the official budget, chronic low-level violence in centres of illegal trade, and swathes of rural territory with no legal workforce or tax base to speak of. Kyiv and its allies need to acknowledge their failures in battling corruption and quickly change course. If not, centrifugal tendencies could potentially spread well beyond Donbas.

At every opportunity, Kyiv reminds its constituents and international backers that Kremlin aggression is the single greatest threat to the country’s statehood. They are right: between the invasion of Donbas, the annexation of Crimea, possible infiltration of military and security structures, and insidious information warfare, Moscow has played a lead role in Ukraine’s destabilisation. Securing Ukraine’s future will require the West to take a firm, consistent line on Russia, namely maintaining all sanctions until Moscow withdraws fully from Donbas. Yet as Kyiv and its allies acknowledge these truths, they must also face the profoundly corrosive effects of continuing systemic corruption.

These are suggested by the phenomena of organised crime in, and mass migration from the two western Ukrainian regions of north-western Polissya (along the Belarusian and Polish borders) and south-western Zakarpattya, next to Hungary. Outside meddling is present in both regions, but corruption at all levels of government is the decisive factor behind the social problems they face.

Just as Kyiv cannot afford to maintain its current stance on Donbas, where it lacks a coherent policy to reintegrate a war-scarred population ruled by Kremlin-backed separatists, it cannot retain its current haphazard approach to vulnerable populations on the far side of the country. The latter, in large numbers, are seeking better livelihoods across borders or retreating into shadow economies. Poorly-conceived attempts to confront these behaviours – such as ill-timed language laws and disingenuous crackdowns on organised crime – may be only fuelling resentment toward Kyiv. Instead, Kyiv must confront their root cause by following through on old promises to hold accountable corrupt officials at all levels.

Many residents of these areas live on the state’s margins. In Polissya, tens of thousands work in a multimillion-dollar, illegal amber trade controlled by armed gangs and allegedly sheltered by officials. In Zakarpattya, much of the working-age population relies on labour migration and tax-free remittances that deprive entire communities of their workforce or tax base. Some ingredients of the Donbas conflict – strong regional identities; deep resentment toward an ineffectual, heavily centralised state; corrupt law enforcement and criminal shadow economies – are also present here, and outside actors – including Moscow and Budapest – could use it to stir up separatism. Absent organised irredentism, these regions’ alienation from the state still casts doubt on whether Kyiv is capable of governing its vast, diverse territory in an inclusive manner.

Since the break-up of the Soviet Union, Ukraine’s leaders have reaped colossal profits from politics. It is no surprise, then, that a large part of the population – between one-quarter and half, according to various estimates – operates in the shadow economy: they see leaders prioritising private wealth over public good and follow suit. Kyiv has made large strides since Maidan, with a new anti-corruption bureau, a new police force, and momentum toward regional decentralisation – yet Ukrainians remain largely convinced that their leaders systematically obstruct or derail reforms to protect personal fiefdoms and corporate bottom lines. Ukraine must get serious about fighting corruption, or risk becoming a state that people on the margins choose to abandon.

Recommendations

To the government in Kyiv:

  1. Create a specialised national anti-corruption court with regional representation, in line with the Venice Commission’s October 2017 recommendation.

  2. Amend national legislation governing the use of mineral resources to facilitate licencing of small, local mining cooperatives managed at the oblast, district or hromada (community) level.

  3. Address language controversies by: (a) Revising ethnic language elements of the September 2017 Law on Education; (b) Developing legislation in partnership with education experts from the Hungarian, Romanian and other minority-language communities to augment Ukrainian-language instruction in minority language schools; (c) Following best practices regarding mother tongue-education for persons belonging to national minorities.

  4. To reduce incentives to take bribes and combat personnel shortages, raise salaries of police, doctors, teachers, and other civil servants incrementally through 2020, adjusting target salaries to account for inflation when necessary.

  5. Ensure decentralisation reform in Zakarpattya and other minority-majority regions proceeds in consultation with local communities, including but not limited to minority community leaders.

To the Rivne, Volyn, and Zhytomyr oblast governments:

  1. Oversee transparent, lawful provision of amber mining licenses for community-based cooperatives.

To the Zakarpattya oblast government:

  1. Approve the Office for Self-government’s plan for redistricting within the framework of decentralisation reform.

To the government of Hungary:

  1. Denounce calls by Hungarian officials for Zakarpattian autonomy.

  2. Refrain from blocking Ukrainian-led initiatives in multilateral bodies, except for cases when these could pose a direct threat to either human rights or the principles of the body in question.

  3. Revisit implementation of the 2010 Law on Citizenship for compliance with OSCE best practices, which call on states to ensure that “conferral of citizenship [to ethnic kin in other states] respects the principles of friendly, including good neighbourly, relations and territorial sovereignty”.