While some hard-right politicians in Washington are trying to make political hay with accusations of corruption lobbed at Ukraine, two major recent political events suggest that Kyiv is becoming more responsive to the Biden administration’s entreaties to fight corruption.
The first is that President Volodymyr Zelenskyy replaced his hard-working Defense Minister Oleksii Reznikov with Rustem Umerov, a State Property Fund boss, corruption fighter, and Crimean Tatar by ethnic origin. Beyond being a subtle way of once again signaling that Crimea is a part of Ukraine, this is an effort to neutralize the miasma of corruption that enveloped the government of Ukraine since before the war.
The second shoe dropped when the Ukrainian Security Service arrested Igor Kolomoisky, a one-time business partner and mentor of Zelenskyy’s, for alleged money laundering. Kolomoisky is a U.S.-sanctioned oligarch who allegedly defrauded his Privat Bank depositors to the tune of $6 billion.
These moves may be signals that Zelenskyy means business when it comes to fighting corruption, and perhaps a pre-2024 presidential election show-and-tell. But it also has a vital importance to U.S.-Ukrainian relations and the prosecution of Ukraine’s war with Vladimir Putin’s Russia. The former is of notable importance, given that some noted conservative commentators Tucker Carlson, and various Republicans on Capitol Hill, are trying to use Ukraine’s endemic corruption to justify cutting military aid to Kyiv.
Losing the Peace
Since World War Two, America has consistently won military campaigns but lost the peace. Vietnam, Iraq, and Afghanistan showcase reconstruction bungling and failures in nation-building. A lack of vision, American cultural tone-deafness, local graft and corruption, and failure to either delegate power or centrally administer it, collectively resulted in failed reconstruction policies that ultimately harmed America’s national interests.
These tragedies are as repetitive as they are predictable. If “war is an extension of politics by other means,” as Clausewitz posited, then reconstruction politics is war by peaceful means. Yet, too often, war and reconstruction are seen as discrete enterprises. In South Vietnam, the regime of Ngô Đình Diệm was allowed to fall, despite Diệm’s effective although heavy-handed anti-corruption activity, because many in the U.S. establishment forgot that the battle against corruption was synonymous with the wider war.
The U.S. government ignored Vietnam's lessons at its own peril. When the United States invaded Iraq with a poorly defined political horizon and reconstruction plan, the Pentagon under Donald Rumsfeld and his successors were unprepared to administer the country after it naively disbanded Iraq’s ruthless Baathist military and bureaucracy. In this case, and many others, the failure to develop economic policy resulted in the intensification of Islamist terrorism.
A Chance to Win the Peace
If we don’t want to repeat these mistakes in Ukraine, the United States, EU members, and the Zelenskyy administration need to begin planning for reconstruction now—for both capacity building for military victory and for peacetime reconstruction.
However, purely humanitarian ventures often rapidly exhaust donors’ political will. Ukraine’s reconstruction is in America’s national interest and should be a win-win for Ukraine, Europe, and the United States. Investment in Ukraine should be profitable during the post-war reconstruction. Ukraine is the breadbasket of Europe, rich in energy resources and raw materials, including rare earth elements, well endowed with human capital, and with a population eager to join the American-led democratic order. Ukraine’s reentry into the world economy would be a great economic asset for the U.S. business in the form of trade and investment.
From the U.S. side, by far, the biggest problem is graft, often stemming from the opaque system of bidding for contracts. The United States spent 141 billion dollars in Afghanistan, just shy of the $150 billion total (adjusted for inflation) that was given to sixteen European countries to rebuild after World War II under the Marshal Plan. $220 billion was spent in Iraq, only for Iraq to become an Iranian sidekick and target of China’s “going out” investment bonanza.
The largely unaddressed problem endangering future Ukrainian reconstruction is the abuse of sanctions tools. Western powers do not trust Ukraine’s sanctions, as the evidence for violations is secret and is not presented when sanctions reciprocity is requested. More cooperation between the Ukrainian authorities and Western sanctions enforcers is necessary, including transparency of evidence subject to review in Ukrainian and international courts.
“Since [February 24, 2022], more than 5,715 individuals and 3,153 legal entities have been added to the Ukrainian sanctions list, many of whom were sanctioned for facilitation of circumvention of the existing sanctions and other restrictive measures on doing business in Russia”, writes Hanna Shtepa, the head of the International Commercial & Trade (ICT) practice in the Kyiv office of Baker McKenzie. “More than 2,300 criminal cases were reported to be commenced in Ukraine regarding collaboration alone.”
Ukraine has introduced a wide array of sanctions against companies doing business with Russia. Sanctions are a necessary tool to cut the flow of military or dual-use technology to the Russian military-industrial complex and reduce revenue, but in the opaque Ukrainian political and business environment, this tool has morphed into an overused, abused, and politicized weapon that in some cases has nothing to do with Russia according to claims of affected Ukrainian entrepreneurs. Lack of transparency and absence of due legal process have led to suggestions that the Ukrainian sanctions regime is not free of corruption and vested interests.
There is an array of tools that can be employed that will help. Blockchain technology could track public money. Donors should maintain publicly available centralized databases of aid projects, running transparent, open bidding processes. However, all of these are band-aids without political buy-in from the U.S. establishment. What the United States needs is another Truman Committee.
The Truman Committee of the World War II-era was a special congressional committee designed to combat war profiteering, ensure fair rates for government contracts, and plan for postwar reconstruction. The committee created the political will that turned contract oversight from a dull administrative task into a bipartisan crusade, creating elite and popular support for sound reconstruction policy.
While U.S. reconstruction failings are best defined by disinterested or inept leadership, Ukrainian failures are better understood as agent problems. Political elites are energized to act but not always able to enact their vision. However, Ukraine is at least taking important steps to remedy this situation as the Reznikov replacement and Kolomoisky arrest suggest.
Zelenskyy also has proposed capital punishment for corruption by equating it with treason, identifying it as just as dangerous to the Ukrainian war effort as Russian bombs. Ukraine already has a High Anti-Corruption Court, and an equivalent of the Truman Committee reporting to the Ukrainian Rada, the National Agency on Corruption Prevention. However, despite these efforts, Ukraine has a long way to go.
Ukraine needs to tighten its wartime anti-corruption act, including making sanctions transparent and compatible with the West. President Zelenskyy is right: corruption in any form is just as damaging as Russian violence. But the proof of the pudding is eating: can Ukraine bring corruption under control so that its war effort becomes unstoppable and its victory realizable?
Ariel Cohen, Ph.D., is a nonresident senior fellow at the Atlantic Council’s Eurasia Center and is Managing Director of the Energy, Growth, and Security Program at the International Tax and Investment Center. He is the author of Russian Imperialism: Development and Crisis.
Wesley Alexander Hill is the Lead Analyst and International Program Manager for the Energy, Growth, and Security Program at the International Tax and Investment Center. He researches geopolitical and geo-economic issues involving China, Eurasia, and Sub-Saharan Africa.