History provides insight on how to properly reconstruct Ukraine: anti-corruption

Even though there doesn’t seem to be a clear end in sight to the Russian military attack on Ukraine, discussions are already happening about how to rebuild it. At the Lugano summit in July, the president of Ukraine, Volodymyr Zelensky, talked about how important it was to start making plans for recovery before the end of open hostilities. The International Expert Conference on the Recovery, Reconstruction, and Modernization of Ukraine will be held on October 25 at venues hosted by the EU Commission and the German G7 Presidency. Conversations like these and others about Ukraine’s recovery and rebuilding are an important chance to include important anti-corruption tools in a process that will cost hundreds of billions of dollars and needs a lot of help from around the world.

If corruption is successfully fought, especially by reducing the power of kleptocratic oligarchs and keeping up efforts to reform political institutions, reconstruction funds will be used in a smart way. A strong plan to fight corruption is an investment in Ukraine’s ability to achieve and keep peace. In this paper, we suggest ways for governments, donors, and civil society to help reduce the chances of corruption during Ukraine’s rebuilding. We do this by using the knowledge we’ve gained from other rebuilding projects in the region and elsewhere.

We look at Afghanistan, Bosnia and Herzegovina, and Czechoslovakia, three different countries where corruption made it hard to rebuild after a war. Corruption has consistently undermined efforts at post-war reconstruction in a variety of locations, political histories, and security contexts. We draw attention to a number of important lessons and factors that should guide Ukraine’s restoration efforts. [1] These lessons back up our general advice, which we also talk about in this article, that anti-corruption programs should be given the most attention.

Afghanistan

Even though the situations in Afghanistan and our other examples are very different from those in Ukraine, we may be able to use what we’ve learned to help guide plans for rebuilding and, more specifically, plans for reducing corruption.

A lack of accountability, corruption, and bad management made it hard to rebuild Afghanistan’s infrastructure and strengthen its institutions. Out of the $7.8 billion in capital assets, it seems that $2.4 billion was used wrongly, left behind, or destroyed in Afghanistan. The Special Inspector General for Afghanistan Reconstruction (SIGAR) found that American employees and contractors were suspected of bribery, fraud, kickbacks, and money laundering. Even though Afghanistan is the main topic of the reports, SIGAR’s analysis of American goals and strategies emphasizes the need for clear oversight from the start of reconstruction efforts.

The United States didn’t come up with a clear plan for rebuilding Afghanistan or put enough emphasis on making sure its reforms would last. The US underestimated how long it would take to rebuild and spent money quickly on short-term goals, which were often related to security. Afghan institutions and politicians were able to use the money for their own benefit and keep acting dishonestly. Aid money was given to Afghan government ministries that were run by warlords, but these warlords never broke away from their patronage networks or “self-corrected” toward good governance, as some American officials had hoped. Even though most people knew that corruption was a big problem in Afghanistan, the U.S. didn’t put a lot of effort into building security institutions based on accountability and good governance until it was too late, around 2015. Corruption has a big effect on Afghans’ daily lives and on the safety of the country as a whole if it isn’t stopped. Afghan soldiers, for example, paid bribes to get medical care, and widows “would probably not get their pensions without bribes or contacts” at times. In the end, corruption not only reduced the quality of life for many Afghans but also made it more difficult for their government to recruit and maintain troops.

Stakeholders in Ukraine and other places should look at SIGAR’s post-mortem reports and other studies, which call for strict, open oversight of officials and organizations at all stages of future rebuilding efforts to avoid making the same mistakes. Civil society must be involved in Ukraine so that large amounts of money can be tracked and made sure to reach the right people. For example, Ukrainian civil society groups like the RISE Coalition have already started working on a pilot system that would help manage reconstruction projects and track funds, as well as give citizens and civil society access to information on the beneficial owners and general flows of funds (to the extent that this information is public). The technology will make it possible for anyone who is not affiliated with the Ukrainian government to follow and monitor the movement and effects of the reconstruction funds.

Bosnia and Herzegovina

Bosnia and Herzegovina’s (BiHreconstruction ) efforts, like those in Afghanistan, lacked a planned, sensible, long-term sustainable plan. Additionally, authorities and organizations tried to take on too much at once.

After negotiating a peace deal in 1995, the parties to Bosnia and Herzegovina’s three-year war wanted to “establish a market economy based on the rule of law and privatize state assets to attract international investment that could lead to jobs.”

Uncertainty surrounds the precise cost of reconstruction. Experts estimate it to cost between $5.1 billion and $15 billion, of which the US is said to have promised $600 million. Political problems also made it hard to rebuild. Corruption, bad long-term planning, racial tensions that didn’t go away, decentralization, and the theft of funds all made these problems worse. This was true even though five donor conferences were set up and attended by people from all over the world.

The work at hand was significant. BiH’s government was not acknowledged internationally before 1992. It was actually a piece of Yugoslavia. Among others, the Federal Republic of Yugoslavia, the Republic of Croatia, and BiH all signed the peace accord. In the years after the war, the peace agreement, called the Dayton Accords, was kept up and rebuilt with money from the government and other organizations. Agencies, governments, and organizations said they would act in a moral way by using conditionality (requiring standards to be met in order to get help) and supporting independent, pluralistic media. Before sending out help, they didn’t set up any coordinated plans or agreements. As a result, it’s thought that about $900 million in foreign aid “went astray.” What has been called a “huge leakage” was unavoidable because there was a large network of local corruption and there wasn’t enough international coordination.

One could say that the international community didn’t do enough to create long-lasting reforms and effective institutions to fight corruption. For example, they couldn’t keep making progress with their implementation when it came to meeting “conditions” for reform. That was due to the fact that “leaders from all three ethnic groups [had] not made a coordinated effort to prevent corruption,” according to the High Representatives. Support for free and diverse media failed because there wasn’t enough interaction with civil society and “the need for quick results.” The donors “failed to enforce the rule of law and greater openness before disbursing either grants or development loans,” which is probably the scariest thing to think about. Instead, international organizations gave a lot of money to “corrupt” moderates in order to “lower support for the nationalist parties,” which hurt sustainable development.

So that mistakes like this don’t happen again in Ukraine, the country and the rest of the world must first come up with short-term and long-term plans for rehabilitation that take into account the complexity of the area and strengthen institutions to make them more responsible, involved, and open. They must also agree that the government will only get financial help if it makes “long-term rule of law and judicial changes” during the first phase of relief. Last but not least, aid should come from international financial institutions that have ways to make sure that conditions are met. But new platforms to coordinate monitoring and conditions should be added to their architectural framework to make it better.

These requirements must be open and quantifiable, with shared and well-known parameters. Broad generalisations won’t do. For example, the government of Ukraine can’t just say that it “will support” accountability measures like journalism by simply saying that it “will support” them. Instead, they should work together to make detailed plans and rules for improving journalists’ skills and abilities. The international community, especially civil society, could help Ukraine’s short-term and long-term reform efforts by releasing aid as soon as these conditions are met.

Czechoslovakia

Slovakia and the Czech Republic, which used to be called Czechoslovakia, still have corruption problems because of how hard it was to rebuild after World War II. At the start of the rebuilding process thirty years ago, the United States hoped to help the transition from communism to life after communism by promoting liberal democratic institutions and free market economies. There was general agreement in Washington that this transition would be different from traditional foreign aid in that the recipient nation was suddenly prepared to create modern institutions, and the most crucial way U.S. policymakers could assist them was by starting to get the money out the door as soon as possible.

This aid plan, which was required by the SEED Act of 1989, took years of close U.S. involvement and led to a complete rebuilding of the economies and government institutions. Part of the reason both countries still have liberal democracies today is because of how hard these people worked. But the speed and lack of oversight of the privatization process led to corruption in the countries’ economies, which is still a problem today. From 1990 to 1996, only 5% of the main U.S. aid program’s money went to helping the Czech Republic’s democratic institutions. Similar to Slovakia, only 9% of funds went toward promoting democratic institutions. Due to this lack of investment, democratic institutions didn’t have the tools they needed to put a stop to widespread public corruption.

It was easier for “private fiefdoms that served the whims of entrenched lords” to form because privatization happened quickly, there were few laws, and a lot of things were sold off. This also “allowed for rampant corruption, which in turn has damaged the liberal goal.” Similar to what happened in Afghanistan and Bosnia and Herzegovina, the focus on efficiency during the recovery of the economy came at the expense of putting in place strong regulatory safeguards and structures.

To be fair, funding for civil society helped create projects that “remain an important part of democracy in the Czech Republic and Slovakia to this day.” As part of this political governance-related aid, the free press was helped, civic education was made better, and USAID paid for training for elected officials in the region. These initiatives have mitigated systemic corruption even though they weren’t enough to stop it.

These limited results can help Ukraine’s rehabilitation efforts with its anti-corruption goals, but more could be done there. It is important to pay close attention to the function of independent and diverse media. As “watchdogs” of democracy and anti-corruption efforts, as Eisen and Blumenthal say in a recent article, they need to be protected and helped so that governments can be held accountable. International donors and Ukraine’s growing civil society groups must make it a top priority to meet the needs of local journalists and their civil society partners. This includes funding long-term capacity building and training sessions led by locals. The Czech Republic’s and Slovakia’s independent media have benefited from technical and financial support from the United States, which has helped both countries’ liberal democracies. Reporters Without Borders says that the Czech Republic and Slovakia have some of the greatest freedoms for the press in the world. This has also made it easier for campaigns to find wrongdoing in the public sector and bring it to light. The U.S. can help rebuild Ukraine by building on its current aid programs to keep helping the media industry and make it better able to fight corruption.

Moving forward

The international community will be put to the test throughout Ukraine’s postwar reconstruction effort. Ukraine and the rest of the world need to learn from past problems with rebuilding to avoid capture and kleptocracy, which make it harder to help people in need and could even stop the process of rebuilding. Ukraine and its partners have a chance to make efforts to fight corruption more effective and secure Ukraine’s future by making effective transparency and oversight mechanisms, setting conditions for aid, coordinating between international financial institutions, and giving more support to civil society, including investigative journalists.

Footnote:

[1] We recognize, of course, that these examples and the factors we describe are illustrative rather than exhaustive, as the dynamics in each of these jurisdictions are complex and cannot be fully unpacked in a brief piece.

Analysis by: Advocacy Unified Network