Recovery aid for Ukraine must be linked to anti-corruption efforts

Date:

Recovery aid for Ukraine must be linked to anti-corruption efforts

  • News by AUN News correspondent
  • Monday, October 24, 2022.
  • AUN News – ISSN: 2949-8090

Summary:

  • Reform Is NeededSecond, over the past eight years, Ukraine has implemented a more comprehensive programme of anti-corruption measures than any other nation in modern history.

  • As much information as is legally permitted should be made available to the public in formats that are simple to access, from current platforms like the ProZorro public procurement system in Ukraine to a new digital platform to centralise data relevant to recovery.

  • Making Assistance Subject to ProgressSecond, assistance for recovery must be conditioned on Ukraine continuing its expansive national anti-corruption reform journey, which it has been on since 2014.

  • Establishing and strictly enforcing medium-term priorities for demonstrated development as a prerequisite for aid tranches beyond 2022 is also necessary.

  • By emphasizing anti-corruption in the aid architecture and reform agenda, a contemporary Marshall Plan could help Ukraine rebuild itself and strengthen its sovereignty and join the EU.

A morally and politically challenging task will fall to the leaders of the United States and the European Union, given how bravely Ukrainians are defending the front lines of the free world: They will have to insist on sending Ukraine hundreds of billions of dollars for recovery and reconstruction only if the aid architecture and reform agenda aggressively prioritise anti-corruption. For Ukrainian sovereignty, the nation’s membership in the European Union, and the integrity of Western tax dollars, it is crucial to safeguard aid funds from corruption and advance Kyiv’s reform efforts. For Ukraine to emerge from this horrific war with modern democracy and a fair economy deserving of such historic sacrifice, firm anti-corruption promises and performance are essential.

Anti-corruption must be included in a Modern Marshall Plan for Ukraine with prompt and thorough planning. The discussions regarding financing the rebuilding of the Ukrainian economy began at a Lugano conference in July. They will continue with a follow-up conference in Berlin on October 25, focusing heavily on the necessity of transparency, accountability, and integrity. We feel obligated to provide independent policy suggestions for how the governments of the G7 and other donor countries can incorporate anti-corruption into the process of funding the recovery and reconstruction of Ukraine as scholars at the German Marshall Fund of the United States (GMF) and the Brookings Institution, two institutions that were historically involved in the original Marshall Plan.

For three reasons—the strategic, the reform, and the political imperative—Ukraine must integrate effective anti-corruption strategies into the recovery process.

The Fight Against Strategic Corruption

First, strategic corruption is a significant channel for evil Kremlin influence. In contrast, Ukraine has established the great nation that has dazzled the world on the battlefield this year by battling corruption since 2014. By making pro-Russian billionaires in Ukraine affluent, like Dmytro Firtash and Viktor Medvedchuk, who later went on to finance political parties and acquire half of the country’s television news networks, Putin spent two decades attempting to maintain influence over Kyiv. A few weeks after President Joe Biden took office, Ukraine imposed sanctions on Medvedchuk’s close friends, shut down their pro-Russian news outlets, and seized assets belonging to Medvedchuk and his family. Less than two days later, once strategic corruption had lost potency, the Russian military began expanding along Ukraine’s borders as a substitute strategy for undermining Ukrainian sovereignty. We don’t think that’s just a coincidence.

Since then, Russian forces have been weighed down by crippling corruption, leading to Russian spies stealing bribe money intended to finance a Ukrainian coup, destroying Russian supply chains, and low morale among Russian soldiers. On the other hand, Ukrainians fight with the knowledge that they are preserving the democracy and the rule of law they have erected over the previous eight years. The ability to bounce back more robust as a European Ukraine will depend on the same societal resilience.

Reform Is Needed

Second, over the past eight years, Ukraine has implemented a more comprehensive programme of anti-corruption measures than any other nation in modern history. Their wide anti-corruption accountability measures and public transparency are praised as world-beating examples of ferocious change. The court and the security service are two significant facets of the state that have not undergone reform. Some of these new anti-corruption institutions are still in their early stages and are going through growing pains. As a result, there is still much to be done to transition from the Soviet kleptocracy to the current political-economic system.

All five specialised anti-corruption bodies—independent organisations that work to prevent, look into, prosecute, rule on, and recover assets related to grand corruption—could need more funding and clout, but three lack permanent leadership. The President’s Office holds disproportionate power, and the larger political structure permits informal decision-making that benefits wealthy interests and avoids democratic responsibility. Oligarchs control the most powerful positions in the Ukrainian economy (media, energy, construction, transport, etc.). Large governmental construction projects have 30% more costs than they should, with a 10% rebate for decision-makers. The likelihood of the reconstruction effort failing increases when hundreds of billions of dollars in reconstruction financing are pumped into a political system with serious corruption problems.

Political Danger

Third, it might only take one or two significant corruption scandals to undermine the bipartisan support in the US for providing Ukraine with billions of dollars in aid. According to a study taken in October, 66% of Americans approve of arming Ukraine, up from 51% in August. Those improvements in American public opinion were attained because of the bravery and sacrifice of the Ukrainian people, who began a historic counteroffensive in late August.

Evidence of significant corruption in U.S. funding may very quickly drive this level of widespread approval below its August level of 51%. Politicians in the United States have every right to be concerned about potential threats to taxpayer resources. Other forces, including Biden’s domestic political rivals and Kremlin propagandists, would use the chance to further their political objectives. Nobody should have the irrational hope that the reconstruction following a conflict will be completely free of corruption. It is never. But if we don’t severely reduce the oligarchs’ and kleptocrats’ capacity to pillage the post-war economy, there might not be the kind of recovery the Ukrainian people have earned.

Two-Piece Strategy

A two-pronged approach is required to prioritise anti-corruption during recovery: preserving the restoration process and advancing more comprehensive anti-corruption policies.

An effective anti-corruption architecture

As stated in a study released in September by GMF, the architecture through which recovery funds flows must be protected from leaking to corruption. The G7 and other partner nations should use the channels for multi-donor funds at the existing international financial institutions (IFIs), like the International Monetary Fund, the World Bank, and the European Bank for Reconstruction and Development than establishing a new aid agency or centralised trust fund. But a unique platform for coordination and tried-and-true techniques for preventing corruption should be added to the IFI architecture.

The United States and global leadership must be balanced and carefully arranged, much like other international institutions. Since only the United States can assemble a genuinely worldwide coalition and forge consensus, the G7 should initially take charge of donor coordination and appoint an American of international renown to serve as the first recovery coordinator, whose duties include harmonising conditionality principles and oversight specifications. The coordinator should establish a task force for recovery that a representative of the EU will lead, rely on employees of the European Commission as its secretariat, and bring together task force members from the G7 and other interested nations. The coordinator should also establish the role of an impartial inspector general with broad jurisdiction to monitor the distribution of recovery funds and look into misconduct claims. As Ukraine draws closer to joining the EU, the recovery process should be increasingly controlled by the European Commission and supported by confiscated Russian assets, necessitating a lengthy legal procedure.

Three concepts will be crucial throughout all the procedures carried out by this suggested recovery architecture:

  • As much information as is legally permitted should be made available to the public in formats that are simple to access, from current platforms like the ProZorro public procurement system in Ukraine to a new digital platform to centralise data relevant to recovery.
  • Instead of being mixed with the budgetary accounts of the Ukrainian government or distributed at the whim of Ukrainian ministries, recovery funds should go straight to thoroughly vetted and transparent contractors.
  • Local ownership should extend from Kyiv to the grassroots by enlisting the active civil society of Ukraine to take the lead in the recovery effort from the beginning. The authors advocate allocating a tenth of that amount, or 3%, for battling corruption because up to 30% of cash in significant reconstructions of this kind can be syphoned through bribery. This includes novel strategies like increasing the number of unbiased investigative journalists serving as watchdogs inside and outside Ukraine.

Making Assistance Subject to Progress

Second, assistance for recovery must be conditioned on Ukraine continuing its expansive national anti-corruption reform journey, which it has been on since 2014. President Volodymyr Zelensky is extremely well-liked at a time when political, oligarchic power is waning, creating a window of opportunity for long-delayed changes. The European Commission set seven requirements for Ukraine in June, most concerning anti-corruption efforts. By 2022, the commission will provide a report on Ukraine’s development.

By then, Ukraine should have significantly advanced on the first two prerequisites: first, provide the specialist anti-corruption organisations with all the necessary support, funding and power. Second, pass the forthcoming legislation that would do the same for Constitutional Court justices and complete the process of asking respected foreign experts to examine the integrity of candidates to sit on high judicial governing bodies. Those prerequisites should be satisfied before receiving reconstruction funding.

Establishing and strictly enforcing medium-term priorities for demonstrated development as a prerequisite for aid tranches beyond 2022 is also necessary. These include genuine deoligarchization (rather than merely agreeing to cooperate with the European Public Prosecutor’s Office, as was agreed in March), which goes beyond the recent Anti-Oligarch law intended to reduce the oligarchic influence, and forced divestment until no one fits the definition of an oligarch.

Rebuilding a continent ravaged by war was only one of the initial Marshall Plan’s accomplishments. It contributed to slowing the expansion of communism in Europe and starting the process of fusion that would lead to the creation of the European Union. Similar to the communism of the Stalin era, Moscow-based modern autocracy is held together by corruption, which is also a tool used by the state and other autocrats to subvert democracy at home and abroad. By emphasizing anti-corruption in the aid architecture and reform agenda, a contemporary Marshall Plan could help Ukraine rebuild itself and strengthen its sovereignty and join the EU.

Analysis by: Advocacy Unified Network

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