Imagine the world’s sick democracies in an intensive care unit. Afghanistan has just been wheeled out to the morgue. Never in the best of health, it did once have regular elections. Now the doctors are hovering around Ukraine‘s bedside – a case of organ shutdown as corruption endemicus rips through the body politic.
There had been signs of improvement. Since the Maidan revolution, successive governments had taken steps to tackle Ukraine’s notorious oligarch culture and normalise the rule of law. Ukraine even started to climb up Transparency International’s anti-corruption index.
But nothing in Ukraine is straightforward. Seasoned observers describe a ‘multiverse’ of competing cultural loyalties and business interests that Ukraine’s leaders have to navigate to retain both domestic and international support, while at the same time fighting a war with an occupying state in the shape of Russia.
Reform in these circumstances is far from easy. All political leaders struggle to escape the iron grip of oligarchs who wield enormous political as well as economic power. The most powerful even control large factions of MPs, giving them near-total leverage over what the Government can do.
Sadly, President Zelensky seems to be as captive of the oligarchs as his predecessors. He is after all largely the creation of one. Zelensky made his name as a comedian on a TV station owned by Igor Kolomoisky, currently on the US sanctions list for “undermining Ukraine’s democratic processes and institutions”. The programme, “Servant of the People”, even became the name of the President’s party.
So, with sliding poll ratings and nothing to show from his peace initiatives with Vladimir Putin, it is perhaps not surprising that Zelensky’s reformist zeal should give way to fealty to his oligarch client. Rhetorical commitments to rule-of-law and media freedom are being replaced by media shut-downs and rigged court hearings.
The plight of TIU Canada is the most notorious example of the latter. TIU has invested $65 million in Ukrainian renewables since 2016. Then, in March 2020, it had its solar station in Nikopol disconnected from the electricity grid by a company owned by Igor Kolomoisky.
Kolomoisky has a vested interest, of course. In addition to banks, TV stations and factions of MPs, he owns Ukraine’s largest energy distributor, which is reliant on coal bought from Russia. A viable renewables sector would be bad for business.
Indeed, Kolomoisky is seen as behind a series of moves which have hammered Ukraine’s nascent renewable energy sector. Investors have seen promised prices for renewable power slashed. Even the paltry revenues the Government now says it does owe to the sector are going unpaid.
So it comes as no surprise that the flow of foreign investment that had been sustaining the Ukrainian economy has dried up. The Ukrainian Association of Renewable Energy says investment is down from $4.1 billion to $1.4 billion a year. Its director Alexander Kozakevich says that the Nikopol case “shows that oligarchs can do what they want without punishment. So they do it again and again.”
Funds will only flow if investors have confidence in legally-enforceable contracts and due process in the courts. The case of TIU Canada demonstrated precisely the opposite. TIU’s next court hearing on 8 September might bring a resolution but I would not bet on it; 5 out of 8 judges have already recused themselves in a symbol of how damaged Ukraine’s judiciary is.
The flight of foreign cash is even more consequential given the fate of one previously steady source of revenue. Transit fees for Russian gas being piped to the EU are set to dwindle once Nord Stream 2 starts flowing to Germany. Two weeks ago, Angela Merkel pledged €1 billion to offset the negative impacts. It had the feel of guilt money from a politician who won’t be around to ensure the money is sent.
Days later, Zelensky visited President Biden in the White House. Details of the summit are scant but one imagines that ‘media freedom’ will have been a topic that both parties were content to overlook.
The reasons being that the progressive alliance that put Biden in the White House may inadvertently be responsible for another potentially fatal illness for Ukraine’s democracy – the closure of critical media outlets. Back in January, Twitter, Facebook and YouTube shut down then-President Trump’s principal means of communication. The following month President Zelensky felt emboldened to shut down three TV stations that were critical of his regime (112, ZIK, NewsOne).
And now, faced with plunging poll ratings, he is threatening another TV station, NASH. Significant voices ranging from the UN’s Special Rapporteur, Irene Khan, to the EU’s foreign policy chief, Josep Borrell, have raised concerns about the retreat from a free media, despite the obvious argument from President Zelensky that these outlets sided with the views of Ukraine’s ethnic Russian minority — kith and kin to Ukraine’s disruptive neighbour.
Putting 1,500 journalists and their colleagues out of work hardly helps Ukraine’s economy, but it could prove fatal to Ukraine’s ailing democracy. As the Washington Post’s masthead says “Democracy Dies in Darkness”. Corruption of all types flourishes without sunlight.