On Foreign Policy.com, USIP’s Colin Cleary Looks at the Fight Against Corruption in Odessa, Ukraine, Cites IRI Poll

Does Ukraine Still Believe in Reform?
Foreign Policy.com
By Colin Cleary

The reform movement in Ukraine is having a moment. On the eve of Ukraine’s local elections, new polling shows that the most popular politician in the country is Mikhail Saakashvili, the appointed Governor of the Odessa region and former president of Georgia. A public relations dynamo and enemy of Russian President Vladimir Putin, Saakashvili has been at the vanguard of a public and pronounced effort to run out the old strains of corruption that have survived, and often thrived, in post-Maidan Ukraine. More pointedly, he has become the standard-bearer for the promise that reform is not only still possible, but is in fact in the works. And his close ties to President Petro Poroshenko might burnish the president’s sagging reformist credentials and aid the electoral fortunes of his Poroshenko Bloc/Solidarity party.

If Poroshenko’s party does well in the elections on Oct. 25 — the first nationwide round of local elections since Maidan — it will show that there is still some faith that the president will make good on the reforms he has promised. The Odessa region, where Saakashvili is governor, is the test case for what reform might look like across Ukraine. As voters cast ballots for mayors and representatives in city and regional councils, they will also be weighing in on this fight.

More than four months into his tenure as governor, Saakashvili is consolidating an impressive reform team, including the regional heads of the Odessa Customs Office and the Prosecutor General’s Office. With his people in place, Saakashvili is at last poised to take on the pervasive system of institutional corruption that has ruled Odessa. He’s taken aim at reforming customs — a major issue in Odessa — advancing deregulation, and taking down the oligarchs who have profited from the country’s dysfunction. He is also revolutionizing how officials communicate with their constituents, engaging with the public on regional and national media, riding on buses and walking the streets. Saakashvili is doing what the Ukrainian leadership has heretofore failed to do: explain reforms and listen to the citizens. The favorable reception he has received in Odessa demonstrates that citizens want to be heard.

And the nation has been watching.

He has been doing all of this with the support of the president, who has publicly backed the appointments to Saakashvilli’s team and has echoed his message. On Oct. 21, just days before the vote, Poroshenko announced that he would unveil a series of sweeping reforms to tackle corruption. “I have never talked about this and did not want to speak before the election, but I will tell you that immediately after the elections we will have four years without elections, without populism, when finally we will be able to demonstrate decisive steps for the development of our country,” he said.

Ukraine’s people are primed for change. Public opinion shows increasing disaffection with the national government and a sense that it has failed to deliver on reform — sentiments that will influence the elections. According to the recent poll sponsored by the International Republican Institute, 68 percent of Ukrainians believe the country is moving in the wrong direction. The public sees declining living standards but no change to the oligarchic hold over the economy or to the old methods of insider deals and paid-for justice.

Enter Saakashvili. Poroshenko stunned observers with the announcement May 30 that Saakashvili would give up his Georgian citizenship to become governor of the Odessa region. But Saakashvili is not as foreign as it might appear. He graduated from Kiev’s Shevchenko University and has known Poroshenko since those days. He considers the fight for Ukrainian sovereignty a common fight against Russia’s assertion of a sphere of influence over the post-Soviet space. While Saakashvili has fallen out with the current government of Georgia, he and the other Georgian reformers who have decamped to Ukraine have an impressive record to recommend them. They tamed corruption and radically improved the business climate in Georgia during Saakashvili’s tenure from 2004 to 2013. Most Ukrainians want to give him a chance to see if he can pull off such a feat in Ukraine.

As governor, Saakashvili has characteristically shown himself willing to take on the most senior figures of the establishment.As governor, Saakashvili has characteristically shown himself willing to take on the most senior figures of the establishment. He railed against the monopoly that the airline owned by oligarch Igor Kolomoisky enjoyed in Odessa and called for the firing of the head of the State Aviation Administration, a Kolomoisky ally. When that firing was delayed, Saakashvili publicly criticized Prime Minister Arseniy Yatsenyuk for defending Kolomoisky’s interests and sabotaging reform. Saakashvili won the fight. The official was fired and the monopoly ended. In the process, Saakashvili withstood the relentless scorn heaped on him by Kolomoisky’s national TV channel.

Thus far, Saakashvili’s platform for reform in Odessa has focused on a few main points.

The first is customs. Odessa is Ukraine’s most important port. The Customs service operating there has long been a racket linked to organized crime. The loss of customs duties has cost the national treasury countless millions of dollars while impeding the flow of legitimate business. In July, Saakashvili estimated the losses at between 500 million and 1 billion euros annually. Saakashvili’s team has promised to impose transparency on the customs process. E-declarations will take matters wherever possible out of the hands of officials to preempt corruption. Same day — even one hour — approvals are set to become the norm. Saakashvili has pledged that his team can double customs receipts in six months and triple them in a year and a half.

The second is deregulation. Saakashvili’s team is setting up a one-stop shop to radically facilitate registration of businesses. Regulations are to be reduced and those approvals still required are to be obtained on the same day in one place. Forms are to be transparent and electronic to close off opportunities for bribe-seeking.

Third is taking on the oligarchs. Saakashvili seeks to challenge the privileges and impunity of regional and national oligarchs. One of his early acts in Odessa was to stage a public teardown of the wall a magnate had put up to illegally appropriate a public beach.

The most recent sign of the changing times came on Oct. 19 when 26-year-old Maidan activist Yuliya Marushevska was appointed as head of the Odessa regional customs service. Marushevska had been a deputy to Saakashvili and an Internet sensation during the Maidan movement. Her “I am a Ukrainian” video went viral, racking up more than 8.6 million views. Poroshenko travelled to Odessa to announce her appointment and underline his support for the reform effort. Saakashvili declared he “thanked God” that Marushevska had no formal training as a customs officer since that spared her the tradecraft in how to extract bribes. Marushevska pledged that she would head an honest and professional team. Her chief deputy will be Giorgi Tskhadaia, head of Georgian tax and customs in 2009-10.

Another key reform-minded Georgian in Odessa is deputy prosecutor general and, concurrently, head of the Odessa region prosecutor’s office, Davit Sakvarelidze. Having butted heads with the prosecutor general in Kiev, Sakvarelidze is now in a position to use Odessa as a laboratory to demonstrate that transparency and rule of law can be upheld in what is universally regarded as a deeply corrupt institution.

Being local elections, Sunday’s vote will be swayed by personalities and regional issues. But it will also be a test as to how the reform message is competing with a cynical populism that has risen from other corners of Ukrainian politics. Former Prime Minister Yuliya Tymoshenko, imprisoned by Yanukovych and distant second place finisher to Poroshenko in the May 2014 presidential election, has leveraged populist proposals like maintaining subsidies for gas prices, which violates a key reform mandated by the IMF, to help her Batkivshchyna (Fatherland) party stage a comeback. Support has more than doubled in the past year and the party is set to do well on Oct. 25. The Opposition Bloc, a spin off of former President Viktor Yanukovych’s Party of Regions that is headed by former senior officials who profited handsomely from the kleptocracy that prevailed under his rule, is also expected to do well in the east and south on an anti-reform message.

One of Saakashvili’s team will be running on Oct. 25. His deputy, Sasha Borovik, is an underdog candidate for mayor of Odessa city. Borovik, a former Microsoft executive, left Yatsenuk’s government over frustration with the slow pace of reform. He faces incumbent Gennadiy Trukhanov, a former Yanukovych stalwart who is reputed to have had links to organized crime. His other opponent is veteran mayor Eduard Hurvitz, who was associated with parties stemming from Ukraine’s 2004 Orange Revolution. It would be a coup if Borovik, who has lived abroad much of his adult life and has limited ties to Odessa, could — as Saakashvili’s endorsed candidate — pull off an upset. However, as elsewhere, reform is not the only factor in the race and Saakashvili’s standing would easily survive a Borovik defeat. (As elsewhere, there will be a runoff of the two top finishers on Nov. 15 if no candidate gets 50 percent of the vote.)

What attracts supporters to Saakashvili is his energy, his challenge to the establishment, his flair for public relations, and his desire to show tangible near-term results. Whatever Saakashvili’s ambitions — in Ukraine or Georgia — his personal interests and the interests of reform in Odessa converge. He needs to succeed. Many other Ukrainian leaders are compromised by their own financial holdings or beholden to oligarchic interests. That is why Saakashvili’s name is mentioned as a possible prime minister of Ukraine. If Saakashvili can jump-start reform in Odessa, he could bring new life to his own political career — and just maybe save Ukraine in the process.

Colin Cleary is an Interagency Professional in Residence at the U.S. Institute of Peace. He served as political counselor at the U.S. Embassy in Kiev from 2008-2012. The views expressed are those of the author and do not necessarily represent the views of the Department of State or the U.S. government.