Anders Aslund

It’s time to go beyond official language and diplomatic courtesies to understand what’s really going on

For months, senior Ukrainian officials have been claiming that the Ukrainian government has met all the demands of the International Monetary Fund ( IMF). Investment banks and brokers trading Ukrainian bonds have actively promoted these claims. They have repeatedly suggested that Ukraine will receive the next IMF tranche in the first quarter of 2021 or, at the latest, in subsequent months. Unfortunately, these sweet speeches have always been out of touch with reality. I spoke about this back in November 2020.

The IMF has just completed an unusually long virtual mission in Ukraine. It began on December 21-23 and was then extended from January 11 to February 12. A typical IMF review mission takes 10-12 days. Therefore, its long duration is not a good sign. Even more ominous is the fact that the mission ended without any recommendation on when to disburse the next tranche.

Now is the time to go beyond official language and diplomatic courtesies to understand what is really going on.

The IMF is always emphatically polite. He does not want to arouse the hostility of any government of an IMF member state. On the contrary, he wants to be useful. The IMF rarely makes statements that might discredit a partner. IMF officials do not even point out obvious lies.

With this approach, governments can safely mislead domestic audiences about the state of relations with the IMF. The problem, however, is that the IMF hears it too. He knows what is right and what is wrong, and he has no desire to offer loans to dishonest ones.

Since I do not work for the IMF, I can speak directly, unlike the Fund and the Ukrainian government. Recently, no agreement was concluded between the IMF and the Ukrainian government, since they fundamentally differ, perhaps in everything.

The crux of the dispute is that the IMF maintains law and order and property rights, while the Ukrainian government wants complete freedom. The mission lasted so long because the IMF hoped that the Ukrainian government would realize it was on the wrong track, but it did not.

Ukraine’s original post-Soviet sin is that the government wants to control the country’s prosecutors, courts and security services so that they, in turn, can control the private sector. The temptations are obvious. Once you reach high positions, you can start talking with business leaders about how you can help them, let alone the nation. There is no need to threaten anyone. You can simply declare your willingness to help.

This remains the main problem for the Ukrainian government. The old-regime Soviet telephone law prevails, although calls have now been transferred from landlines to Telegram or Signal. Some senior officials tell the small circle of wealthy businessmen who dominate the Ukrainian economy that it will be better for them to work together. Everyone understands that this collaboration involves offering large sums of money. The rest is just details.

73% of Ukrainians voted for Volodymyr Zelenskyy in April 2019. Why? Because they wanted this charade to end. They looked at the Zelenskiy-star as the anti-corruption president on the television series Servant of the People. As a result, they decided that he really understood the system and was ready to fight it.

But alas. Many now see him as a servant of the oligarchs’ interests. This is reflected in Zelenskiy’s steadily declining approval rating. One of the main reasons for the rapid decline in Zelenskiy’s popularity is a sense of growing lawlessness, which is reflected in an increase in the number of so-called corporate raider attacks or theft of businesses. At the same time, anti-corruption activists are attacked, and law enforcement agencies are inactive.

What should Zelenskiy do? He urgently needs to refocus on the anti-corruption messages that allowed him to win the presidency and create a mono-majority in the 2019 parliamentary elections.

The Ukrainian public has always demanded action against corruption and strives to improve living standards. This should shape the president’s policy. Fortunately, these goals are also key objectives of the IMF, the United States, the European Union and the group of countries ” Big Seven”. With so many powerful forces moving in the same direction, it is difficult to see why the Ukrainian president cannot accept these priorities as well.

The most important issue on the political agenda now is the status of the only functioning anti-corruption body in Ukraine – the National Anti-Corruption Bureau ( NABU). Undermining the bureau or firing the prominent NABU leader Artem Sitnik would be a serious mistake.

Disappointment with the recent IMF mission highlighted the choices facing the Ukrainian leadership. The country is once again at a crossroads and must decide in which direction it intends to move.

Will Zelenskiy make the fateful decision to establish true rule of law? Over the past three decades, a corrupt judicial system has impeded the development of the Ukrainian economy, while allowing oligarchs to dominate the country. The United States, led by President Biden, the IMF, the European Union, and other international partners stand ready to support the Ukrainian president in the fight for judicial reform. Everyone understands the essence of the problem. The question is whether Zelenskiy will do anything about it.

(c) HB