Tomas Fiala, president of the European Business Association and CEO of Dragon Capital in Kyiv, is determined not to let the promise of another revolution slip away from Ukraine.
“I would hate for the 2005 post-Orange Revolution to repeat itself,” Fiala said, referring to the unsuccessful rule of President Viktor Yushchenko and Prime Minister Yulia Tymoshenko, which opened the way to Viktor Yanukovych’s election as president in 2010.
Fiala, however, fears the promise of reform is yet again in danger of fading away more than a year after the end of the EuroMaidan Revolution that prompted Yanukovych to take refuge in Russia, along with other former top officials suspected of crimes ranging from mass murder to stealing billions of dollars from Ukraine.
“Patience is thin, especially if nobody gets punished for corruption and people are getting poorer while others are getting richer who are close to the current leadership,” Fiala said in a recent Kyiv Post interview.
Fiala was interviewed ahead of the July 13 U.S-Ukraine Business Forum in Washington, D.C., that he will attend to help drum up investment in Ukraine — investment that he says will be more forthcoming if Ukraine’s government cleans up its act.
Fiala and other business community leaders are stepping up their criticism of President Petro Poroshenko and, especially, Prime Minister Arseniy Yatsenyuk. Western diplomats are reported to have been sending the same, or even blunter, messages during closed-door meetings with Ukraine’s leaders.
“I don’t see the prime minister being the driver of reforms in the country. He will do just enough to get external funding and he won’t do more,” the Czech native said.
Yatsenyuk’s spokespeople, Danylo Lubkivsky and Olga Lappo, were reached for comment earlier this week. They said they would respond, but had not contacted the Kyiv Post by the time this edition went to press.
Yatsenyuk is failing to make progress on improving civil service, deregulation, and fighting corruption, Fiala said.
“He has not even reformed his own Cabinet of Ministers, which has 600 people. People who have been in this bureaucracy or at the top of the bureaucracy or in politics 10 or 15 years; they are not going to change the system. They are just too dependent on the bribes. (Yatsenyuk) micromanages or stalls things, so a lot of things get stopped or stalled by the prime minister himself,” he said.
Fiala cited changes to public procurement of goods and services for which the government accepts bids. Up to 40 percent of government orders went to bribes under Yanukovych. Yatsenyuk and others supported a new law in parliament to make the procurement system open and competitive, theoretically shutting down a corruption pipeline that cost the state billions of dollars each year.
But the catch, Fiala suspects, was that a new mechanism been created to neutralize the reformist law.
“They found a way to negate (the process) through the Anti-Monopoly Committee, run until a month ago by acting head (Mykola) Barash,” who is seen as Yatsenyuk’s ally, Fiala said. “Whenever a company that was not supposed to win (a tender) would win, they would protect it and stop the results of the tender … The savings never materialized.”
Both Poroshenko and Yatsenyuk are shifting the blame to each other, Fiala said, but at least in terms of law enforcement agencies, both are failing.
He said all the law enforcement agencies subordinate to the president and prime minister “are providing a roof for illegal business…It’s a huge impediment to fighting corruption. When there is no punishment, there is no risk for being corrupt and stealing.”
While Fiala sees more hope in Poroshenko, he doesn’t let him off the hook either as an impediment to reform.
Perhaps the most glaring weakness in Poroshenko’s administration is his inability to improve the General Prosecutor’s Office and eliminate corruption there.
Former prosecutors general Oleh Makhnitsky and Vitaly Yarema, fired by Poroshenko, did nothing to clean up the corruption of the nation’s 20,000 prosecutors who “continued to work as a money-making machine” by taking bribes to open and close criminal cases.
“After firing Makhnitsky, Poroshenko made him his adviser, so he didn’t see Makhnitsky as doing a bad job,” Fiala said. “Yarema was fired under the pressure of civic society and (member of parliament Yegor) Sobolev, who started collecting signatures.”
But General Prosecutor Viktor Shokin is not much of an improvement, Fiala said.
“He started showing some kind of results initially (but) the corruption stayed there,” Fiala said.
Hope with Shokin faded as well. “A 60-plus-year-old man who worked his whole life in the prosecutor’s office is not going to reform it in some Western way,” the investment banker said.
Another indicator is the president’s inability or unwillingness to fundamentally change the legal system, a sign that he doesn’t want to lead the reform agenda.
“He’s a little bit more reform-oriented than Yatsenyuk. He is also in favor of evolutionary change instead of revolutionary change. We don’t have time for that,” Fiala said.
Fiala’s first big disappointment came during the October parliamentary elections, when both Poroshenko and Yatsenyuk traded spots on their respective party lists for campaign contributions. They ended up becoming the two leading parliamentary factions.
When Fiala saw the candidate names on the party lists, he “was very disappointed.”
“Having these people with very questionable reputations, who were very much tied to the old Ukraine being re-elected…Now this is kind of haunting them and hurting their political capital,” he said. “They were selling seats in the party list…Obviously, they also had people who didn’t have money and took them on for marketing purposes – good honest people there – and then filled up the back of the list for $3-$10 million contributions to finance the campaign.”
Corruption schemes continue from the Yanukovych era, Fiala said.
Fiala said he had a chance to convey his criticism to Yatsensyuk on June 25, during a meeting of business leaders with the American Chamber of Commerce in Ukraine and European Business Association.
Fiala said that some of Yatsenyuk’s allies in parliament — he named Andriy Ivanchuk, Mykola Martynenko and Serhiy Pashinsky – “care very little about the country or the average citizen here” and just want to “fill up their pockets.” Pashinsky could not be reached for comment, but the press services for Martynenko and Ivanchuk refused comment.
In the fall local elections, Ukrainian voters must choose politicians “who will carry the reforms through and who will have a very strong political will and the intellectual capacity and the moral authority,” Fiala said.
Given his critique, does Fiala think that the trip to Washington, D.C., will attract U.S. investment?
“We will try to present the opportunities that are here in Ukraine,” Fiala said. “The asset prices are quite low, so assuming that the conflict in the east will be frozen, the government will step-by-step implement the reforms required by external creditors and local business and civil society, the economy could start growing next year and bounce back.”
Kyiv Post chief editor Brian Bonner can be reached at [email protected].
