KYIV BLOG: Saakashvili Odesa reform drive hits favouritism barriers

By bne IntelliNews July 15, 2015

By Sergei Kuznetsov in Kyiv -


Mikheil Saakashvili, former president of Georgia and the recently appointed governor of Ukraine’s southern Odesa region, has declared that his priority is to fight corruption in the law enforcement agencies and customs office. However, it appears that deep-rooted favouritism and the dominance of personal alliances in politics and business will pose significant hurdles on his way to success.

"It's a disaster,” Saakashvili exclaimed in late June on Ukraine’s popular ‘Shuster Live’ TV talk-show as he described the early stages of efforts to reform the customs office in Odesa. “We mapped out the terms and conditions of a recruitment competition for the customs office. But suddenly and unknown to me, an acting head was appointed. This man has nothing to do there, he's just a member of another clan from Kyiv that regulates the [money] flows.”

This situation perfectly illustrates the difficulties faced by Saakashvili’s plan to reform corrupt and ineffective government institutions in the region.  Kyiv’s right to make (and block) appointments fuels the natural desire of “old” local elites to fight any attempts to unmake the longstanding rules of the game. “I spend a lot of time not in Odessa but in Kyiv, because the origins [of many decisions] are there,” Saakashvili said.

However, the new governor is not ready to backtrack on his reform plan, at least in the particular case of the Odesa customs office, which, according to Saakashvili, loses up to $1bn annually as a result of theft and fraud. 

“Sit, smile and deal with paperwork”

On July 10, Saakashvili promised to open a new customs terminal, which will function according to new procedures, by November. "All the law enforcement officers will be removed and we will build a new terminal, where young people with model-like looks, rather than custom officers as such, will work. Everything will be done using computers. All the young new employees will need to do is sit, smile and deal with  paperwork,” Saakashvili said.

His declaration of war against corruption in the law enforcement agencies also indicates that he expects the system resist the measures. 

In June, Saakashvili slammed local prosecutors, describing some of their practices as “racketeering”. A significant part of the governor’s criticism was aimed at the region’s deputy prosecutor, Tatiana Gornostaeva, who is a stepdaughter of Viktor Shokin, Ukraine’s prosecutor general. However, this demonstration of determination received a cold reception in Kyiv. 

“Saakashvili has an emotional temperament. I have talked to him about his statements, and we have agreed that any sweeping accusations of prosecutors will not be permitted,” Shokin told Ukrainski Novyny news agency in late June. He added that he had agreed with Saakashvili that any details of alleged illegal activities by prosecutors would be sent to the prosecutor general’s office. “At this moment, I have no concrete facts from him.”

Shokin was appointed in February this year after his predecessor, Vitaly Yarema, resigned amidst accusations that he failed to investigate crimes including the murders of Maidan protesters in 2014 and the corruption schemes of former president Viktor Yanukovych and his allies.

“Saakashvili was a good reformer in Georgia. But there he headed the system. In Ukraine, he is not at the top of the system, even in the Odesa region,” Vitaliy Shabunin, chairman of the Anti-Corruption Action Centre, a Kyiv-based non-governmental organisation, tells bne IntelliNews.

Carte blanche benefits

The key to success for Saakashvili could be having “full carte blanche” for reforms, including appointments in the region, according to Serhiy Leshchenko, an MP representing the parliamentary bloc of the country’s president Petro Poroshenko. “Saakashvili’s pre-condition for this appointment was the opportunity to form his own team, to appoint his people to all posts, even when this would have seemed beyond his powers,” Leshchenko tells bne IntelliNews.

On the other hand, it looks like Saakashvili’s freedom to undertake radical moves has led to confusion among other governors and many experts. “Why didn’t Poroshenko provide carte blanche to other governors to fight against corruption? In what way are Odesa’s residents better than residents of Volyn? It's a kind of madness,” Shabunin underlines.

He adds that Poroshenko probably intends to make Odesa a “showcase” of the fight against corruption in Ukraine, whilst not making any active efforts in other regions. “If this is what is happening, then such an approach is unacceptable,” Shabunin says.

The governors of other regions in Ukraine have also displayed mixed feelings. On July 8, the governor of Dnipropetrovsk, Valentin Reznichenko, started a fray with Saakashvili over the legality of some of his actions. The incident occurred when Poroshenko was on a visit to Odesa and seemed to be an unpleasant surprise for the president.

“I do not think in terms of Mr Saakashvili. I believe that there are some difficulties with the law,” Reznichenko said, pointing out that governors have no power in the face of some actions that Saakashvili wants to do. In turn, Saakashvili said that Ukraine's quick development is more important to him than the threat of punishment by the prosecutor’s office.

Saakashvili the winner?

Saakashvili’s governorship in Odesa is a landmark project for Poroshenko, and the Ukrainian president has a vested interest in a positive outcome. Otherwise, Poroshenko’s rating would suffer a painful blow, having already dropped significantly over the past year. This is  why he is likely to continue providing all necessary support to Saakashvili.

However, even if Saakashvili proves unable to implement some of his reforms, he would nevertheless benefit from his current post. Thanks to his political talent, Saakashvili manages to turn almost all of his movements in Odesa, even insignificant ones, into PR events. The incredible popularity of recent TV footage in which the governor slammed the region’s officials and ‘the old normality’ is ample evidence of his appeal.
Meanwhile, Kyiv-based political analyst Vadim Karasev believes that Ukraine's western backers have placed their hopes on Saakashvili and a team of other Georgian officials invited by Kyiv as players who can provide the impetus for change among the Ukrainian elites, who are "drowning in nepotism" and incapable of major adaptation. "Our Western partners would like to use the Georgian team as a torpedo to clear the Ukrainian authorities", the analyst told the BBC Ukrainian Service. 

Related Articles

Ukraine's largest PrivatBank faces down nationalisation fears

Graham Stack in Kyiv - Ukraine's largest lender PrivatBank has survived a stormy week of speculation over its future, but there are larger rocks ahead, with some market participants anticipating the ... more

bne:Chart - Russia begins to steady the ship according to latest Despair Index

Henry Kirby in London - Ukraine and Russia’s latest “Despair Index” scores suggest that the two struggling economies could finally be turning the corner, following nearly two years of steady ... more

Austria's Erste rides CEE recovery to swing to profit in Jan-Sep

bne IntelliNews - Erste Group Bank saw the continuing economic recovery across Central and Eastern Europe push its January-September financial results back into net profit of €764.2mn, the ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.