Russia, Ukraine still ranked as the most corrupt in Europe by Transparency International

Russia, Ukraine still ranked as the most corrupt in Europe by Transparency International
Russia, Ukraine still ranked as the most corrupt in Europe by Transparency International
By bne IntelliNews February 22, 2018

There were some very public arrests and jailings in Russia in 2017, but they have had little impact on the latest Transparency International (TI) Corruption Perceptions Index ranking. 

For the first time a sitting minister, economics minister Alexey Ulyukayev, was arrested and sentenced to eight years in prison on corruption charges last year. Despite this Russia actually fell four places over the last year to be ranked 135 out of 180 countries on the TI index with a score of 29 (unchanged for three years in a row).

"The result means that the high-profile criminal cases did not make enough impression on the respondents to recognise any progress in counteracting corruption by Russia," Ilya Shumanov, deputy director of TI, said in the report.

Ukraine has been an even bigger disappointment and has made even less progress than Russia in implementing reforms. The country has yet to jail a single senior official on graft charges despite hundreds of investigations being carried out by the National Anti-Corruption Bureau of Ukraine (NABU) and a handful of indictments of top officials.

Along with Russia, Ukraine remains one of the most corrupt countries in Europe. It ranked at 130 place in the list with a score of 30, up one point from the previous year. Despite heavy pressure from its international donors, not only has the administration of President Petro Poroshenko done little to deal with the endemic corruption, it has been actively resisting implementing reforms.

“With a score of 30, Ukraine continues to see attacks against anti-corruption activists, NGOs and journalists exposing corruption. Smear campaigns, illegal inspections, lawsuits, harassment and beatings are all instruments sometimes used by the powerful elite against those who drive anti-corruption efforts. Currently, civil society organisations working on anti-corruption issues are forced to fill out cumbersome e-declaration forms that make daily operations very difficult. Despite calls to end this practice, as well as subsequent promises made by the government, these requirements still exist,” TI said in the report.

The issue of corruption is becoming a deal-breaker between the IMF and Kyiv. The IMF delayed its last transfer of $1bn to Ukraine from the final quarter of 2017 to the first quarter of this year because of the lack of progress in setting up a mooted independent anti-corruption court, and the EU also cancelled the transfer of €600mn, explicitly citing the lack of progress on the anti-corruption court as the reason.

The lack of reform progress means that just four out of 12 planned IMF tranches have been made over the last three years, or $8.7bn of $17.5bn from the standby programme. Speculation is now rife that unless Kyiv sets up a real anti-corruption court – and one that is to the donors’ satisfaction, not just a watered down facsimile – then no more aid money will be forthcoming.

“Efforts to establish an independent anti-corruption court were also delayed despite pressure from international and national stakeholders. While an independent anti-corruption court is urgently needed, an independent judiciary is similarly important. Without this, civil liberties and freedom of the press are an illusion,” TI concluded.

To buy some time Poroshenko has introduced a bill to the Rada to set up the anti-corruption court, but Ukrainian officials pointedly ignored the recommendations of the Venice Commission that would ensure the court’s independence from government control and this version of the bill is unacceptable to the donors.

“I sense on a number of levels we are approaching decision time for Ukraine, at least in terms of the course of reform, the relationship with the IMF and perhaps also the political setting,” Tim Ash, head of strategy at Bluebay Asset Management, said in a note. “For Ukraine’s elites [the anti-corruption court] is an existential threat, and for the International Financial Institutions (IFIs) they understand the critical and game changing importance of this issue to the broader development of the economy and the country – simply put it could and should be game changing.”