November 26, 2021

Three steps from oligarchy to healthy competition. What Kurt Walker offers

The situation with the oligarchs in Ukraine is not unique in the world’s history.


The column was written with the co-founders of the Center for National Resilience and Development: Pavel Klimkin, former Minister of Foreign Affairs of Ukraine and Ruslan Ryaboshapka, former Prosecutor General of Ukraine


Last week, an American diplomat, special representative of the US State Department in Ukraine (2017−2019), director of the McCain Institute Kurt Walker visited Kyiv, where he held a public talk with business, politics and media representatives. The topic of the talk was de-oligarchization: how Ukraine can move from an oligarchic system to healthy competition.


Kurt’s vision was important to hear for two reasons. Firstly, he is very well acknowledged with Ukrain’s issues and opportunities. Secondly, he is able to assess our situation in a global context. Ukrainian politicians often lack such a holistic, global vision.


According to Walker, the key task of the United States in the context of relations with our state is to keep Ukraine on the international agenda, not to leave us alone with Russia.


And in this matter, Kurt was optimistic: "We have a wonderful Secretary of State (Anthony Blinken - ed.), whom I know personally. President Biden knows Ukraine very well. I think we will see a renewal of the US involvement (in the issue of Ukraine - ed.) ".


But in response, the United States expects the Ukrainian government to reform, fight corruption, and take other steps necessary for economic development. "It will be a combination of support and emphasis that some issues cannot be resolved by the outside world. Only Ukrainians are able to fix certain problems. Ukrainians are the ones who must correct them," - Walker said.


We would like the Ukrainian authorities to hear these words, which were a leitmotif for almost two-hour conversation.


Now, according to Kurt, an observer in Washington or Brussels sees the reforms carried out during Poroshenko's and the first year of Zelensky's presidency being slowed down or canceled.


Walker predicts that the United States will become more active in imposing sanctions against some oligarchs - both visa and financial. And Washington expects to see Ukraine's efforts in this direction as well. "There has to be something we work on together. The United States cannot do work for Ukraine,” - he said.


The United States has already imposed sanctions on Igor Kolomoisky. They are investigating his activities in the United States and expect that Ukraine will also take the initiative in it’s part. In particular, with regard to Privatbank.


"Billions of dollars of Privatbank depositors have been stolen. The Ukrainian budget, the IMF, which supports the Ukrainian budget, and therefore the US taxpayers, were forced to cover these losses," - Kurt said. Therefore, it is obvious that determined action is expected from Ukraine.


However the Privatbank case is just one example of the oligarchs' excessive influence. Walker is convinced that this issue is much more complex. The whole system needs to be changed.


"Ukrainians talk about corruption as a problem. But, in my opinion, this is a symptom of an illness: in politics and economics, a very narrow circle of people has enormous resources, which gives them excessive power and influence over the judiciary and government… Therefore, corruption is a consequence rather than a problem. And this has been the case since the beginning of Ukrainian independence," - he said.


The situation with the oligarchs in Ukraine is not unique in the world’s history. An example is the situation of the late XIX - early XX centuries.  When oil, transportation, metallurgy, and other magnates owned entire sectors of the economy and thus had tremendous political influence in the United States. The US then passed antitrust laws and forced business empire owners to sell some of their assets. As a result, America has benefited from fair competition - people like Morgan, Mellon, Carnegie, Rockefeller and others have become prominent philanthropists.


"I think something similar should happen in Ukraine. You need to focus on antitrust laws, set acceptable limits and give people time to sell assets, save money and reinvest it. Give them something like - I can't find a better word - amnesty. Don't look back, look ahead if they accept the rules,” - Walker suggests.


And then these businessmen - former magnates, oligarchs - will also need the rule of law. Successful business leaders are needed for business development, but they need to be forced to act within the law and in a competitive environment. Everyone with no exception, all of society,  will benefit from business development and economic growth.


"Ukraine, if I'm not mistaken, today has the second lowest GDP per capita among European countries. This is crazy. Ukraine must be a prosperous country. If you look at the size of its territory, agriculture, industry, natural resources, human capital and talent - it must definitely be a successful country. Nothing should stop Ukraine on the path to prosperity, " - the American diplomat is convinced.


To summarize what was said during the meeting with Kurt Walker, Ukraine needs to take the following key steps:

- Show the determination and irreversibility of reforms;

- Do not expect that someone will do the homework on de-oligarchization and justice;

- Radically change the entire system of politics and power, limiting the excessive influence of the few and creating conditions for business development and fair competition.


We are convinced that these words are worth listening to. The mechanisms can be discussed, but everyone is aware that the system in which a limited number of people dictate their political will to the government and the whole society must be completely changed. Everyone will benefit from this.


Let's remember 2005. Then, after the Orange Revolution, the value of assets, including those belonging to the oligarchs, significantly increased. Exclusively because of optimistic expectations for better governance and overcoming corruption.  Though the value of assets shortly returned to the old levels, because there was no fight with “the system”. 


Weak governments failed to ensure change for 30 years. We go in circles: hope for decisive reforms - disappointment, hope again - and disappointment again… We must break it.


The column is published on the Novoe Vremya website: https://nv.ua/ukr/opinion/ssha-kurt-volker-rozpoviv-yak-vporatisya-z-oligarhami-novini-ukrajini-50148284.html