Combatting Corruption - Ukraine

In February 2022 Russia escalated the Russo-Ukrainian War by launching a full-scale invasion of Ukraine and occupying many areas of the country. So far the war has led to the deaths of close to 10,000 Ukrainians, the largest recession in Ukraine’s history, and over 7.1 million Ukrainian’s joining the ranks of poverty, with many industries being almost entirely destroyed. In response, many around the world have made strong efforts to support the Ukrainian people. The US has created a coalition of over 50 countries to send financial and practical support to the Ukrainian government. Since 2014, the US has committed more than $46.7 billion in security assistance, and continues to do so. Since the start of the war, the US has provided $23 billion in direct budget support (separate from military aid). As recently as October 26, 2023, the US has added an additional $150 million in support for Ukraine.

However, it appears that the US is increasingly displeased with the way that the Ukrainian government is managing its finances, with concerns regarding the need for critical reforms regarding anti-money laundering, financial transparency, and countering the financing of terrorism. Corruption has long been an issue in the country, with a 2016 Transparency International report stating that between 38% and 42% of Ukrainian households pay bribes to access public services. Since the war, the high-level corruption throughout the country has cost the Ukrainian people in defense, security, and access to medical supplies, food, and employment. In January 2023, Ukrainian President Zelensky made a massive cleanup effort to deal with the rampant accusations of embezzlement, stolen money intended for troops, and massive bribery. Ukraine’s Deputy Defense Minister Vyacheslav Shapovalov resigned following a major scandal regarding the purchase of military rations at inflated prices, costing the Ukrainian people hundreds of millions of dollars. Deputy Minister of Infrastructure Vasyl Lozynsky was fired and arrested after receiving a bribe of $400,000. Senior Advisor to President Zelensky, Oleh Tatarov, would solve law enforcement and regulatory issues for top construction companies in return for bribes.

However, the continued corruption in Ukraine may soon start costing the country its international aid. In September 2023, officials in the US government began issuing notices to Kyiv indicating that the US’s continued economic aid will begin to be contingent on Ukraine’s progress in reforming its institutions, and that the US led international financial support will be in jeopardy if Ukraine does not seriously address its corruption issues. According to one US official, “The message to the Ukrainians has always been that if any of these funds are misappropriated, then it jeopardizes all US aid to the country.” In late summer 2023, the US State Department even issued a diplomatic demarche, detailing its expectations of Ukraine to take specific and drastic measures to combat corruption.