A Critical Sight on Reforms in Ukraine
16 April, 2018

Ukraine needs reforms. It’s a mantra that both locals and foreigners have been hearing for the past four years. While progress has been made in some areas, the government continues to drag its feet on key anti-corruption efforts despite pressure from western authorities.

According to Melinda Haring, editor of Atlantic Council’s UkraineAlert blog, Ukraine has plenty of potential for a turnaround, but the progress on the ground has been disappointing.  Issues such as the lack of electoral or judicial reform, the middling economy and Ukraine’s slow progress on establishing an anti-corruption court are just some of the issues holding Ukraine back.

Hromadske spoke to Haring about US-Ukraine relations and how to move forward with reforms.

Melinda, my first question to kick off the discussion is, with at not longer Rex Tillerson in the state department, what actually is going on? How would you describe the Ukrainian-US relations at this moment?

So, Rex Tillerson was removed and he is going to be replaced by Mike Pompeo. There's been a big discussion how does he feel about Ukraine, how does he feel about Russia and most of the experts that I've spoken with think that a Pompeo is actually a hawk and that he will be even tougher when it comes to dealing with Russia than Tillerson was. So, that's certainly a good thing. And there is another positive sign within the larger administration. There are people who are fantastic, who understand Ukraine and all the complex dynamics here. Assistant secretary Wess Mitchell is fantastic, there are people in the National Security Council as well, who are really tuned into this. In spite of the headlines and all the concern about Trump: did he get support from the Russians to get elected? Is he soft on Putin? There are signs and mixed messages all over the place. There are people who are strong and know what's going on and these people believe in Ukraine and want Ukraine to succeed, the US has finally agreed to send javelins here and they are meant to arrive here this month, the US has finally put really serious sanctions with a lot of bite in place. I think that there are a lot of good things that are happening.

The same time, as you said, it's always overshadowed by Trump’s relations with Russia Muller's investigation and the whole talk about the collusion. At this stage, what do you really know and what is the role of President Trump in that? What does it mean? What can we expect from President Trump still?

I don't think you should focus on Trump. I think you should ignore the tweets. He likes to create fireworks, he is splashy. I think you should focus on policy, on what the US and the West continue to do with Ukraine. And the line hasn't changed. It hasn't fundamentally changed. If anything, it's gotten a little bit tougher.

And how would you describe the US’ policy towards Russia at this stage?

If you read through all of those sorts of bureaucratic documents, Russia is a huge threat. We know that on a number of different levels and our government is doing a variety of things. It's set up some apparatus to push back within the state department in terms of the messaging. There is a lot of very different things. Civil society is doing a lot and watching this as well. Just expelling diplomats is just going to lead to a reaction.

What are the real actions being considered? Because it took a lot of time for the Magnitsky Act to be enforced, and then it took a lot of effort to enforce the sanctions. But what are the feasible things we can expect from the US to act further? What is there besides sanctions? What is being discussed to further enforce this? In the end, there’s still Donbas, the annexation of Crimea, Russia is still doing what they are doing, there are all the debates over Syria. There is no clear action that’s really stopping them. So what are the future plans?

Have we finally gotten his attention? Have we have gotten Vladimir Putin's attention? Is this enough? And it's probably not. We may have to do another round of sanctions. These sanctions though – the Russian oligarchs lost somewhere between 12 to 16 billion dollars after this latest round of sanctions. So, it definitely got people's attention. What are the concerns though within the financial community, the Treasury? They were worried that if Russian sanctions were enacted, that would hurt the economy. But it seems like the real hurt was to the right place. So, there is probably going to be less hesitation and more willingness to try another round if Putin doesn't change his behavior.

What about the Skripal case? What's the role of the Skripal case in that?  How important was that for the US, for instance?

I think there is the tendency to see Russia hostile actions as sort of one-off. They poison Skripal, they interfered in these elections, they poisoned Litvinenko, but no one wants to connect the dots. There's been a real strong hesitation to connect the dots and they say that Russia has hostile intent, it wants to go to war with democracies. There's been real hesitation. It's much easier and much more convenient to just say: that's one thing, but we don't want to connect the dots, we don't want to arrive at this conclusion that Russia is at war with the West.

At the same time, recently there have been so many US publications writing about Russian meddling in the US elections. Recently there was an article on Ukrainian oligarch Pinchuk donating money to the Donald Trump campaign for giving a speech a couple years ago at a conference here in Kyiv, and later that he donated to Hillary Clinton. How are all these things perceived? How is Ukraine seen?

I don't think it's a big piece of it right now. The focus is really on Russia and Trump and the results of the election. The Pinchuk story is a side story and the question is: did the donation Trump gave a speech from New York at the YES conference – I think it was in 2014 – and the question is: was Pinchuk trying to buy the influence? Can it be considered the campaign contribution? And that's the question. It sort of a side story of the Mueller investigation.

We talk about the reforms, the anti-corruption fight, the situation on the frontline and all the other things. At this stage in particular, how is Ukraine seen in DC?

There are many views on Ukraine in Washington. I would say number one: it's important to say that there is huge interest in Ukraine on Capitol Hill, in the diaspora, in the think-tanks.

But, in general, my expert opinion after following the reforms for the last three years – I'm extremely disappointed. It has been 4 years and there is no justice. Ukraine has still not fixed its courts. The heartbreaking part of following Ukraine is that everyone knows what needs to be done but no one does it. That's the heartbreak. there is talent in this country. There is deep talent in this country. But it can't be realized.

There are people who should be in the Rada. There is tremendous talent in this country, people who want to get into political life and they can't get in because of the electoral system. The electoral laws are one of the things that massively needs to be changed this year and it won't be.

You said that there is a huge interest that would talk to say that there is a Ukrainian fatigue, it definitely exists in Europe, but how is it in the US? In particular, you expressed your expert point of view. But in that regard how serious are those disappointments on the reforms? At the same time when you listen and see that the US is on Ukraine’s side. In general, to what extent is the establishment critical and to what extent is it still saying: okay, we understand you went to war with Russia, we will keep our eyes closed, we won’t discuss it, but we understand.

There's a tension, right, there's a tension between these two camps. So one is saying: You need to push harder on domestic reforms, the other is: We don't want to push too hard because you do have this corruption fight. So those are... it's sort of like a – it's a balancing act. I think people, though, are growing increasingly disappointed with Poroshenko in particular and we expected a lot more. I don't want to be totally pessimistic though. There were some reforms last year, there were reforms in health, in education, pension reforms, but, these aren't enough. The problem is these aren't enough to get the economy growing, so the economy still stinks, right? The economy should be performing at 6-7%, instead, it's projected to perform at 3.5%. But, there's a big catch to this. The World Bank just said it may be more like 2% if Ukraine does not enact some structural reforms and it's resisting enacting these hard reforms.

What directions do you think Ukraine is not moving fast enough in?

We need an anti-corruption court – that's one of the first things that would convince business, it would convince people to take Ukraine seriously as a destination to start investing money. Foreign direct investment has been zero for the last three years because no one trusts the courts, no one wants to put money here. If you talk to the business community, it's kind of boring to read their surveys, you know what they're going to say: corruption remains the top problem – over and over again. They need to liberalize gas prices and let the prices float up to market level. I understand it's political suicide, but they need to do it.

Honestly, if you wanted to take Ukraine from its middling growth to 6-7, you're going to have to do a lot. So the militia has been disbanded officially, but they still haven't put a fiscal investigative service into place and there are big fights in the parliament over that right now.

Ukraine needs land reform, right? We know this. There have been eight or nine attempts at it in parliament and they just pass a moratorium again. I've been here for the last three days talking to civil society activists and this is not a good year, right, in terms of what we can expect. It's the year before the elections, every decision is being calculated based on how will this look in an election cycle. So, basically, civil society says that, if we manage to keep land reform and the electoral reform on the table, like, if we can manage to keep talking about it, that's a win. I think that's terrible. I think that's absolutely terrible. We can't have greater expectations? Because this is fabulous country and Ukrainians are fabulous and there's so much talent in this country that's unrealized. And that's the thing that breaks my heart.

To what extent do you feel the Ukrainian government is in denial over what critics say? And, also, there as those who would say that the US is trying to influence NABU in particular, the Specialized Anti-Corruption Prosecutor's Office, that they are pushing, they are breeding these teams and the government listens to them. The president personally listens to what matters to the US. We remember Joe Biden when he said: "I called the former Prosecutor General shocking, using swear words." So some would say that US is really into doing that. Others would say that, so far, the president is really listening and, to give the example of the e-declaration law, in the end, the West put a lot of pressure on Ukraine, but it's still there. How is the president seen personally in that regard? To what extent is he someone who is considered to be someone who cooperates and really listens carefully? To what extent is there the feeling that the government is in denial mode: oh those westerners, again and again they are making demands instead of helping us to a large extent.

I think that the only thing that works in Ukraine right now is the sandwich approach. You need to have a civil society squeezing the government, and the western donors squeezing on the other side in order to get reforms into place. I don't think this government wants to push any harder on the hard structural reforms and its not going to do it without that pressure. But I wanted to go to your point on Biden. I think that's a really important point, that there was a relationship, right, there was a relationship with the Vice President and with Poroshenko and they talked on the phone all the time, and they developed a nice friendship, and we don't have that same connection right now in the new administration.

What would you say about the comments that we sometimes hear about how Ukraine is fighting a war but, in the West, people hear more about the corruption in Ukraine? How did this happen? Is it fair? And is it the West pushing its own agenda? I heard those comments from some of the anti-corruption activists, who speak a lot in the West, from the MPs who are speaking in the West. They say: how come they are complaining instead of helping Ukraine, and maybe sometimes in a panicked mood.

So what's the alternative? To say that it could be worse? That's not an argument. That's not an argument. It could be worse? I mean, that's not an argument. Our job is to evaluate what Ukraine looks like today with realism – with affection, but with realism. That's what we're going to do. And we're going to call it the way we see it, and we're going to continue to push Ukraine to fulfill its potential.

And what are the indicators, for you, that things are moving in the wrong direction, and in the right direction?

Let's put all the cards on the table. I think things are moving in the wrong direction. I'm worried about the short and medium-term picture, right. I'm very worried about the economy, I'm worried about the elections. In particular, I've been snooping around for the past three days, and, you know, I keep counting and learning about new political parties that want to vie for the reform vote, right. The reform vote in this country – the Euromaidan vote, or however you want to call it – is not huge, it's maybe 25-30-35%. And a lot of people want that vote and there's no unity right now. So that's one thing that I'm worried about. I'm worried about the rise of populism. You know, that's going to be a big part of the elections. I'm worried about Russian interference in the elections, in the Ukrainian elections – that's a real possibility.

And what are the things which will indicate for you that Ukraine is moving in the right direction?

We want to see movement on electoral reform. And the fiscal investigative services would be another big thing to watch. If you look at IMF conditionality, the thing that they're not going to compromise on is the anti-corruption court. And I think Bankova thinks that it can, kind of, do one of these, and maybe change the conditions, or get around this, by playing with some of the languages. Ukraine is going to need some cash later on this year, and it's going to need IMF. They're not going to be able to just float another Eurobond like they did last year.

And, in that regard, to what extent is there a discussion that there is no alternative to Petro Poroshenko in the next presidential elections, which will take place in less than a year.

There is an alternative. There's absolutely an alternative. I think that's lazy thinking and I think they're underselling Ukraine because there is incredible talent in this country. Just because we know the name Poroshenko, Tymoshenko, you know, all the big names, it's not a foregone conclusion that either one of these is going to win, right. I know that they have administrative resources, they have big names. There's a possibility that Slava Vakarchuk is going to run, you know, some days it's yes, some days it's no. He's being courted by a number of parties, right. But there are other people who might end up running as well, people who have big names, who've done a lot in the last four years. I mean, I think the hope is that some of these people will finally stand up and say: I want to run, I want a shot at it. But the problem right now though is that the opposition vote is so split and you're not going to make the 5% threshold, and you're not going to win unless you unify. And I hope that the opposition parties get their act together and find a candidate who can appeal broadly and work on getting the Ukrainian economy working. I mean, that's the basic problem here. That's the most important thing that a candidate can do is to figure out a way to fix the economy, convince young people to stay here and make people happier. I don't think it's a foregone conclusion though that Poroshenko is going to be re-elected. I think Tymoshenko's a real contender and we're certainly watching her and watching the ways that she's changing.

What do we know about Tymoshenko? What do we know about what her work in DC?

She comes to Washington regularly, she was at the National Prayer Breakfast. You probably saw pictures of her. She comes to think tanks, she talks to experts. I read in the newspaper that she has representatives there. I've personally never met with them, but she's active. She wants this, right. And then, she was also at the Munich Security Conference. She's grooming her image and it's interesting – she's trying to move away from the old image, she doesn't want to be associated at all with the gas contract, and she's sort of burnishing her image.