This past July 3, I found myself commuting homeward alongside hundred of protesters, waving volunteer battalion flags as they marched down Kyiv’s central streets. The protesters were on their way to burn a pile of tires. Many wore facemasks and chanted nationalist slogans, and their ferocity stood in jarring contrast to Kyiv’s tranquil cafe culture backdrop. The marchers were members of some of Ukraine’s many somewhat-official volunteer battalions. These groups’ presence and frustration highlights one of the Ukrainian government’s newest challenges.
At the center of the protest was a group called "Right Sector," one of Ukraine’s forty or so volunteer battalion groups that were mostly formed last spring as fighting broke out in the East. (You can check out the Kyiv Post breakdown of the groups here. The battalions were an effective response to the Ukrainian army’s unpreparedness in the face of the well-armed, Russian-backed separatist groups. But unlike some of the other groups, Right Sector’s role actually began months before; many of its fighters had been on the Maidan’s front lines struggling for the ouster of former President Viktor Yanukovych.
Ukraine’s volunteer battalions, including Right Sector, are generally well funded and their training camps have a reputation for being quite rigorous. However, their money sources are, to put it mildly, a bit controversial. Alongside donations from average Ukrainians and the Ukrainian diaspora, large chunks of money also come from the country’s oligarchs. These individuals have interests in many sectors other than the war in the East. And these other interests create conflicts with wide-ranging consequences. Earlier this year, for example, an oligarch who sensed his business interests in a state owned energy company under threat, reacted by sending in the armed men he funded to secure the building’s premises.In response, the government has largely tried to fold these units under official control.
Things became even tenser a few days after the protest. On July 11, a shootout in southwestern Ukraine involving Right Sector members sparked worries that these volunteer battalions would increasingly clash with the government. The firefight, which left
three people dead, took place between roughly twenty Right Sector members, police, and security personnel from a local member of parliament. No one really knows what happened or why—with explanations ranging from Right Sector’s crackdown on illegal cigarette smuggling, to the group’s own involvement in the trade, to a Russian attempt to foster unrest in Ukraine’s western territories. Regardless of the reason, Right Sector’s soldiers were furious, threatening to pull their fighters from the front lines.
Walking to my Committee Building a few days after the shootout, I stumbled upon fifty to sixty Right Sector fighters milling around Ukraine’s Presidential Administration building to commemorate the deaths of their three comrades. In a slightly lackluster memorial, the fighters lodged a bunch of flowers between uprooted bricks, calling for others to fill the space with their own bouquets. I didn’t see anyone else follow their example, though the low-grade protest continued for much of the following week.
Some commentators have warned that Right Sector and other volunteer battalions could be at the heart of a third Maidan (the first being the Orange Revolution and the second was last year’s Revolution of Dignity). And the battalions certainly have large numbers of angry armed men, equipped with combat experience and bankrolled by oligarchs with specific interests, not a combination particularly conducive to social stability.
So far, the group’s support is not overwhelming, but it’s not trivial either. At another Right Sector rally on July 21, an estimated six thousand or so Ukrainians watched speakers decry government behavior. The onlookers spanned all ages, waving flags and yelling “Glory to Ukraine … Glory to the Heroes” every few minutes. I slipped into the audience with a friend, who whispered simultaneous translations of the varied speeches. Yet as the crowd began chanting “Glory to Right Sector" and "Revolyutsiya,” no interpretation was necessary.
The Ukrainian government has a delicate balancing act on its hands going forward. It needs these volunteer battalions. Their strong morale and sense of purpose have created impressive results on the battlefield, and many Ukrainians sympathize with, if they don’t outright support, the groups. But the government also needs to keep the battalions under its control, ensuring that they are integrated under an official system of command and oversight.
Watching face-masked, battle-hardened men marching down Kyiv’s distinguished streets—even in peaceful protest—brings home just how precarious the entire situation remains. At this point, the volunteer battalions may be providing more value added than harm, but they are also inherently risky.
One well placed match, and a lot more than tires could burn.
Ukraine’s Energy Sector
I have spent the past 11 weeks working as a legislative intern in the Ukrainian Parliament’s Energy Committee. The position was as unexpected as it was fascinating. To be frank, I had no idea going into the job what to expect from it. As I headed to work for the first time, I had not only all of the normal first-day anxieties, but the added fact that I had spent a total of forty-eight hours in the country whose government I was about to work in. And there was the small fact as well that my Ukrainian language prowess consisted only of the words “hello” and “thank you.” I hadn’t yet mastered “goodbye.” (I’ve got it now, thanks.)
Unsurprisingly, not everyone at the Parliament was terribly sure about me. The soldier checking my building pass glared at me; he and his colleagues would soften, albeit slightly, over the coming months. My coworker would eventually handle my permanent pass to get in and out of the building, apologizing for the delay, “They thought you were a foreign agent,” she explained matter of factly.
During my internship, my work centered on researching legislative changes for production sharing agreements (PSAs), contracts between private energy companies and the government, for natural gas exploration and production. This meant talking to a whole host of characters—both Ukrainian and foreign—across private and state owned energy companies, government agencies, law firms, consultants, and civil society. It meant the constant struggle in Ukraine to try to find data or information that almost certainly should be easily accessible—yet often was not.
And it meant some great stories.
There was the Ukrainian consultant who laughed at my questions. “This sector is so corrupt that you will get no where with those nice questions,” he scoffed. “In fact, I wouldn’t even be able to explain to you how corrupt it is.” This was, of course, before he launched into a five-minute housing metaphor to describe the extent of the sector’s corruption. He was right the first time, though; I had no idea what he was talking about.
Then there was the almost cliché villain-esque American energy investor who bluntly explained to my colleague and me that he didn’t care if a few of his Ukrainian workers died in the East if he was making high enough returns. Or the fact that after three months and many interviews, I never could get a concrete, agreed-upon answer as to just the number of joint-agreement contracts in Ukraine (for the record, it seems to be “around fifty”).
It was an exercise in constant bad news with sprinkles of hope and optimism. To say Ukraine has a bad track record with PSAs would be putting it mildly. The country is batting at 0 for 4. The first one fell apart as a consequence of corruption. The second, an at-least-$10 billion dollar deal with Shell fell apart as separatist fighting picked up in the East. The third, an equally large agreement with Chevron, disintegrated over Ukraine’s frustrating bureaucracy and political instability. And the last, with ENI in the Black Sea, was put on hold as Russia seized and then annexed Crimea.
As these mega-deals shattered, conditions in regular natural gas production remained stable, if not great. State owned companies continued to pursue deals with private companies that were opaque at best, mind-bogglingly corrupt at worst. And private sector companies complained furiously about last year’s extremely high tariffs that were supposed to be temporary but weren’t dismantled until late July.
This all matters for energy investors, but it is also massively important for Ukraine's democratic future. The country has long been highly reliant on Russia for natural gas imports, and, along with cutting its own consumption through higher prices and energy efficiency measures, spurring domestic production is another path toward independence. In fact, energy reform is so important for Ukraine’s future that the IMF made its loans contingent upon it.
Reforms are already taking place. Pricing for natural gas is moving toward real market value and the entire natural gas market is being unbundled from the monopolistic stronghold of Naftogaz, Ukraine’s state owned energy company. There are hard-working, brilliant people who strive every day to make the sector more transparent and efficient. By and large, the experts who took the time to speak with me were truly world class, fluent in discussing the intricacies of Ukraine’s energy sector and in making international comparisons.
But despite these best efforts, reformers face significant hurdles ranging from a lack of transparency, a lack of data, and blatant roadblocks from the individuals who benefit from the corrupt deals. As one energy expert summed it up, “There is just too much money here to root out all the corruption. No one wants to let go of their piece of the pie. And the moment they are forced to, someone else will try to grab it.”
Back in the Committee Building, I sat in on and watched one of the Energy Committee's two-hour meetings. (The key word here is watched, as my survival Ukrainian classes had somehow skipped the vocabulary section on tariff pricing.) The members of parliament spread around the table ranged from looking like a government fat cat to looking like a hipster straight out of Brooklyn, and they moved seamlessly from intense arguing, to raucous laughter, to stern silence.
Talking to a friend in the government later, I mentioned that while I was expecting the fat cat lookalikes, the hipsters caught me a bit off-guard. “Don’t be fooled,” he warned, “those hipsters are not necessarily any less corrupt as the old guard.” Plaid shirts and trendy glasses might change the optics, but not necessarily the behavior.
It’s true. In Ukraine’s energy sector old habits and old ways of doing business die hard. But even so, it is clear that things are changing, including well beyond any officials’ fashion sense.
Three Thoughts I’m Left Chewing On
My time in Ukraine has wrapped up. I’m back in New Haven now, feeling like I’ve only begun to scratch the surface of pretty much everything. Here are three issues that I’ll be mulling for a long time to come.
Levels of Corruption
Sitting in the Ukrainian Parliament on the last day of the summer session, I turned to a friend and asked, gesturing to the mingling members of parliament, “How many of these guys do you think are corrupt?” In a look that I’d seen a thousand times by that point—the ‘haven’t you learned anything yet’ look—she pressed me to define what exactly I meant by corrupt. “If you mean corrupt as in taking bags of money, probably not that many,” she guessed, “but if you mean corrupt as in they have conflicts of interest, I don’t know, perhaps everyone?”
I should have known to phrase my question better. In Ukraine I’d already learned that there is corruption and then there is corruption.
Sometimes corruption means that things are done unfairly or at higher than market pricing. For example, if a government needs 200 new lamps, it may look for a contractor to provide the lamps. A corrupt act may mean rigging the tender to award the lamp contract to an official’s friend at a 30 percent higher than normal price. The friend would produce the 200 lamps, pocket the extra money, and in return, the government official could receive a kickback or political loyalty.
But then there is corruption where things are not only done unfairly or at higher prices, but in the end, there is nothing to show for it. For example, in this same lamp contract metaphor, let’s imagine a scenario where there is no tender at all and the contract gets awarded directly to the friend who charges three times the market price. Instead of making the new lamps, the friend buys faulty lamps from abroad at dirt-cheap prices. One year later, the lamps have all burnt out, but a strategic line in the contract (that everyone just happened to overlook) forbids the government from taking legal action.
The key difference is, of course, that at the end of the first example there are lamps, while in the second, in very short order, there are not. When Ukrainian and international policymakers are seeking to distinguish between corruption problems that demand immediate attention and those that should be put aside for later, these types of distinctions become important.
Wherever the line, however, corruption seems to have far more shades than I had considered in the United States, where all of it is labeled as unambiguously bad. And while yes, it is very difficult to argue that any of it is good, it is also fairly unhelpful to apply this kind of black and white approach to Ukraine. In a country where corruption has so completely permeated so many different facets of life, from paying for grades in a university to slipping money to a traffic cop to slimy deals in the energy sector, where you even start addressing the issue may depend on which type of corruption you deem the most damaging.
Ukrainian Officials and Bureaucrats
In basic discussions of international relations, we make distinctions between countries and their governments—for example, referring to China’s government policies instead of China’s actions, to distinguish between the Chinese people and their leaders’ policy decisions.
After working in the Ukrainian Parliament, I want to push this one step further to look at divisions within the government. Any government’s bureaucracy is massive, and decisionmakers are but a small percentage of overall employees. Not only are many workers in purely administrative positions, but even those close to policymakers are often tasked with writing memos or with scheduling, rather than with any real decision making. While we intuitively know this distinction, and recognize it quite clearly within our own government, somehow in casual policy discussions of foreign governments, it becomes easy to lump everyone together.
When I entered Ukraine’s Parliament, I had never clearly thought this through. I knew of the divisions between political parties and even among the old guard parliamentarians versus the fresh new reformers who had been ushered in during the last election. Yet there was also a much wider divide among the employees than I had been expecting.
“When I started [working in the Parliament], I thought I’d be able to do something,” one legislative assistant said over a sushi lunch in our Committee Building, “I was wrong.” Another assistant complained about Ukraine’s government and its general policy of inaction. I couldn’t stop myself from reminding her that, she too, was technically a part of her country’s government.
Clearly, only a few people in a government have enough power to enact large-scale change. Even those individuals who are creating and executing policy, just not at the top of the political pyramid, may not have the ability to do much, since deviating from the official line would be professionally suicidal. They can often feel as helpless as the folks on the street. The implication of this is particularly interesting when applied to the question of political will. With so many calls for the Ukrainian government to show greater political will in its reforms, who are we actually talking about here and how long is the list of officials who could actually act?
Sitting in policy talks in the United States, people toss around the words “structural reforms” with a breezy casualness. A search for the phrase on the Brookings Institution's website brings up 1,744 hits, while over at the Council on Foreign Relations’ website it is only slightly more popular—a mere 1,253 hits. After having a front row seat in Ukraine’s reform agenda, I promise that I will never use those words lightly ever again.
Watching policymakers attempt to make wide-ranging structural reforms to Ukraine’s energy sector brings home what an incredibly overwhelming process it all can be. On a sectoral level, it’s quickly apparent that if you make one change, you may have to make another, then yet another in order for any of the changes to achieve their desired effects. For example, in the energy sector, you can adjust legislation on tenders, but then you may need to adjust legislation on transparency, and then how do you deal with those contracts signed before the reform. At each step, lawyers must review the laws, consultants offer advice, and industry experts will argue why it is, or is not, a good idea.
This is, to be sure, the lawmaking process for many countries around the world. Yet it is complicated further when undertaken at a breakneck pace by a government that is far from being the most efficient and where employees are making obscenely low wages (brought down even further by Ukraine’s currency collapse earlier this year). Adding one more request to staffers’ already-filled plates, for no additional pay, is not likely a great tactic for quick results.
By way of support, the international community often offers technical teams or consultants to make strategic recommendations on the reforms. In certain circumstances, these levers can be helpful. But if you don’t have the middle management to carry out reforms, they can fall flat.
And those same technical teams and consultants tend to overlook the lower and middle levels of government that have to actually effectuate policy. Given that reforms are so much work, and especially legal paperwork, perhaps allocating money to hiring young Ukrainian lawyers to plow through the administrative backlogs would be, at times, just as helpful. Not only might it alleviate some of the bottlenecks that come from changes at the top level needing to be processed administratively, but it could also help inject fresh ideas into the bureaucracy.
There is no magic bullet for making reforms any easier. But it seems that our calls for structural reforms will ring hollow if not joined with a sober understanding that making these systemic changes is excruciatingly difficult even under the best of circumstances. This certainly doesn’t mean that countries shouldn’t continue applying pressure on Ukraine’s vested interests, calling out backsliding wherever it occurs, or supporting reformers across the government and civil society. Instead, it should serve as a somber reminder that despite many determined reformers, the road to reforming Ukraine will be a long, complicated, and frustrating process—even if it remains the only path worth taking.