On Sunday, November 15, officials at polling stations yawned while waiting for people to cast ballots for the mayor of Kyiv. The turnout in the latest local elections across the country marked a record low, indicating a widespread disappointment in politicians and politics in Ukraine. (Vitaly Klitschko, the incumbent mayor, won, with a plurality of less than 40 percent of the vote.) That disappointment is reflected in a joke making the rounds in the capital: Sociologists polled Ukrainians, asking which politicians they would like to spit at? An overwhelming majority marked the option, “Any one.”In a recent real-life poll, two-thirds of Ukrainians said the country is headed in the wrong direction. The number is the same as before the latest “Maidan” revolution, which took place in 2013, and it’s a good indication of society’s frustration with its institutions and leaders. But this is natural. Ukrainians as individuals are free to read, think, discuss and hence rise to high levels of political awareness and sophistication. But functional institutions and competent, experienced elites cannot form quite so quickly. They are not easy to conjure up anywhere; they take time to develop.The deeper point here is that political attitudes and institutions must align at least to some extent for any governmental order to thrive. People expect to interact in the public domain in ways that reflect their value hierarchies, and the rules that govern those interactions are deemed legitimate and are affirmed through usage when they actually do reflect that values hierarchy. Misalignment can occur from either direction. Sometimes institutions outrun attitudes, such as when foreigners or bold leader impose a new order on a recalcitrant society—think the imposition of electoral democracy in Iraq and Afghanistan, or the modernization campaign of Mustafa Kemal. Other times, however, attitudes outrun institutions, as in Ukraine today.It is easy for Westerners to forget that Ukraine is a very young nation; indeed, it never existed within its current borders before August 1991, or in any modern borders save for a very brief period in 1918 amid the chaos following the Russian Revolution. A few legendary attempts at statehood on the territory of modern-day Ukraine capture the popular imagination to some extent. The first one existed between the 9th and the 13th centuries. This medieval proto-state, called Kyivan Rus’, left a vibrant historical legacy in its capital Kyiv, not least through its choice of Orthodox Christianity as the religion of the land. It spread its influence and created civilizational offshoots far beyond its borders; indeed, Kyivan Rus’ was responsible for the rise of Moscow, and many of its leaders married kings and queens of Europe.The next attempt at Ukrainian statehood came in the 17th century with the rise of the Hetmanate, a wild militocracy that at its peak sprawled over about half of modern-day Ukraine, as well as parts of Russia and Poland. It was crushed by the Russian Empire, but left behind a trail of colorful folklore, and an historical memory of a distinctive Ukrainian identity. It was personified by the Cossacks, a brotherhood of tough but idealistic warriors who defended Ukraine’s independence in battles with the Russians, the Poles, the Turks, the Tatars, and even the Ottomans. At times, all of those enemies were allies as war coalitions shifted, disintegrated and reassembled.The brief independence interlude of 1918 gave way to Ukraine’s incorporation into the Soviet Union as one of 15 constituent “republics.” It was not an easy coexistence. Moscow often treated its “brotherly republics” as little brothers to abuse and bully. By far the most striking evidence of that in Ukraine was the Holodomor, the artificial terror-famine of 1932-33, malevolently induced by Soviet dictator Josef Stalin in order to starve Ukrainians into submission. Somewhere between 2.5 to 7.5 million people died—estimates obviously vary according to who is doing the estimating. Regardless of the numbers, parents and grandparents whispered stories of that famine to children at bedtime lest it ever be forgotten. The remaining published images of gaunt, weed-eating survivors haunt Ukrainian popular consciousness to this very day.But memories of suffering alone do not institutions make. Ukrainians stumbled into independence in 1991. On August 19 of that year, a putsch in Moscow, launched by elements of the Communist Party elite disappointed or frightened by his perestroika policy, sought to remove Mikhail Gorbachev from power. As a brief standoff ensued, Ukraine watched from a distance. Five days later, the parliament of the Soviet Republic of Ukraine proclaimed independence. The Declaration of Independence was still being edited literally minutes before coming up for a vote.The decision was basically opportunistic. Ukraine had developed a national political movement that was preparing the ground for this decision, but they were not the prime movers of it. It was rather Ukraine’s Soviet-era elite that chose independence in an attempt to preempt the political momentum rising beneath it. The vote evoked a national euphoria, and there quickly followed a December 1991 referendum in which more than 90 percent of the population supported the creation of a new and democratic Ukraine.But when the political adrenalin boost subsided, a harsh reality set in. Ukraine of the 1990s was mostly a land of the destitute. Everything was in short supply. I remember that my family, which lived in a residential district of Kyiv, had to queue before a shop for hours and hours just to buy eggs—the only thing that was supplied to the shop that day. Most of the shelves were empty. The Soviet planned economy had collapsed. Old ties between former republics were severed, but new market economies had yet to form.That also meant opportunity for others; state assets in gas and the metallurgy sector were up for grabs and could be had on the cheap. Many of Ukraine’s grand fortunes were made this way, starting in the 1990s and continuing all the way through the mid-2000s.One case that has given Ukrainians a glimpse at how exactly this murky privatization happened has been revealed thanks to the 2013 London lawsuit filed by Viktor Pinchuk against fellow billionaires Igor Kolomoisky and Gennadiy Bogolyubov. The asset in question is Kryviy Rih Iron Ore Enrichment Plant, a major ore mining company in eastern Ukraine’s Dnipropetrovsk region. The asset was privatized in 2004 for some $130 million, and has grown in value tenfold since then. In his claim, Pinchuk, son-in-law to then President Leonid Kuchma, said that he had reached an agreement in July 2004 with Kolomoisky and Bogolyubov that they would purchase Kryviy Rih Ore Enrichment Plant on his behalf, and transfer it to his company later. They never did. They also failed to pay dividends, according to Pinchuk. (The claim related to dividends was settled earlier this year, but the ownership dispute is ongoing). The privatization of Kryviy Rih Iron Ore Enrichment Plant was part of a bigger deal among a small group of top businessmen to carve out a national ore producing holding comprised of ten plants. To achieve that, they teamed up to pass a special law in parliament that allowed them to buy these assets cheaply.Apart from the insight into privatization of former Soviet blue chips, this case also shows that quite soon after independence Ukraine’s nouveau riche acquired a lot of political savvy. They figured out a winning combination for Ukraine: money, power and media gives you more money and power (and you can have more media, too, if you like). This was the beginning of Ukraine’s modern oligarchy, an intricate political system that came to dominate the country and that is proving resistant to change and reform.On the surface, Ukraine looks like a democracy. It has a publicly elected president and parliament, a ruling coalition that appoints the Prime Minister and Cabinet by consensus. There are judges and prosecutors, local governments and a multitude of political parties, diverse media and a thriving civil society. But all this is just a veneer. Underneath, the same small political and business elite has ruled the country since independence. Oligarchs have started or subsidized political projects, then gotten into power and taken decisions that benefit their businesses or that stifle competition. And the whole vicious cycle endlessly perpetuates itself. The degree of influence wielded by individual oligarchs has varied over the years, but the system overall basically remains the same.Ironically enough, many institutions of Ukraine’s young democracy have been deformed to serve this system. Take political parties, for example. There are 242 of them registered in Ukraine at the moment. You can buy one, just like a business, if you have the money. The package includes a completed government registration, regional offices and ready-made activists on a payroll ready to campaign on your behalf. You pay the current owner, rebrand and, voila!: You’re ready for a grand ceremony to elect you as party leader. Or you can install a proxy if you want. This is roughly what happened when the incumbent mayor of Kyiv and former legendary world boxing champion Vitaly Klitschko got his own party UDAR (Ukrainian Democratic Alliance for Reform) in 2010. But he’s far from the only one.Many state institutions operate in the same way. They are tools used by the oligarchy. From issuing licenses for gas production to awarding sweetheart state procurement contracts, from setting up offshore companies that siphon off part of the profits from state-owned monopolies, to launching criminal prosecution of competitors—oligarchs large and small can buy all of those services. Ukraine has effectively become a country with different sets of rules and rights for different types of people. It’s a little like the temporary class system on an international flight, with first class, business class and economy divided. Except that in Ukraine those who fly first class get to determine where the airplane is going. By now, Ukraine has become the only country in the region that has had two revolutions in the decade preceding 2015. Probably the most important thing that these revolutions show is that beneath the existing system of governance, which continuously regenerates itself according to its own closed logic, a new Ukraine has been forming and evolving. And it’s quite literally beneath the old system, if one refers to sociological stratification of the society. The new Ukraine comes from the grassroots. It’s an effort of the underdogs who want to actually have the rights that they formally already possess.First came the Orange Revolution. It started on November 22, 2004, the day when the Central Election Commission announced that Viktor Yanukovych was the new president. But most Ukrainians knew they did not vote for him. Voting fraud was massive, and people took to the streets to defend their vote and their right to delegate power to the person of their choice. That revolution was quick, bloodless and idealistic. While thousands of people dressed in orange scarves sang songs in the freezing cold on Maidan Nezalezhnosti in Kyiv, its fate was decided at a round table by all political sides, including outgoing President Kuchma, with foreign dignitaries as intermediaries.Yanukovych agreed to give up what he believed was his victory. He famously described his motives like this: “I didn’t want mothers to lose their children and wives their husbands. I didn’t want dead bodies from Kyiv to flow down the Dnieper. I didn’t want to assume power through bloodshed.” So by January 10, 2005, Ukraine had a new president, Viktor Yushchenko. By that time, this man, who had once been a sex symbol among Ukraine’s mostly faceless gray politicians, looked like a monster from a Hollywood horror movie because his face had been badly disfigured by an alleged dioxin poisoning. Strangely, the crime was never properly investigated and remains one of modern Ukraine’s great unsolved mysteries. (Yushchenko himself blamed the Russians, who were busy interfering in Ukraine and trying to prevent the election of an ostensibly democratic and ostensibly pro-Western candidate.)Yushchenko was possibly the nation’s biggest political disappointment, wasting his five-year term in office on squabbles with other Orange leaders—principally Yulia Tymoshenko—and failing to enact crucial reforms. He was mocked for his beekeeping passion and despised for allowing corruption and cronyism to thrive. Worse yet, his dismal performance as President set the stage for Yanukovych’s comeback. Yanukovych won the presidency in 2010 over Tymoshenko in what observers declared to be a free and fair election.A twice-convicted felon in his Soviet youth, Yanukovych was known for his lack of eloquence and polish, and was the unlikeliest of Presidents. He came from the mining region in the more Russian-speaking eastern region of Ukraine, where force counted for more than intellect. He swiftly rolled back freedoms, jailed political opponents—most famously Tymoshenko—and amended the Constitution and various other laws to gain control over all branches of power. His close circle, known as The Family, was busy “acquiring” assets and riches at the speed of light, often at the expense of both the nation and other (increasingly disgruntled) oligarchs.Oddly enough, as all this was going on, Yanukovych had also been negotiating with the European Union to sign an Association Agreement, which would move the nation closer to the EU and install European rules of the game in Ukraine. Then, at the last moment, under pressure from Russia, Yanukovych backed out of the deal. On November 21, 2013 the Cabinet announced that it had halted all preparation for the signing—and that pushed people onto the streets.The second Maidan was long, mean, and hopeless. The standoff between people and the Yanukovych regime grew increasingly more aggressive and turned deadly at the end. At least 106 protesters died during EuroMaidan, mostly from the hands of the police and sniper fire. At least 18 policemen were also killed. While the iconic images of the previous Orange Revolution were flowers that female protesters offered to police officers peeking from behind metal shields, EuroMaidan’s images were frozen barricades and burning car tires, Molotov cocktails and dead bodies laid out in rows. Then, on February 23, 2014, the revolution suddenly ended. President Yanukovych was gone. He packed up his vases and statues in his luxury mansion and took them to Russia, where he resurfaced a few days later. By that time the political leaders of EuroMaidan had taken key jobs in the government, and had set a new date for an early presidential election. But there was one crucial difference with the old revolution: people no longer trusted politicians to run things as usual. They wanted in; they wanted to fix the country themselves.So investment bankers became ministers. Civic activists became MPs. IT entrepreneurs ran for mayors of Ukrainian cities. When Russia annexed Crimea in February and started a war in eastern Ukraine in March, volunteers quickly moved in to replace non-existing or paralyzed institutions.For example, Ukraine had an army, but it had never been used in combat. In fact, the nation’s military doctrine assumed that Ukrainians had no enemies around the country’s perimeter. So the army was like a withered muscle. Its property was looted and sold off by its generals at a profit, its soldiers were demoralized and lacked the most basic supplies—even food. So volunteers stepped in to both fight and ensure supplies were procured and delivered. Eventually some of those volunteers even infiltrated the Defense Ministry to start designing new military uniforms and introducing modern logistics.Volunteering shot up to unseen levels. According to a UN study released in December 2014, some 23 percent of Ukrainians were volunteering in one way or another. Although this figure is on par with many EU countries, it is unprecedented for Ukraine, where one of the most famous proverbs goes like this: “My house is on the edge of the village, I know nothing.” Most Ukrainians famously mind their own business.Since the EuroMaidan, Ukrainians have made a notable leap from the old low-trust posture toward building a community bound by common values and goals. It is somewhat ironic that the policy of Russian President Vladimir Putin has helped to speed up the process. (But as a Romanian philosopher once said, “history is irony in motion.”) The need to fight a common enemy united the nation. Ordinary Ukrainians felt they had to participate, and that was the good news.The bad news was that those volunteers, despite their unprecedented numbers, were and continue to be badly outnumbered and outmaneuvered at every step by the old, corrupt elite that still controls key institutions. And what is worse is that the existing corrupt system is very seductive and lucrative, tempting many good people to the dark side. American billionaire and philanthropist George Soros, speaking in Kyiv on November 14, said he had lost some of the optimism about Ukraine that he had before the visit: “I have been in Ukraine for only a week, but I came to realize that the situation is not as promising as I had thought from the outside.”What struck him was how badly progress at reforms had stalled. His intuition as to why it had stalled was that corruption continues to eat the nation like a cancer. In a recent nationwide poll by IFES, 40 percent of respondents said that they had given a bribe in the past year. The majority of those cases took place in everyday situations, such during a visit to a doctor (32 percent) or at schools (8 percent). You come to the surgeon in an emergency, and they say that there are no spare beds in the hospital for someone in your condition. But the bed suddenly becomes available once a financial incentive is offered. Frequently financial contributions are even openly solicited in the form of a “voluntary donation” to the hospital, the school or a government agency where you seek assistance or service.In the same poll, 53 percent of Ukrainians said corruption is Ukraine’s biggest problem. It was only surpassed by the Russian-inspired war in the eastern provinces of the nation (70 percent), and high prices and inflation (56 percent).Petty corruption, however, represents just a fraction of a much larger issue. The real elephant in the room is the grand-scale political corruption—the old oligarch-driven system—less visible through polling data but much more damaging to the country as a whole. It directly robs the nation through the unfair distribution of the lion’s share of wealth among the ruling political and business elite. In the long term, it constrains business, infrastructural and human development, depriving the nation of its potential and its future. But perhaps the worst effect of this grand corruption is the creation of distrust and apathy in the society, a sense that there is no way out. Bohdan Vitvitsky, a retired U.S. Federal prosecutor and international expert on corruption, notes that people say that corruption exists in every country. Although true to a degree, it matters enormously whether the corruption is episodic or systemic:
In countries with systemic corruption there is no effective mechanism for preventing corruption and no effective law enforcement system. Also, people believe that it’s inevitable. In countries with episodic corruption, corruption is considered intolerable, and pretty much the opposite situation pertains.
At a recent conference in Kyiv, President Petro Poroshenko said that Ukraine is moving toward fighting systemic corruption. “We have already sharpened the ax,” he said. What he failed to mention is the fact that it took him 18 months in office to sharpen that ax. More importantly, there is massive resistance within the political elite against using it, because in a great many cases it would mean chopping your own head off. President Poroshenko, who owns a confectionery empire, as well as considerable assets in media, shipbuilding and other sectors, became Ukraine’s only oligarch in the top ten richest whose fortune actually grew (by a whopping 20 percent) in the past year amid economic recession and war raging the eastern provinces. The ranking of the richest was done by Novoye Vremya, a weekly magazine, in conjunction with Dragon Capital investment bank and released on October 29.At least part of this growth might have come as a side-benefit of Poroshenko holding the country’s highest office. When his confectionery empire, Roshen, decided in July to expand by building a biscuit factory in the outskirts of Kyiv, it managed to rent a large land plot from the local community in Boryspil region, bypassing a land auction mandated by law. Existing tenants were kicked out prior to the deal. Roshen, however, insists that it is in full compliance with existing laws. And when his confectionery opened a new store in the city of Lviv in October, it put up a huge sign without any approval from city authorities in October. It was later taken down.But Poroshenko is by no means alone among those in power whose fortune is growing. Ukraine has seen the rise of a new wave of oligarchs, those who have been friends and business partners of the current political elite. They inevitably latch themselves onto any viable business with a healthy cash flow and any state procurement contracts. For example, the long-term sponsor of Prime Minister Arseniy Yatsenyuk’s party took over the lucrative duty-free trade in Ukraine’s main airport.Friendly oligarchs continue to get away with the illegal privatization of land and assets, setting up intermediary companies that provide non-existent services to state monopolies for various non-transparent fees, and engage in tax evasion on a breathtaking scale, and in hostile takeovers of other people’s business. All of these crimes should be investigated by the law enforcement system, but that rarely happens in practice. Moreover, harassment of journalists and opposition politicians has restarted in ways eerily reminiscent of the Kuchma era. The path-dependency of the system is reasserting itself.All this is happening under the watch of Western donors and diplomats who are dishing out unprecedented levels of technical and financial aid to Ukraine. In exchange, they are fed long laundry lists of laws approved and new anti-corruption agencies set up by the government, pushed through by civil society and by the conditionality of the international aid. But all these efforts merely scratch the surface of the existing system, and will go no deeper as long as Ukraine remains institutionally weak. Building those institutions in the absence of political will in much of the elite remains the main problem with which the nation is struggling. And Ukrainians are once again growing restive with the failure of their leaders to follow through on promises of change.Young Americans have this phrase, derived originally from an animated satirical television sitcom, “friends without benefits”, and it’s sort of funny. Ukrainians seem ready to invent a similar phrase: “revolutions without benefits”, but it’s not the least bit funny. It is as though the nation is caught in a classical double-bind: Ukraine needs responsive institutions to break the bonds of a traditionally low-trust society, but that legacy of low trust prevents those responsive institutions from forming and setting a firm foundation. How exactly that cycle gets broken is the key to a better future for Ukraine, if it ever achieves one.