The recent detention of Roman Nasirov, Head of the notoriously corrupt State Fiscal Service, sparked near euphoria in Ukraine. Nasirov’s arrest was seen as a sign of long awaited success of anti-corruption reforms in the country. However, even if Nasirov is found guilty and sentenced (a prospect of which we cannot be certain at the moment), there is very little hope that the corruption nightmare of Ukraine’s tax administration will come to an end. For true change to take place, the very system needs fundamental reform.
The key point which is missed in Ukraine and abroad is that fighting corruption is not “just a matter of political will”. This dangerous oversimplification makes most anti-corruption efforts futile – or even counterproductive – by diverting efforts from addressing the root of the problem to the pursuit of misguided and impossible goals.
As the Nobel Prize winner Douglass C. North, Barry R. Weingast and J.J. Wallis described it:
“Natural states [such as Ukraine] are not sick.” Natural states have their own logic; they are not dysfunctional… Natural states may appear to be corrupt according to the norms and values of open access orders [which is characteristic of all developed nations], but that corruption is an inherent part of the operation of the social order. Failure to understand how the much more visible and direct connections among political, economic, religious, and military privileges are integral to the social order is a major impediment to a better development policy…”
Corruption in Ukraine appears to be a good illustration of the above statement. Both Western and domestic observers – often unfamiliar with (quite complex) modern institutional and political economic concepts – misinterpret the current state of affairs in the country as “just ordinary corruption, demanding prosecution by political leadership”. This misconstruction of the issue leads to populism and farce.
“Political will” in what North and his co-authors call “natural states” is ineffective against the kind of corruption that constitutes the essence of their social orders, their modus operandi. Rather, “political will” works against the decay of this very social order by opening it up, and thus helping the progress of its development. For instance, in Medieval Western Europe, where new technologies were strictly prohibited by law, they could be developed only as a result of corruption of the controlling authorities. I describe in more detail below why relying on the strong political will of the executive branch of the government is likely to be counterproductive in Ukraine, (as well as in many other countries).
Advocates of the “political will” approach readily cite Li Quan Yu, but tend to ignore many other less famous (or even infamous) “strong leaders” who have attained power under the banners of “fighting corruption” – from Muhammad Zia ul-Haq to Alexander Lukashenko. Many, if not the most of them, eventually were exposed as corrupt as their predecessors, or even worse.
Different kinds of corruption require different kinds of tools to fight them. A land mine can be very effective weapon against a tank, but not against a warplane. However, in the prevailing anti-corruption rhetoric, the serious crime of embezzlement is described as a mere fee for “overtime hours” put in by bureaucrats for “greasing the wheels of bureaucracy”; as “aiding and abetting the circumvention of the stupidly cumbersome or burdensome regulations” (which they believe deserved to be abolished); or as a complex issue of law-backed extortion described in more detail below. Despite various interpretations, embezzlement is clearly harmful and leads to unlawful enrichment by empowered officials. This form of unlawful enrichment takes place in dramatically different ways and leads to very different outcomes. On top of that, the motivation of involved parties and other stakeholders is equally different in different cases. The solution of “sending them all to jail” works only for some cases. Further, “them all” in reality means a mere 5-7%, not 50-70% of all involved officials, as proponents of this solution would hope. Achieving higher numbers of legal prosecution is impossible, as no political will is capable of solving the problem by punishment.
Understanding the context of local reality is important for comprehension of the issues at hand. The old Russian proverb, “laws are written for fools” is, unfortunately, also true in Ukraine. It is a deeply-rooted tradition of public administration for laws to be made deliberately impractical in order to vest their selective and discretionary enforcement with government officials. This discretion gives the officials a vaguely defined power “to solve problems”, something unimaginable in countries embracing the rule of law.
Interestingly, in Russian, a public servant is called a “nachalnik”, a term (also used to some extent in Ukrainian) denoting rule over people by using the law as a stick, instead of the impersonal implementation of the law, as is expected of a bureaucrat.
When Robert Klitgaard’s formula, “corruption = discretion + monopoly – accountability” is applied to the national context, we can better understand the key challenge Ukraine faces today. The fact is that most state functions are realized through the state’s monopoly on the use of coercion. Until democratic and judicial institutions mature, accountability will remain weak and discretional, allowing the “nachalniks’’ to abuse their discretionary power with impunity. They will gladly use it as an instrument of persecution and extortion, of political pressure, and corporate raiding, of eliminating the competition, and promoting their cronies, and so on. More importantly, they will use discretionary power to support the current system by keeping laws impractical.
As long as these foundations remain largely intact, corruption will persevere as a practical, and sometimes, as the only, venue for solving a problem. At the same time, even the best “anti-corruption” legislation will suffer from the same selective, discretionary enforcement as any other regulations. Under such conditions, simply prosecuting individuals, even those with a high profile in the government, at the orders of their higher positioned “nachalniks” will only lead to state prosecutors lining their pockets. Or, if the offense is too egregious, the offenders will simply be replaced with equally corrupt individuals, albeit more loyal to the system and their benefactors. Within the above-described system of relations, selective punishment for common violations is interpreted by other state officials as a signal to demonstrate loyalty, not integrity. If not rooted in deeper institutional change and the rule of law, anti-corruption prosecution against specific individuals may even be counterproductive. Prosecution of individuals is a conventional instrument of selective justice against political or business competition, and as such, can be used for reinforcing personal power. Ukraine’s history knows many examples of such an agenda, and even more so in Russia’s history, where corruption flourishes despite juicy corruption scandals of key Ministers like Serdyukov or Ulyukayev.
The system described above is exploited not only for purposes of seeking personal gain by government officials, but also for sometimes fully legitimate purposes, including the performance of a government official’s legal duties. In other words, Ukrainian bureaucrats exploit the opaque nature of their powers to operate under the guise of law. This explains why “corruption vulnerabilities” are so hard to eliminate. It also explains why under the current system, the government cannot be entrusted with singlehandedly carrying out reforms that are meant to erode the system on which its power thrives. Because of that, seemingly modern Ukrainian state institutions often operate as the institutions of medieval “natural states” so brilliantly analyzed by North, et al.
To put it bluntly, the conflict of interests inherent in the powers of state officials is at the heart of dominant systemic corruption. It is foolish to rely on the same bureaucrats to implement true changes. There are some exemptions from the rule, such as “angels” dedicated to genuine reforms in their sectors who pursue changes addressing real issues. Good examples are a post-Maidan government, or, more recently, Olexander Danilyuk, the Minister of Finance, who, despite extremely fierce resistance, managed to push through ambitious anti-corruption changes to tax laws last year. Danilyuk’s success was possible only because he deferred to civil society experts rather than maintaining the tax authorities’ pivotal role in drafting legislative reforms, as all of his predecessors did (including Natalie Jaresko, who was widely misperceived as an “angel”). Danilyuk’s achievement was a far greater reaching and systemic move than Nasirov’s imprisonment can ever be.
Regretfully, anti-corruption policy is too often simplified and distilled down to the prosecution of top officials, and to a reliance on the personal integrity of new individuals who replace the old guard. Unfortunately, Western governments, for all their good intentions, have not come to grips with the fact that systemic corruption cannot be rooted out by such means. Selective punishment for criminal practices in which a large number of people participate is totally ineffective. It is not surprising considering the corrupt and politicized nature of law enforcement agencies, as noted above. Nothing will truly change as long as in practice, integrity will remain a morally relativist quality measured and weighed against opportunities offered by corruption. Instead, anticorruption efforts should focus on those corrupt opportunities arising out of legal and institutional frameworks, foremost on those which provide room for discretionary enforcement of regulations.
Corruption in Ukraine will keep persist as long as Western advisors continue to rely on a face value reading of laws (written for fools), and the government’s (mis)representation of facts. The government is happy to deceive outsiders in order to preserve its old ways. As developments since EuroMaidan have shown, it’s hard to expect the reformists or technocrats devoted to reforms to overtake the Ukrainian bureaucracy and secure a dominant position that would allow them to carry out real change from within the system. Since the problem of corruption is not merely a matter of corrupt individuals, but of corrupt institutions, the solution must be institutional in nature. Reforms capable of transforming the system should originate from outside, not from within, the current corrupt system. Naturally, officials must be given the powers to implement and manage reforms, but they should not be entrusted with conceptualizing and developing reforms.
There are many different examples of efficient institutional measures adopted in Ukraine and elsewhere. They range from separate government “offices for reforms” staffed with independent local and Western experts, to civil society organisations that draft and advocate laws in cooperation with reformist Members of Parliament. In 2010, Brian Levy and Francis Fukuyama suggested that Ukraine is one of the few countries where, “Bottom-up development engages civil society as an entry point for seeking stronger state capacity, lower corruption, better public services, improvements in political institutions more broadly — and a subsequent unlocking of constraints on growth”. Today, this insight is as evident as ever. Domestic experts and activists are fully aware of the rather sad realities Ukraine faces. Nevertheless, these activists (at least those with solid reputations), hold a sincere disdain for the rampant corruption that plagues the country, and often are able to offer good ideas on how to make the rule of law work even in the dire circumstances of systemic corruption. The more the West hears these experts and cooperates with them – the sooner the common goal of the rule of law in Ukraine can be achieved.
 Perhaps, those 50-70% of Ukraine’s bureaucrats could be fired. The problem is, however, that firing officials in corrupt institutions often means getting rid of those who are less loyal (and sometimes also less corrupt) or eliminating the most corrupt offices. The reduction of bureaucratic staff must go hand in hand with the eradication of opportunities for corrupt practices, as reforms were done in Georgia.
The author doesn`t work for, consult to, own shares in or receive funding from any company or organization that would benefit from this article, and have no relevant affiliations