August 9, 2015

Former President of Georgia Vows to Tackle Corruption in Ukraine

Former President of Georgia, Mikheil Saakashvili is now the governor of Ukraine's Odessa region. He traveled by bus for a meeting with residents of a small town in southern Odessa last Tuesday to make the case that he is committed to rooting out corruption. Photo: AP

Aug. 7, 2015 3:53 p.m. 

KOMINTERNIVSKE, Ukraine—For residents of this small town in southern Ukraine, the new regional governor’s inaugural visit was surprising: He came not in an official motorcade, but on a cramped minibus.

Mikheil Saakashvili, the recently appointed governor of Odessa oblast, had squeezed into the cheap van, paying the roughly $1 fare from Odessa to attend a town-hall meeting on Tuesday. Seeing a regional governor on humble public transport is an unusual sight in any part of the world. But even more strikingly, Mr. Saakashvili is a former head of state.

From 2004 to 2013, Mr. Saakashvili was the president of Georgia, the small republic on the eastern edge of the Black Sea. After losing power in his native country, Mr. Saakashvili relaunched his political career in his adopted home of Ukraine, where he has capitalized on his reputation as a maverick post-Soviet reformer and vowed to root out pervasive corruption.

The appointment of Mr. Saakishvili to run one of Ukraine’s most notoriously corrupt regions has become a litmus test for the Kiev government, which has struggled to overhaul governance amid the continuing conflict with Russia-backed separatists in the country’s east. But the former Georgian president’s crusade has set him on a collision course with some of the most powerful stakeholders not just in Odessa, a port city of about one million on the Black Sea coast, but also in the capital itself.

Informal, town hall-style meetings are a novelty for many in Ukraine, where political rallies usually feature stiff speeches and senior officials keep ordinary people at arm’s length. Mr. Saakashvili’s minibus trips, like the one to Kominternivske, have become a signature piece of political theater, recorded by his office and posted on YouTube.

In Kominternivkse, Mr. Saakashvili worked the crowd like an evangelical preacher, threatening hellfire for corrupt and incompetent bureaucrats. The governor then fielded dozens of questions, putting one disgruntled audience member on the phone with his chief of police, and delightedly agreeing when someone in the crowd suggested he run a bulldozer over a developer accused of seizing a public beach.

Initially skeptical, the crowd responded with rumbles of approval. “That’s right!” exclaimed several elderly women sitting in the front row.

Later, Mr. Saakashvili said straight talk is the only effective approach. “You cannot fool them [Ukrainians] by pouring out slogans and building them another hospital,” Mr. Saakashvili said. “They know that they can’t get anything good from the government, so they’re asking to be left alone—‘Don’t ask us for money, don’t ask us for all these documents.’”

Overhauling Ukraine’s notoriously corrupt customs regime is a priority for Mr. Saakashvili as he takes responsibility for a region that contains the country’s main ports. Entrepreneurs here complain that bribery is endemic at customs, where government inspectors often tack on heavy fees by overvaluing goods in transit.

“You create very tough requirements, then you impose an unduly high duty rate on goods,” said a regional customs expert, describing what he said was the general approach. “Then someone comes and says, ‘Do you want to import cars? No problem. You still have to pay 50% in terms of a tax, but I will allow you to declare the car for $5,000 rather than $50,000.’ ”

Yury Kovbel, the deputy director of a local company that produces goat cheese, said a bribe is usually expected in return for lower rates. When recently trying to import special storage units to preserve his cheese, Mr. Kovbel said he was told to either pay import duties that would double his costs or risk waiting for days.

In the end a bribe wasn’t needed, Mr. Kovbel added: After he threatened to take his grievances to the new governor, his request was pushed through customs in record time. The experience bolstered his faith that Mr. Saakashvili might have a chance of solving a decades-old problem.

The Odessa-based European Union Border Assistance Mission, which monitors cross-border activity in the region, estimates that customs officials perform hands-on checks on between 30% and 50% of cargo that arrives in Odessa’s ports, creating greater risks for foul play. The organization is pushing for lower duty rates in line with EU practice.

Even if Mr. Saakashvili succeeds in rooting out corruption locally, though, he still faces a major uphill struggle in ensuring that a fair share of legitimate customs revenues, which are sent directly to the central government, make their way back to Odessa’s coffers.

“With the powers he currently has, he can’t change the situation,” said Viktor Berestenko, the leader of a local freight-forwarding trade union that has actively called for customs overhaul. “He doesn’t even have the power to appoint regional heads of the fiscal service, the prosecutor’s office, or the customs office.”

Some Ukrainian political observers also question whether Mr. Saakashivili is the right man for the job. As president of Georgia, he presided over his country’s humiliating defeat in a 2008 war with Russia. The appointment of Mr. Saakashvili—who attended university in Kiev with Ukrainian President Petro Poroshenko—is also controversial in Odessa, a predominantly Russian-speaking city where street fighting between pro-Ukraine and pro-Russia activists left 48 people dead in a single day last year.

Meanwhile, in his native Georgia, Mr. Saakashvili faces charges for abuse of office, which he says are politically motivated and unjustified.

Mr. Saakashvili says he hopes to one day return to his native country, but declines to put a time limit on his stay in Odessa or in Ukraine. He dismisses suggestions that he is a liability for Kiev in predominantly Russian-speaking Odessa, where tensions remain high and small-scale bombings still occur amid Ukraine’s continuing separatist crisis.

“I am here to avoid provocation by Russia,” Mr. Saakashvili said. “Corrupt bureaucrats—I know how to deal with them. I don’t know how to deal with Russian tanks; that has never been my strong point and it never will be.”

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