The Ukrainian Malaise: Will Georgians Save the Day?

The Ukrainian Malaise: Will Georgians Save the Day?

The FINANCIAL -- When Georgia ran into a conflict with its northern neighbor in 2008, it experienced considerable solidarity on part of its main Western ally. The United States supplied military transporters to fly back Georgian troops from Afghanistan, which was correctly understood by the Russians as a warning that the US would not allow Georgia to fall.

While the Russians had already taken Gori, Condoleeza Rice and Michail Saakashvili held a joint press conference in Tbilisi, just 80 km away. Surprised by the American determination to defend small Georgia, the Russians finally withdrew their troops to South Ossetia.

In contrast, in the ongoing crisis in Ukraine there was no swift Western reaction to deter the Russians. The Western response to Russian military aggression was a series of sanctions, sending a clear signal that one would not be willing to defend Ukraine militarily.

Why were Ukraine and Georgia treated so differently? There may be a couple of reasons, but the most important one is that since 2003, the government of Georgia had “done its homework”: in a series of bold reforms, many of which were either taken from economics textbooks or later included in them, Georgia had developed from what was essentially a failed state into an important asset in the geopolitical game. No Western government is willing to risk a war with Russia for saving Ukraine’s territorial integrity, because its government is dysfunctional and swamped with corruption.

Ukraine learned the hard way why one should get one’s government in order, and in the wake of this experience they hired various members of the former Georgian government to fix up their country – the achievements that were made in Georgia shall now be repeated in Ukraine. The former Georgian minister of healthcare, Alexandre Kvitashvili, has become the new minister of healthcare in Ukraine. Eka Zguladze-Glucksmann, former first deputy minister of internal affairs in Georgia, has become first deputy minister of internal affairs in Ukraine.  Gia Getsadze was deputy minister of justice in Tbilisi and has now the same office in Ukraine. Dato Sakvarelidze, who held a similar office in Georgia, is now deputy prosecutor general in Kiev. And, last not least, Michail Saakashvili himself was appointed governor of the Ukrainian province of Odessa this week. This list is not exhaustive, and each of these Georgians brings along former aides, staff members, and experts from Tbilisi.

The question is, however, whether the Georgian political team will be successful. In my opinion, there are two good reasons to be optimistic. The first one is that, while there are differences in the details, Ukraine is struck essentially by the same problem Georgia had in the past: government failure. The second reason is that Georgian politicians have a very “pragmatic” way to fight corruption, which arguably is more effective than a more principled approach favored by most corruption experts and NGO’s.

GOVERNMENT FAILURE

Writing this article from Kiev, I can assure you that at the surface, Ukraine appears to be anything but a failed state. The streets are very clean, the density of high-end limousines is quite amazing, there are almost no old, rusty cars driving around, and the air quality is much better than in Tbilisi. People are dressed up nicely, pedestrian rights are respected, and the society makes a much richer and more “European” impression than Georgia.

This private glitter, however, is part of the problem. While rich Kievans enjoy themselves in the cozy street cafes of the capital, the Ukrainian army fails to provide food and equipment to its soldiers, who therefore have to rely on their families! And after the revolution, there were allegedly only a few hundred thousands of dollars left on Ukraine’s government accounts (which led Europe to hastily give some extra loans). Taxing just a fraction of the wealth that is driving around in Kiev’s streets through a car tax would have solved the problem, but the government was not capable or willing to do it. It is obvious that what is dysfunctional in Ukraine is not the society, which is civilized, European, and quite wealthy, but the government, which does not tap the private wealth. As a Ukrainian friend told me: “Ukrainian authorities have remained in the 19th century.”

This very much resembles the situation in Georgia before the Rose Revolution. Also in Georgia, people were not intrinsically corrupt (I refer the readers to my article “Georgian Decency as a Competitive Advantage”, to be found on the ISET Economist Blog). Ordinary Georgians suffered big time from corruption and truly yearned for a government which would move the society into a new, non-corrupt equilibrium. Similarly, yesterday on the Maidan here in Kiev I saw a demonstration against corruption, where protesters were holding up posters with a message for their political leadership: “If you don’t terminate the corruption, terminate your government!”

Georgians have an impressive record in fixing government failure. Their preferred approach was to just remove the government when it failed – while in office, Kakha Bendukidze removed some 900 laws or so. This nurtures hope that also in Ukraine, with similar problems, the Georgian recipes will work.

SELECTIVE INTEGRITY

An important characteristic of the “Georgian way” to fight corruption is its selectivity. Not everybody had to denounce corruptive practices after the Rose Revolution. In a classical top-down approach, the first one’s who had to change were those at the very bottom of the hierarchies: policemen, simple government employees, bureaucrats. Many of them were fired and some reemployed under zero-tolerance conditions. The government encouraged whistleblowing and established telephone numbers where citizens could report corruption. This worked perfectly well, and there is no doubt that so-called “petty corruption” was eradicated in Georgia.

In the higher ranks of the hierarchy, however, the anti-corruption campaign was enforced less strictly. The many reports about extortions of money from businessmen, political considerations in government tenders, the involvement of Vano Merabishvili in a highly disturbing murder case, to name just a few instances – integrity standards were not equally high for all members of the Georgian society.

Is this good or bad? From a principled view, of course one has to condemn this selectivity, and Transparency International would never give its approval. Yet from a pragmatic view, it may be necessary to, at least in the beginning, focus on fighting petty corruption. Once the lower ranks are cleaned in a top-down approach, a bottom-up development may follow later: if people are not used to corruption in their everyday lives anymore, they will also lose comprehension for grand corruption at the top. And for a limited amount of time, it may be acceptable to let some people get away with their practices, if that secures their support for the general reform process.

Selective integrity may also be necessary in Ukraine. Some in the new Ukrainian leadership control entire business empires, and who knows whether they would be happy about an anti-corruption campaign that would cut deeply. If uncautious, the Georgian experts might be back on the job market quite soon -- yet the concept of selective integrity, which they developed when ruling Georgia, may help them to deal with local challenges quite well.

A NEW GENERATION OF POLITICIANS

Successful managers and executives in the private sector are not restricted to work for one company. Very often, when the position of a CEO has to be filled, headhunters look for candidates among those who proved their competency outside of that company. I found it always problematic that this was not the case for politicians – apparently, for politicians it was not competency and skills which counted but networks and political support they had built up.

Yet also politicians need skills and expertise. The lack thereof among numerous examples among politicians from all countries of the world, is one of the reasons why governments are frequently performing so badly.

I am happy that Georgian politicians break up the convention that a Ukrainian minister must be Ukrainian. If somebody has proved to be able in country A, why not using their skills in country B? The signature skills of Georgian politicians, namely to fight corruption and build up democratic institutions, are scarce all over the world. Perhaps, Georgians will find employment not only in Ukraine, but later also in numerous other countries where the “Georgian approach” is needed!