Although Ukraine is not unique as a developing country and emerging market economy-nor is the presence of corruption-it is the scale and pervasiveness that gives Ukraine a reputation as one of the most corrupt places in the world. Everyone here can tell you endless stories of how and what they pay for this or that.  In fact, it is the rare anecdote that does not include a mention of a bribe(s). Even the most mundane and simplest of everyday transactions has a bribe attached to it.

Recently, I had a conversation with a student who told me that she would skip an important exam she was scheduled take the following day so she could stay out late that night. When queried whether she would fail her class if she missed this exam, she replied that it is normal for students to pay bribes to teachers to pass classes. My first thoughts were of the doctors educated here. Having undergone surgery in Odessa recently, I felt lucky. Perhaps my doctor was the one who did not stay out late prior to exams and pay the professor to give him a passing grade?

Lastly, no one here expects this to change anytime soon. Most say that it is too ingrained in the culture and life of Ukrainians to change, and no political will for it either. Let us hope that this is an incorrect assessment.

CORRUPTION PLAGUE

Mark Rachkevych

Ukrainians believe corruption is on the rise and blame public servants, politicians and government, according to recent studies, including one survey that found as many as 6 in 10 Ukrainians were exposed to corruption in the last year.

The high level of corruption is costing Ukrainians plenty, not only in battered image internationally but also in the pocketbook at home.

Transparency International’s 2009 Global Barometer survey estimated that 7 to 10 percent of household disposable incomes go towards paying someone off. Compared to the rest of the ex-Soviet republics known as the Commonwealth of Independent States, the Berlin-based corruption watchdog said that Ukraine is at the bottom of the barrel.

“Bribes are essentially extra taxes on firms and individuals, which reduce profits and disposable income and thus demand,” said Vladimir Nesterenko, head of research for Galt & Taggart Securities. “They increase the income of the corrupted elite.”

Besides Transparency International, at least two other groups recently painted unflattering portraits. Those include the UPAC (Support to Good Governance: Project Against Corruption in Ukraine) anti-corruption project, which was done for the Council of Europe and European Commission, and the ACTION project (Promoting Active Citizen Engagement in Combating Corruption in Ukraine), which is funded by the United States Agency for International Development.

The U.S. AID-assisted project found that Ukrainians pay roughly Hr 3.5 billion, or more than $400 million, in bribes annually, said Juhani Grossman of the ACTION project.

That’s money that Ukrainians can ill afford to lose.

According to official government statistics, the average disposable income of Ukrainians is $229 monthly, next-to-last in Europe, or 9 percent of what Germans have available to spend. But this figure grossly understates Ukrainians’ real spending power.

It does not, for instance, include off-the-books income made in the country’s robust shadow economy, where much of the nation’s commercial activity may be taking place. Researchers say a more realistic average monthly figure for Ukrainians may be $975, just below Poland’s disposable income.

Whatever the figure, bribes and an even more common variant – outright extortion – are forcing Ukrainians to part with their hard-earned money. No one knows better than Ukrainians themselves.

The European Commission/Council of Europe’s anti-corruption project found that 79 percent of the public and 66 percent of Ukraine’s entrepreneurs view corruption as high in the nation.

Quantifying corruption, including bribes and extortion, is always difficult because of its very nature – money changing hands in furtive and hidden ways.

The U.S. AID-funded study suggested that corruption has inched down a bit in 2009, while the same study indicates that citizens perceive that corruption has doubled.

Nevertheless, bribes are so widespread and common that many Ukrainians know exactly how the system works. Disturbingly, the USAID-funded study found that nearly half of Ukrainians see corruption as more than an every-day part of life: as a “justified market mechanism” that exists to get things done fast or counter-balance low salaries. Ukrainians face corruption at nearly each step they take, be it in business dealings, education or when they go to the doctor.

Oleksandr Ovcharyenko, an IT specialist at a prominent Kyiv company, said he paid a total of $1,000 to the doctor who was responsible for caring for his wife during her pregnancy all the way through delivery of their son. He was more concerned about securing quality medical care than demanding free service. The extra payments Ukrainians routinely make to underpaid doctors dispel the myth about the country’s “free” healthcare system.

Foreigners residing in Ukraine are not spared by Ukraine’s widespread and institutionalized corruption. Uliana Paliukh hails from North America and is of Ukrainian lineage. She paid a lawyer $2,400 to obtain a residence permit without an expiration date in order to avoid the massive bureaucracy and common demands for bribes from state officials.

The money given in bribes to doctors, university professors and traffic police – three common recipients – is money that doesn’t go into state coffers. Consequently, that’s less public money for improving infrastructure, increasing public-employee salaries or other social uses.

“A bribe is often spent or saved outside the country, instead of being spent on the purchase of locally-produced goods, or saved in a local bank, which would fuel the country’s economy,” said Galt & Taggart’s Nesterenko.

Government would seem to be the biggest victim, because of loss of potential tax and other revenue.

But, in reality, government officials – from bureaucrats to lawmakers – find lots of benefit in not changing the way that Ukraine operates. After all, they inherited a stiff Soviet bureaucratic system and have done little to change it. What remains is a maze of regulations that effectively enhance the powers of lawmakers and government bureaucrats over the economy, businesses and citizens.

Consequently, bribes are commonplace for avoiding the time-consuming processes of government regulations, including requirements for countless permits, licenses and signatures. Government officials who took part in the UPAC study admitted that 300-600 signatures are required for certain administrative issues related to land and permits.

Long lines, lack of public information and mandatory face-to-face visits with civil servants – who remain stubbornly resistant to doing business online – all enhance opportunities for shaking down citizens.

People are “simply intimidated by the experiences related to administrative procedures,” said Roman Chlapak, UPAC’s project leader.

The perpetuation of the status quo continues to erode public trust in their institutions. Transparency International’s study found that 28 percent of Ukrainians see civil servants as most corrupt, followed by lawmakers (21 percent), the judiciary branch (21 percent) and political parties (12 percent).

Business and media are seen as far less corrupt, respectively 11 percent and 2 percent.

“The problem with fighting corruption is that this fight is often not in the best interest of the political elite, those who actually have the means and levers to fight it,” Nesterenko said.

With recent improvements in freedom of speech in Ukraine, “People hear, see and read about corruption much more frequently than they did two years ago,” Grossman said of his survey’s comparative analysis. “When they hear about it more often, they get the impression that there is more of it.”

Lately, government is trying to show the public that it is getting serious about combating corruption.

A package of anti-corruption bills is working its way through the Verkhovna Rada. The measures are viewed as a significant leap forward and designed to comply with a series of recommendations provided by the Council of Europe’s Group of States Against Corruption.

Parliament also recently gave initial approval to a revised law to increase public access to information on government activities and public officials. It will: allow citizens, non-governmental organizations and journalists to receive requested information in 5 instead of 30 days; allow those requesting information to do so via fax or e-mail; require local government officials to be responsive; force government officials to explain their actions and activities on their respective websites; and hold government officials responsible for not releasing open information.

UPAC also recommends that Ukraine separate administrative and political functions, increase public-sector salaries, develop a universal ethics code, develop one-stop centers for doing business with the government and expand points of contacts to include postal and e-mail requests, among other recommendations.

(from www.kyivpost.com)

When I read this, I was thinking of a few people I have met here in Odessa who resemble reptiles by their behavior. Maybe some entrepreneur can breed these crocs for shoes, belts, wallets and handbags??

Two Crocodiles Appear in Odessa!

Local fishermen found 3 metres crocodile in the pond near premises of Lukoil-Odesskiy oil refinery plant OJSC.

Having found exotic inhabitants of the pond, rescuers of the city Emergency Situation Department went there immediately. Some time later divers confirmed that crocodiles appeared in the pond in the northwestern suburb of the city.

Deputy chairman of the city department on emergency situations Victor Oliynyk said to UNIAN that “ some fans of exotic living creatures released crocodiles to the pond. One of the crocodiles is near 3 metres  and the second one is one metre and a half. Taking into consideration a danger to lives of fishermen, rescuers established an indicator plate, where it is said about crocodiles and the police post is near the pond.

At the same time rescuers of the Emergency Ministry keep trying to catch dangerous reptiles.

(www.unian.net)

This will come as no surprise to people living and working here, but the International Monetary Fund sees greater economic decline than it had projected earlier. The real concern…spoken in hushed tones by businessmen here…is that things may not really improve until the political situation does. The upcoming elections could help, but real reforms will be slow in coming and that may keep Ukraine in an economic funk long after other emerging markets recover.

IMF Sees Sharper Downturn in Ukraine, Budget Strain Amid Crisis

By Kateryna Choursina and Timothy R. Homan

June 18 (Bloomberg) — The International Monetary Fund will likely change its forecast for an 8 percent economic contraction in Ukraine to a sharper decline, an IMF spokeswoman said.

“We do foresee a sharper-than-expected contraction,” Caroline Atkinson, director of external relations at the IMF, told reporters today in Washington, adding that the numbers are still being worked out. “Obviously we are looking at the strains of the budget from the deeper contraction and from the continued financing need of Naftogaz.”

The global economic turmoil forced Ukraine, like other emerging markets, to seek assistance from the IMF last year to prop up its financial system and currency. Moreover, the Ukrainian government said this week it will increase the capital of state-run energy company NAK Naftogaz Ukrainy as it seeks funds to pay for natural gas to be stored over the summer.

Of the $16.5 billion the IMF has allocated to help Ukraine, the first $4.5 billion tranche was received in November and the second $2.8 billion in May.

The IMF originally planned a third payment of $2.8 billion, which Prime Minister Yulia Timoshenko has said can be $3.2 billion. To qualify for that installment, Ukraine needs to stabilize its troubled lenders.

The use of third tranche specifically to bolster Ukraine’s budget “is quite possible,” the IMF’s Atkinson said.

An IMF mission is scheduled to depart for Ukraine next week, she said.

(from www.bloomberg.com)

OK…if you are a woman living in Ukraine you might think differently. However, if you are a man that likes women and you seek less competition, then you aren’t shedding too many tears.

Of course, behind the statistics there are discomforting reasons contributing to a shortage of men. The usual suspects include diet and lifestyle, high per capita alcohol and tobacco consumption, traffic accidents, a lack of safey standards and enforcement, TB & HIV, an inadequate health care system, and men leaving to seek employment and business opportunities in other countries.

Another factor are the high levels of stress due to a culture that has lost some of it’s bearings after the fall of the Soviet Union, and the lack of a stable political system and economy. Moreover, the difficulty in completing even the simplest task, as well as endemic corruption, wears people down in a way that is insidious and often obscured.  Something as simple as crossing the street in any Ukrainian city, can create a level of stress that one rarely experiences in the developed world.

Of course, women are also subject to many of the same stresses that men are, perhaps even more so when they are caregivers or mothers. As in most countries however, their level of alcohol consumption tends to be far less for example. Moreover, they are generally not employed in jobs that have the same degree of hazards that men are exposed to. In most societies, women also tend to utilize the health care system more than men and perhaps are genetically predisposed to deal with certain types of stress better.

Deficit of men in Ukraine is 3.6 million

As of January 1, 2009, the number of Ukrainian population made up 45 million 963 359 people (as of January 1, 2008 – 46 million 192.3 thousand people, as of May 1, 2009 – 45 million 881 048 people).

According to the official information of the State Statistics Committee of Ukraine, the number of urban population made up 31 million 331,587 thousand people as of January 1, 2009 (as of Janaury 1, 2008 - 31 million 413,1 thousand people, as of May 1, 2009  – 31 million 294,756 thousands), out of them men – 14 million 349,742 thousands, women – 16 million 981,845 thousands; rural population – 14 million 631,772 thousand people (as of January 1, 2008 - 14 million 779,2 thousands, as of May 1, 2009, – 14 million 586,292 thousands), men – 6 million 835,190 thousands, women – 7 million 796,582 thousands.

As for the age difference, the average age of a Ukrainian made up 40.1 years as of January 1, 2009. In particular, the average age of men made up 37.3 years, women – 42.5 years. Besides, as of January 1, 2009, the age of 1 thousand 425 Ukrainians, including 287 men and 1138 women, exceeded 100 years old.

(from www.unian.net)

Even the most jaded Odessa local, expat or tourist will enjoy the new restaurant cafe Kakadu (Russian for the tropical bird Cockatoo)  located in the courtyard just behind McDonalds on Deribasovskaya and Krasnyi Lane.

Kakadu has a genuinely eclectic menu and is reasonably priced with generous portions of food (our favorite so far, is the Caesar salad). The interior of the restaurant has the sort of masculine style of expensive martini bars one would find in New York, yet it maintains an intimate and romantic atmosphere. The courtyard seating evokes the feeling one gets sitting outside a villa in Italy or Western Europe and is a nice respite steps from Deribasovskaya.

Kakadu has just started a “Ladies Night” every Thursday evening (free drinks with a coupon) and if the past two Thursdays are an indication, the event is gaining in popularity as some of the most beautiful women in Odessa are starting to congregate there. Let’s just hope that the place doesn’t become too popular and they start charging a cover.

Economy Ministry: Ukraine to cancel 13% extra Duty on car and refrigerator imports

Interfax-Ukraine

AP

OK…maybe the sarcastic reference to the corrupt police captain in the movie “Casablanca,” is not the best analogy but suffice it to say we are NOT surprised that Ukraine is viewed as the most corrupt country of formerly Communist countries.

Global Corruption Survey: Ukraine has highest level of corruption among newly Independent States

Interfax-Ukraine