Punishing Russia for the MH17 tragedy will not help Ukraine

Punishing Russia for the MH17 tragedy will not help Ukraine

The Guardian |20-07-14

Until Thursday, the world was ready to let Ukraine fail: hollowed out by corruption, dismembered by Russia, given up on by western countries. The downing of flight MH17 has changed that.

Visitors can be forgiven for not realising quite how wrecked Ukraine is. Kiev has all the car showrooms, restaurants and elegant architecture of a European capital, but last year Transparency International’s Corruption Perceptions Index rated Ukraine 144th in the world, level with the Central African Republic.

Ukraine’s orgy of kleptocracy reached its riotous peak under Viktor Yanukovych, leaving the country incapable of defending itself, or even of holding itself together. Tax officials trying to make sense of Yanukovych’s greed estimate that around £18bn a year was stolen from Ukraine’s coffers under his rule – almost a fifth of gross domestic product. No country can survive that.

A part of the wreckage of flight MH17. 'New sanctions against Russia are just a matter of time.' Photograph: Maxim Zmeyev/Reuters

A part of the wreckage of flight MH17. ‘New sanctions against Russia are just a matter of time.’ Photograph: Maxim Zmeyev/Reuters

Washington and the European Union are rightly punishing Russia for undermining Ukraine. Since the destruction of MH17, western anger at Russia’s actions has gained a harder edge, particularly while its proxies in eastern Ukraine blocked access to the wreckage. New sanctions are just a matter of time.

That will not help Ukraine. To do so we have to examine our own actions as much as we examine Russia’s. Without western bank accounts and shell companies, Ukraine’s leaders could never have undermined their country the way they did.

Yanukovych’s Sukholuchya hunting lodge, set in a forest that he privatised via a murky process that appears to have been illegal, was owned via a shell company registered on Harley Street. That fact alone should embarrass every British policymaker, but has gone largely unremarked. Dmitry Firtash, a billionaire who made a fortune as an unnecessary intermediary in the Russian-Ukraine gas trade, met the Duke of Edinburgh in the autumn, and was welcomed as a donor by Cambridge University. He is now on bail in Austria, fighting extradition on US bribery charges.

Our banks, lawyers and others have enthusiastically laundered the proceeds of Ukraine’s looting. Anti-money laundering regulations are supposed to oblige our banks and other institutions to check whether such money is legally obtained, but there are few signs that is being done. Yes, we have frozen millions of pounds in bank accounts linked to the old regime, but why did we wait till Yanukovych had fallen before doing it?

There are many reasons for Ukraine’s corruption: low wages; excessive regulations; reliance on Russian gas; murky government spending; crooked judges. These are Ukrainians’ problems to solve. As a doctor there told me recently: “The west cannot do our homework for us.”

But people do not steal things if they cannot keep them, and Ukrainian officials have for too long enjoyed ownership rights in the west, while denying those same rights to their own citizens.

My doctor friend earns £180 a month. He has £1.8m worth of machines in his intensive care unit, but no money to maintain them. Either they break and his patients die, or he takes bribes to maintain the equipment, and they live. He can be a doctor, or obey the law, but he cannot do both.

Ukraine is not a poor country; it’s just that the money that should be maintaining his equipment – and equipping Ukraine’s army, and guarding its borders, and so on and so on – has been spent in our shops. Ukrainians’ loss has been westerners’ gain.

The price of Ukraine’s disintegration was already too high before 298 people got blown out of the sky. The tragedy of MH17 should make us realise how complicit we are in creating the circumstances that allowed it to happen.

Oliver Bullough was a Reuters Moscow correspondent, and is now Caucasus Editor for the Institute for War and Peace Reporting.