[Leonid Bershidsky] How Ukraine’s president fooled Joe Biden

The liberal world order, insofar as it still exists, is about rules and conditionality: If you stay on the righteous path, you’ll get help. On Tuesday, former US Vice President Joe Biden explained how this worked for Ukraine while he was the Obama administration’s point man on the rebellious post-Soviet nation. The reminiscences should serve as a cautionary tale for International Monetary Fund chief Christine Lagarde, who met Wednesday with Ukrainian President Petro Poroshenko in Davos to discuss the fund’s lapsed cooperation with Ukraine.

Biden spoke at the Council on Foreign Relations in Washington, in a setting that clearly put him in a relaxed mood. He recalled how, on what he says was his 12th or 13th visit to Kiev, he convinced Poroshenko and then-Prime Minister Arseny Yatsenyuk to fire a prosecutor general -- Viktor Shokin, under whose watch corruption remained unchecked -- as a condition of releasing a $1 billion loan guarantee. Here’s how it happened, in Biden’s telling:

I said, nah, I’m not going to -- or, we’re not going to give you the billion dollars. They said, you have no authority. You’re not the president. The president said -- I said, call him. I said, I’m telling you, you’re not getting the billion dollars. I said, you’re not getting the billion. I’m going to be leaving here in, I think it was about six hours. I looked at them and said: I’m leaving in six hours. If the prosecutor is not fired, you’re not getting the money. He got fired. And they put in place someone who was solid at the time.

The audience laughed. But the “someone who was solid at the time” turned out to be Yury Lutsenko, Poroshenko’s close political ally -- and someone who has shown himself to be an aggressive pursuer of the president’s political opponents.

At the end of 2017, Lutsenko was the most fervent attacker of Ukraine’s National Anti-Corruption Bureau, a key part of the parallel justice system that Ukraine’s international donors, including the IMF, demanded it set up to combat endemic corruption. There has been something of a public reconciliation since, but Lutsenko still accuses NABU of acting outside the law.

So, if Biden remembers everything correctly, what is the operative narrative behind the Shokin firing? From Biden’s perspective, the US brought about positive change.

What did the US get for that $1 billion, or in fact for all $3 billion in loan guarantees provided under Obama? Essentially, a Poroshenko better armed against Western attempts to reduce corruption in Ukraine. Even Biden appears to be unsure now that he achieved all that much. “I’m desperately concerned about the backsliding on the part of Kiev in terms of corruption,” he said at the CFR.

He’s not alone. The IMF, the World Bank and the European Union are trying to force Poroshenko and Ukrainian legislators to strengthen legislation authorizing a special anti-corruption court, which the president reluctantly submitted. They’d like to have some say in how the judges are appointed. The IMF and World Bank are withholding funding. The EU is threatening to withdraw visa-free travel for Ukrainians, one of Poroshenko’s biggest achievements as president.

Poroshenko’s goal is to make the court as ineffective as possible while satisfying the requirements that will bring him international aid. The Ukrainian leader can’t afford a breakdown of Ukraine’s relationship with the West, as it would leave his country alone to face unrelenting Kremlin pressure. He’ll probably cave on the court, then find ways to get around it as he has done with all the other Western-dictated anti-corruption checks.

Poroshenko, worth $914 million, according to Bloomberg Billionaires, is no fool: He got the $1 billion loan guarantee and replaced Shokin with a stronger loyalist. That’s why it’s likely that Poroshenko convinced Lagarde at Davos of the sincerity of his intentions -- probably by gauging how much she needs him to bend, and bending exactly that much. In more than two years of playing this game with Biden and his other Western interlocutors, he’s become a virtuoso at it.

US and European politicians should entertain no illusions: They’re not buying anything from Poroshenko with their billions. Ukraine is still an oligarch-infested kleptocracy that works a lot more like Russia than an EU country. Poroshenko has proved time and again that playing with him requires watching his hands at all times. Not playing, however, might open Ukraine to the Kremlin’s depredations, a scenario Biden described Tuesday in his trademark colorful manner:

Russia is not going to roll across the inner line here and take over the rest of the country with their tanks. What they’re going to do is they’re going to take your economy down, you’re going to be absolutely buried, and you’re going to be done. And that’s when it all goes to hell.


Leonid Bershidsky
Leonid Bershidsky is a Bloomberg View columnist. -- Ed.

(Bloomberg)