The Common Threads of Corruption in Former Soviet Republics

On December 12, 2014, President Obama signed into law the Magnitsky Act, a retaliatory act towards Russian officials responsible for the death of renowned human rights lawyer Sergei Magnitsky. On December 8, 2016, just a day before International Anti-Corruption Day, Congress passed a law allowing the President to extend Magnitsky-like sanctions to anyone engaged in “significant corruption.”

Transparency International’s Corruption Perception Index of 2015 lists 68% of countries as moderately or highly corrupt, and half of the countries in that group are members of the G20 , an international forum of the 20 leading economies. In the 50 most corrupt states, 8 Former Soviet Union (FSU) republics out of 15 total make an appearance. Turkmenistan takes the spot for the 14th most corrupt country in the world, with Russia and Azerbaijan clocking in at 48 and 49, respectively. Let’s take a look back at what a few of these states have faced in terms of corruption and what 2017 might look like. The bottom line? The fight against corruption is a tough road ahead.

Turkmenistan (14): With one of the largest natural resource reserves in the world, Turkmenistan is also one of the poorest and most repressive states. Local leaders have taxed their populations into poverty, skimming benefits for themselves and for the government. Under long-standing President Gurbanguly Berdimuhamedow, freedom of the press is practically nonexistent. In the energy sector, Turkmenistan has historically been a hotspot for middleman gas companies to buy cheap gas and resell it to larger companies in Ukraine, Russia, and China. While these companies have been slowly pushed out of the market, even the larger companies like Russia’s Gazprom have shown a decreased willingness to work with Turkmenistan. With no regime change in sight, even pressure from outside energy companies doesn’t look strong enough to change Turkmenistan.

Uzbekistan (16): After 24 years of Islam Karimov’s authoritarian rule, Uzbekistan has elected a new leader, Karimov’s de facto pick, Shavkat Mirziyoyev. Uzbekistan’s struggling economy likely won’t change under Mirziyoyev’s rule; rather, the government will maintain its monopoly over critical industries like cotton. Uzbekistan leaders and companies have been accused of accepting bribes from Russian, Dutch, and Swedish companies, and the U.S. government has ongoing investigations of money laundering and corruption open in Uzbekistan.

There is however, a glimmer of hope- Mirziyoyev appears intent on making his country more appealing for international investment, which would necessitate a crackdown on domestic corruption. Should Uzbekistan open itself up to stronger relations with international investors and improve its regional relations, some anti-corruption measures may come into play as assurance for foreign businesses. Foreign direct investment usually comes with strings attached, so investors know their money won’t be swindled away. The key to improving Uzbekistan's transparency and economy could lie in the conditions set out by primarily Russian and Chinese companies.

Ukraine (34): Despite the high-profile Maidan revolution of 2014, Ukraine still remains one of the world’s most corrupt states. Under Petro Poroshenko’s government, Ukraine successfully overhauled its police force and is weeding out corruption in the government itself. The most recent effort to combat government corruption is an online database where all current and former government officials are required to report all income and assets. Amazingly, everyone submitted their declarations online, available to the public, but these declarations have revealed a huge wealth disparity that has sparked domestic concern over the government’s will to truly weed out corrupt officials. Additionally, after resigning from his post earlier this year, former President of Georgia and former governor of Odessa Mikheil Saakashvili has claimed he will launch a new political party in Ukraine to advocate for anti-corruption measures.

Ukraine is also under continued pressure to reform its government to meet European standards, particularly in the energy sector. This is one of the most corrupt industries in the country, where oligarchic and monopoly interests reign supreme. In order to receive international financial assistance, Ukraine must undertake the unbundling of the state gas giant Naftogaz. We can hope that the combination of pressure on elites from the wealth reports and continued demands by the International Monetary Fund, the World Bank, and the EU will culminate in discernable change in Ukraine. Reforms of the energy sector and the continued oligarchization of the economy will be areas where Poroshenko must focus the most effort. Elections in Ukraine aren’t scheduled until 2019, but a lack of concrete change could spark calls for early voting by members of the opposition parties. 

Russia (48): With Putin gearing up for a fourth presidential run in 2018, 76 percent of Russians see their government as corrupt. In an ironic, albeit disappointing, turn of events, earlier this year a top Russian anti-corruption official was caught with over $120 million in cash from alleged bribes. In June, a regional governor was arrested for taking bribes, and in November, the Minister of the Economy, Aleksei Ulyukayev, was accused of taking a bribe from Russian oil giant Rosneft. On the one hand, it’s a positive development that high-level corruption is being exposed, but on the other, they occurred in the first place.

The larger issue with anti-corruption measures is the political motivation behind them. Putin’s government has been accused of targeting his liberal opposition with these measures and using trumped up charges of corruption to shut down their ability to challenge him. Alexei Navalny, who had been arrested for and recently acquitted of corruption charges, may choose to challenge Putin in the federal elections and has called Russia’s anti-corruption campaign a public show. The public nature of these corruption arrests is something to continue to watch for in 2017, as Russia sets up for elections. Will the Putin regime continue its “name and shame” policy to consolidate power? Keep an eye out.

These are just four countries: Tajikistan, Kyrgyzstan, Kazakhstan, and Azerbaijan all face serious issues of corruption as well. The bigger question here is why so many former Soviet states still battle corruption. With hypotheses from the Soviet economic legacy to literacy in the 1800s, the debate on the roots of corruption in Eurasia is far from over. The new globalized Magnitsky Act is a positive step towards isolating that corruption however, and one that should be used not just to identify corruption, but to foster a new legacy of transparency in these states.