Ukrainian anti-corruption agencies revealed this week that some of Volodymyr Zelensky's close associates were allegedly involved in the plot, prompting the Ukrainian president to impose sanctions on his former business partner and fire several senior ministers.
This divided Kiev's European partners. For many of them, these revelations are a positive sign of the continued independence of Ukrainian bodies supervising the fight against corruption. Others are furious and want concrete commitments from the country to show it is serious about preventing similar incidents in the future.
The “endemic corruption” revealed by the inquiry is “outrageous,” an EU official tells POLITICO on anonymity. This “will not help” the country's reputation among international partners. The whole of Europe is now wondering what to do about it.
— This means that the Commission [Europejska] will certainly have to re-evaluate how energy sector funds are spent in Kiev, the official argues, adding that in the future “Ukraine will need to pay more attention and provide greater transparency in how the money is spent.”
— We expect Ukraine to continue anti-corruption activities and reforms in its country, German Chancellor Friedrich Merz said on Thursday after a telephone conversation with Zelensky.
The president “needs to reassure everyone,” adds an EU government official, “most likely by presenting a plan to fight corruption.”
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This scandal comes at a delicate time for Ukraine. The country is facing a budget crisis of 41 billion euros [173,5 mld zł] next year. Meanwhile, there is an impasse in Brussels regarding the release of the reparations loan in the amount of EUR 140 billion [ponad 592 mld zł] for Kiev from frozen Russian assets.
Ukraine's Foreign and Energy Ministries did not respond to POLITICO's request for comment. However, on Wednesday, Zelensky said that “there must be maximum honesty in all processes in the energy sector.” “I support… any investigation conducted by law enforcement and anti-corruption officials,” he added.
Walking a fine line
So far, the scandal — the worst to hit Zelensky since he took office in 2019 — has failed to convince allies to cut aid to Ukraine.
On Thursday, the EU confirmed that it would allocate EUR 6 billion [25,4 mld zł] for new aid for Ukraine. Earlier this week, Estonia officially approved an additional 150,000. euro [ok. 635 tys. zł] for Kiev's energy sector, and Germany is reportedly considering an additional EUR 3 billion [ok. 12,6 mld zł] for this country next year.
During Wednesday's G7 meeting and Thursday's EU-Ukraine investment conference in Warsaw, allies tried to present a unified position.
— It is painful to see how corruption is affecting the energy sector, especially with the approaching winter and Russia's brutal attacks on energy infrastructure, explains Lithuanian Energy Minister Žygimantas Vaičiūnas. However, “we firmly support the people of Ukraine – our support will not cease,” he assured in an interview with POLITICO.
Ending aid for Kyiv's crisis-hit energy sector would have 'catastrophic' consequences before winter arrives
– says Aura Sabadus, energy analyst specializing in Eastern Europe at the ICIS consulting company.
In recent months, Moscow has stepped up bombing of Ukraine's key energy infrastructure, destroying its gas production facilities and coal-fired power plants. As a result, the country received EUR 500 million [2,1 mld zł] aid from the European Bank for Reconstruction and Development for the purchase of emergency gas supplies.
Behind closed doors Ukraine's supporters in the EU also fear that too loud statements could fuel a narrative by its opponents aimed at discrediting Kiev and thwarting its efforts to join the EU.
“A war mafia network with countless connections to President Zelensky has been revealed,” Hungarian Prime Minister Viktor Orban, a consistent critic of Ukraine, said on social media on Thursday. “This is chaos into which the Brussels elite wants to pump European taxpayers' money.”
By highlighting corruption scandals, they only provide ammunition to those who claim that Ukraine is a corrupt country like Hungary
– says one EU diplomat.
— Those who are against Ukraine… will use it to the fullest – adds the second one.
A former senior Ukrainian official expects Brussels to redouble its efforts to make part of its funding conditional on reforms. — But the general taboo on publicly criticizing Ukraine will remain, he notes.
Cleaning
Defenders of Ukraine claim that the investigation is limited to one company and argue that international funders should not therefore penalize the energy sector. However, some allies continue to demand further reforms.
So far, the investigation has focused mainly on Energoatom, the Ukrainian state-owned energy company. Seven officials are accused of manipulating contracts to obtain bribes worth 10-15 percent. contract values.
“There will be a cleansing and reset of the Energoatom management board,” Zelensky said on Wednesday.
The EU executive spokesman informs that from 2022 The Commission awarded Kiev “over EUR 3 billion” [12,7 mld zł] energy-related aid.
Okay. one tenth of this amount remained [na podstawie wniosków Kijowa] provided through the Energy Community, an international organization that supplies Ukraine with energy equipment such as transformers. The total amount is EUR 1.5 billion [6,3 mld zł] in the form of donations from Ukraine's Western partners.
Energy Community Director Artur Lorkowski calls this scandal “frustrating”. However, he says the Vienna-based organization “risks of corruption are limited” because it retains “full control” over the coordination, procurement and monitoring of equipment after delivery – and procurement is handled by an independent agency in the UK.
Meanwhile The EBRD allocated EUR 3.1 billion [13,1 mld zł] for assistance to the Ukrainian energy sectorwhich constitutes approximately one third of the total amount of support provided from 2022, informs the bank's spokesman. Its “very stringent procurement requirements,” including open tenders and direct payments to contractors, give the bank “very great comfort” with future donations.
However, others argue that we still have a long way to go to eliminate corruption in this sector.
In the future, Ukraine should increase the transparency of its energy sector and assure its European partners that their money will be well spent
– say two EU diplomats and two European government officials.
– This is also a chance to cleanse and rebuild a stronger position – emphasizes Minister Vaiciunas.
Andriy Zhupanyn, an MP from Zelenskiy's ruling Servant of the People party who sits on the parliamentary energy committee, agrees. Kiev should start by improving the corporate governance of state-owned energy companies and strengthening their supervisory boards, he points out. – Greater transparency is certainly needed – he concludes.
I’m Ashley Davis as an editor, I’m committed to upholding the highest standards of integrity and accuracy in every piece we publish. My work is driven by curiosity, a passion for truth, and a belief that journalism plays a crucial role in shaping public discourse. I strive to tell stories that not only inform but also inspire action and conversation.
