The Ukraine Uprising: Analysis

I have been to Ukraine numerous times. Lectured there. Received honorary doctorates from their Universities. Published books and articles in Ukrainian. Worked with Ukrainian business executives and their managers. But in all my experience working worldwide, I have never heard of or come across such blatant, open, shameless, corruption as I have encountered in Ukraine.

Don’t misunderstand. I know there is a lot of corruption everywhere. Even in the United States. Even in my home city. If you want a license to build a house in Santa Barbara you need a permit, which might take a year or more before it is approved by the bureaucracy. So you hire a “middleman” who used to work at the department of urban planning and who knows the ropes. He is called an expeditor, and for a fee will make sure that your request for a license is granted in less than a year.

To me that is corruption… though everyone considers it a normal way of doing business.

There is corruption of course in every nation-state. You will find it in Israel, in India, in Brazil. Name any country and you will find traces of corruption. But Ukraine is a different story. It represents a paradigm shift in the magnitude and nature of corruption. A sizable jump to a different level of corruption that places it in a league all of its own.

I was told but did not validate that in Ukraine you could get a medical degree for a fee. Just pay a bribe. Same with a degree to parade as a lawyer. Or any other license.

Just imagine going to a doctor to be treated and you have no idea if this “professional” is really trained or just bought the degree… To me this is a nightmare. A total breakdown of trust.

But it does not end there. Government officials will not let you operate in the marketplace unless you pay a fee for protection; in this case protection from them. In its own way this is a system patterned after the mafia. If you do not pay a significant fee monthly or annually the officials will take over your business. Nationalize it or remove the license to operate. And in many cases they take ownership of the business as well.

During my last trip I was told (after one of my lectures) by a leading business leader who was in the audience how a Western bank lost its investments in Ukraine.

The bank invested a significant amount of money in Ukraine so that it could finance loans. The loans were given to businesses that were either owned directly by the state, or to people very close to leaders within the state, or to those who worked directly for the government itself.

That kind of bias is questionable but in Ukraine they took it one step further. The loans were simply never repaid.

It is useless to sue in court. The courts are corrupt and in collusion with the government.

Unable to collect, the mother bank put its branches in Ukraine for sale at ten cents on the dollar. Lost billions of dollars. And who bought the bank? A member of the President’s family in Ukraine.

It can have another variation of the scheme. The government gives loans to the banks to finance the economy. The bank loan it to businesses owned by those government officials. The businesses refuse to pay back the loans. The bank bankrupts and the government loses its loan but all the money ends in the hands of the government officials via their companies.

Nice scheme, eh? Open. Known by everyone.

The openness with which the ruling politicians take advantage to enrich themselves at the expense of the nation is mind boggling. Anyone who is able to do so takes any assets they can out of the country, and no one in his sane mind is willing today to invest in the country. Ukraine is not going bankrupt. It is already bankrupt as a system.

What to do?

A leading intellectual of Ukraine asked me that question; his name of course has to remain anonymous.

I offered a one sentence response: “The fish stinks from the head, but it is cleaned from the tail.”

In other words, the corruption comes from the leaders of the country. They set the tone. They lead the parade. They are the cause of the stinking situation. Common logic suggests they need to be changed in order for the situation to change.

Good. But who will change the leadership? They will not change by themselves.

Alas, you cannot change corrupt leaders by democratic means, by voting them out of power. Those in power will rig the votes.

External sanctions do not work either. The corrupt leadership makes itself even richer during times of sanctions. They control the black market for the essential goods the nation needs. It is rumored that Milosevic made billions of dollars importing gasoline across the border in spite of the sanctions against Serbia. Being the only supplier he could charge a fortune.

There is only one solution: clean the fish from the tail. The people must rise in protest. And not desist, regardless of the cost in lives, until they have prevailed. They must say, enough is enough and take to the streets. And remove by force the corrupt leaders. To the barricades. To the Bastille.

In Davos where I recently served on a discussion panel I was told that the President of Ukraine threatened to shoot at the demonstrators if they do not disperse.

I said I hope that he does so. The audience gasped.

But shooting demonstrators, one’s own nationals, will infuriate the people and make them even more committed to overthrowing the President and his party leaders. Just the way the Romanians got rid of Ceausescu.

It needs to get real bad before it gets better.

Changing the leadership is only one step towards the rehabilitation of the system. It is not enough. You may cut off the head, but the rest of the body is still infected.

Ukraine needs new leadership that has not been infected by corruption; God forbid the new regime is cut from the same cloth as the old one. The country will slide even further into despair… and it is not only money that will leave the country. Anyone who can walk will flee. (Maybe it was a blessing Ukraine did not join the EU. If people had the right to move freely anywhere in common market Europe, Ukraine would soon be empty of its inhabitants that have any brain to sell.)

It is important to recognize that in an uprising the goal is not only to rid the nation of its corrupt leaders but to make sure as well that their replacement are not corrupt. And the new leaders must understand that cleaning house needs to be their first priority; an end to corruption their first assigned task.

That is never easy.

I believe that bureaucracy is often the cause of corruption. “A hole in the fence calls for a thief” is a Hebrew expression and all countries in transition experience major disruptions that cause “holes” to emerge in the process of governance. That is called bureaucracy. And people are human and some do not have the strength to resist temptation and “crawl through the hole“ to steal. That is corruption.

The new leadership in Ukraine—if one comes into being— needs to re-model the system. To close the “holes” to create accountability and transparency. To remodel the present day bureaucracy rather than only punish those who continue to act corruptly. Not unlike the changes the leadership in the Republic of Georgia did a decade ago. And the changes the leaders of Macedonia are implementing today.

It can be done. It needs to be done. It must be done.

And I pray it will be done.

 

Dr. Ichak Kalderon Adizes

30 Comments

  1. Yehoram
    Posted January 31, 2014 at 6:25 pm | Permalink

    Replacing the president, the government or the party is not enough. The corruption is withing ALL levels of government.

    the only potential solution is a military cue and that will only work if the military is clean of corruption – tough call!

    Yehoram

  2. Dragan
    Posted January 31, 2014 at 11:48 pm | Permalink

    Lucky Ukraine,

    They are at this point where they went on the streets.

    In Slovenia ot seems, they will get away w/o sanctions?!

    BR
    D.

  3. Carlo A. Fuduli
    Posted February 1, 2014 at 12:33 am | Permalink

    All true Dr. Adizes and well presented the Ukrainian situation.
    One lack. You did not mention that about the bank, there is no difference between a system that gives permit to bank to abuse of client and a system that abuse of the bank.
    The misconduct of the bank system in recent past is visible to everyone. And who paid for this ???
    Continue, please, to honor us with your writings

  4. Orest
    Posted February 1, 2014 at 12:59 am | Permalink

    Thanks a lot for your insight!!!

    It is cruel, of course, but true.

  5. Shabtai Affias
    Posted February 1, 2014 at 5:14 am | Permalink

    I am shocked, and disgusted at your unemotional suggestion that people should be killed and sacrificed just to correct a system. Surely there are better ways to make changes. For example, the EU could help in money and expertise with tight controls over progress. Human life is more important than anything else.

  6. Carlos
    Posted February 1, 2014 at 5:26 am | Permalink

    Dear Ichak, that was a very corageous article. I wonder if would put you in danger next time you visit Ucraine.

    In terms of change, I believe it would be an uphill batle because, unfortunately, corruption resides not only at the top but it permeates down to the people either as active corruption at the lower levels of society and or as a culture of tolerance and a feeling of resignation.
    Abrazôs Carlos

  7. Marko Cadez
    Posted February 1, 2014 at 6:01 am | Permalink

    I have amazingly talented Ukrainian software engineers work for my company for the last four years. I have nothing but praise for their intellectual capacity, work ethic and absence of entitlement. The latter simply stinks in the West. On the other hand these same people have Russian roots and thus support the current president. On one hand they abhor their mafia-like system, which is precisely as you describe, but on the other hand they fear the West even more. They are afraid that they will get tricked into submission by more experienced rulers than their own. The opposition needs the West to step up to the plate and offer real support, including financial (under strict conditions of course). Russians bought off the country with oil, gas and cash and Europeans need to match this somehow. Unfortunately money talks and the rest walks in the minds of most people, including your Santa Barbara expeditor.

    Eastern Ukrainian intellectuals have a cynical view towards the West with its Wall Street bailouts and the ever increasing gap between the rich and the poor. If we add up the trillions stolen from Main Street and given to corporate buddies the question becomes who is a bigger thief. One works brazenly and blatantly in the open while the other hides under the cover of conveniently crafted law sponsored by lobbying buddies.

    I work hard to convince my Ukrainian friends that the West has a more robust, just and predictable system that guarantees to every individual certain unalienable rights. As a strong believer in the government for the people, by the people, from the people I can do no less. The Ukrainians are just afraid that our ideals might ring hollow due to our own abandonment of what our forefathers once stood for.

  8. Dennis Keller
    Posted February 1, 2014 at 6:02 am | Permalink

    How very documented and presented. Your post certainly is indicative that the law itself is impotent. The heart is the center of morality – the law only a judge of it. I wonder if an additional comment on corruption might focus on the methods of journalism which in our country seem to focus almost exclusively on sound bites and with little to no investigation. The lack of substantiated truth in the fifth estate hurts us as much as corruption does and is complicit in continuing it.
    Dennis

  9. Bohemian
    Posted February 1, 2014 at 2:26 pm | Permalink

    Thank you for your analysis-many great points there.

    “It needs to get real bad before it gets better.”

    Pivotal thought yet the biggest obstacle I think. Unless there is a civil war which noone really wants there will not be a “real bad” situation-so in my mind the process of rebuilding will be that much more tedious and time consuming.

    Let’s face it, corruption will always be here in one way or the other. And we all are responsible for it in our everyday lives. We just need to stop offering it snad start reporting it. Sounds good doesn’t it? Until your loved one falls ill gets into hospital and fights for his/her life. At that point your righteous stance on corruption gets a hit and you take the money and go visit the doctor.
    I just want to demonstrate how difficult it is to root out corruption even in “advanced democracies”.

    I am from Czech Republic-formerly Czechoslovakia. Country that went through a transformation after the popular uprising called the Velvet revolution in 1989.

    No doubt Ukrainians are in a better starting position then we were back then – a nation released from a communist prison after 40 years learning to live with freedom learning about the outside world. They know the life in Europe and beyond, they speak foreign languages, are well educated.

    My address to them would be this:
    prepare for a long “battle”
    (after the Velvet revolution someone said it would take another 40 years to put our country back on track, people were laughing at that notion but not anymore 25 years after).

    You need to bring good guys to lead you and keep an eye on the bad ones. Absolutely crucial!
    What’s more, strenghten your democratic system so that no person can abuse it such as Yanukovych has.
    The bad guys must go at all costs, trouble is they will become your enemies for life trying to undermine new system whenever they can. But you have to strip them off their powers so they can no longer dominate you.
    Learn to be open minded towards other nations and cultures because fear and ignorance is something that fuels the evil machine of totalitarian regimes.

    In the future, when others will be calling for help for freedom, try helping them as much as you can.

    Wishing you all the best Ukraine. We don’t know what future holds, but knowing that it is us and our decisions that lead us on the path is a value worth figting for.

  10. Shabtai Affias
    Posted February 1, 2014 at 11:49 pm | Permalink

    To Marko Cadez, your comment was excellent and helped me understand a lot of things about what Ukranians think and believe.

  11. pinhede magali
    Posted February 2, 2014 at 11:02 am | Permalink

    I ponder to this article….

  12. Posted February 2, 2014 at 1:21 pm | Permalink

    Very good analysis but I’ve never heard of a medical degree being sold to someone with no medical school experience. Payments to good grades and passing the finals, of course, but a plumber off the street has no way of buying himself an MD degree.

    I’m covering the protests now but will leave for the Sochi Olympics tomorrow. Of course there is much corruption also where I live in Russia.

  13. Guillermo B
    Posted February 5, 2014 at 6:28 am | Permalink

    Estimado Dr. Adizes,

    Puedo entender perfectamente que existan personas que se sientan ofendidas y afectadas por algunos de los comentarios y reflexiones que usted comparte a través del Blog.

    En lo personal a mi me parece que uno tiene todo el derecho en estar de acuerdo y en desacuerdo con cualquier postura. Al final de cuentas, líneas de pensamiento distintas a las propias son las que nos permiten formar y justificar nuestro propio criterio y visión de las cosas. Y esto precisamente, en muy buena parte es algo que yo valoro y disfruto cada viernes que leo sus insights.

    Si mi opinión es de su interés, yo lo motivaría a que siga escribiendo respecto a temas ajenos al management tales como política, cultura religión y relaciones humanas, tal como lo ha venido haciendo.
    Así mismo respecto al tema de requerir una cuota de suscripción al blog, opino que a pesar de que es justo y necesario el que de alguna manera se le retribuya por su conocimiento y el tiempo dedicado a compartirlo y que muchas veces erróneamente las personas necesitamos sentir que las cosas tienen un costo para darles el valor que merecen, yo lo motivaría a que lo siguiera haciendo de manera gratuita, ya que eso facilita mucho el poder compartir sus insights con otras personas no familiarizadas con usted y su instituto, algo que yo en lo personal hago con cierta frecuencia.

    Saludos cordiales,

    Guillermo

  14. Ira Weingarten
    Posted February 5, 2014 at 9:29 am | Permalink

    Thanks for stepping up, and standing up on the Ukraine!

    Those who claim you lack expertise to comment on this situation, are most likely stuck in cement with a fixed agenda

    You asked about charging for the blog.

    if you want to maintain broad distribution for your blog, then you can not charge for it. Not even one penny. But you can accept advertising.

    best to you,

    ira

  15. Deepak Dovedy
    Posted February 5, 2014 at 7:40 pm | Permalink

    I actually wanted to comment about ‘the important note to readers’.
    I loved your candour and you spoke from the heart.
    We are all on this evolutioary path called life. We express what we see or perceive at that moment and that is perfectly fine. Some, who happen to be higher up on the mountain, which may be above the clouds have a very different perspective than the folks below the clouds. It is all a matter of location of one’s consciousness; is it above or below the clouds. Metaphorically, clouds are the problems in life. Having experienced both locations I prefer to exist above the clouds. And for this to happen I had to shed a lot of garbage that was weighing me down! Most importantly my limiting beliefs, which had literally chained me down.
    So, keep sharing your perspective irrespective of what others say as there is always something to learn. In fact I have learnt a lot from your insights, especially when you think with your heart!
    Catch up with you soon. It is overdue.
    Deepak

  16. pinhede magali
    Posted February 7, 2014 at 2:31 am | Permalink

    what a pity that you dont write again! i expand your writing to two friends of mine . Please , continue.. magali pinhede

  17. Oleksandr Kunchenko
    Posted February 10, 2014 at 11:54 am | Permalink

    Some developed economies are also experiencing extreme bureaucracy – such as France for example being corrupted, according to you, Doctor, as well. While economy is still strong. The analysis does not address why the bureaucracies are different though if they are so. Roughly the same area, the same number of citizens in early 90th in Ukraine and France. But probably lack of knowledge about what to do and unexperienced country’s ‘top management’ made Ukraine underperform. Looks like the same question over past decades as it’s raised by your contact a leading intellectual today. Nothing changed in the system where ukrainians are tought to make choices, I noticed. My answer to the intellectual would be to concentrate on education. To focus on stopping corruption in its mostly public educational system first. In a few decades the bureaucracy will be revisited conciously by ukrainian people themselves and will work for Ukraine in my view without any cent of additional investment.

  18. LucV
    Posted February 11, 2014 at 1:33 am | Permalink

    They just started an online petition to ask the EU to fund them an anti corruption force. Careful the English text is at the buttom.
    http://www.avaaz.org/en/petition/Herman_Van_Rompuy_President_of_the_European_Council_Fund_an_AntiCorruption_Force_in_Ukraine/?copy

  19. Costanzo Bestonzo
    Posted February 12, 2014 at 10:57 am | Permalink

    Ref: Your ‘Important Note to My Readers’ of February the 5th
    Hi Ichak,
    As per me, PLEASE, continue sharing your unique Professional Insights & generally Deep & Enriching Writings about your life’s perception and experience (no matter about the subject and if with or without an unlikely sum).
    We all have a ‘free will’.
    So we all, your Readers by choice, can choose whether go through or just skip that writing of yours we feel not as much fitting with us.
    Moreover you are right!
    We also can civilly react and answer you or simply wait your next (as per me, evolving AE) writing.
    This is, to me, Respect the Alterity.
    After all, a healthy Human Being needs to be (materially, culturally and spiritually) fed with a varied ‘diet’.
    Personally I wary of those who proselytes for ‘mono ‘diets’’.
    To me, they will most probably fall into a not balanced life.
    Do not stop thinking, Ichak, PLEASE (also about what you feel to be ‘ignorant’).
    Costanzo
    PS
    Permission to forward, print and download this mail is granted

  20. Alexey
    Posted February 13, 2014 at 3:42 am | Permalink

    Dear Ichak,
    please take the apologies for my not-that-good English.

    You say that shooting people “will infuriate the people and make them even more committed to overthrowing the President and his party leaders”. Maybe it will work for Ukraine but there exist countries (and cultures) where it won’t work. Have you ever been to Belarus? The situation here IS slightly better I guess.
    But in case a riot here starts the population won’t support it. The reason is quite evident: the majority won’t take responsibility for their own destiny. Together with truly high level of tolerance here people won’t support the protest. Although the corruption level ain’t that much less here.

    There’s one more difference between Ukraine (the country where the elites more or the less changed time to time) and Belarus (or Serbia): countries with strong persistent elite have really weak possibilities to change the regime ’cause the state leader successfully uses his power to prevent alternative leaders from appearance and gaining power. So the people prefer to follow the corrupted but strong leader instead of trusting a weak leader.

  21. Anton
    Posted February 15, 2014 at 10:06 pm | Permalink

    Dear Dr. Adizes,

    Thank you, you’re right to the point. Yet, I know you’ve been cooperating with Russian universities and companies, too. I wish you were courageous enough to write the truth about it as well. E.g., about the Graduate School of Management, St. Petersburg State University. I’d like to hear your insights from there — it looks like you see everything through quite correctly.

    Sincerely,

    Anton

  22. ichak
    Posted February 16, 2014 at 12:40 pm | Permalink

    I know nothing about this university

  23. Maksim
    Posted February 19, 2014 at 11:27 am | Permalink

    military industrial complex is different from ukraine’s corruption? “lobbying” for corporate interests is different from municipal bribes? the only difference is that legalized corruption is taxable.

  24. Posted February 20, 2014 at 7:23 am | Permalink

    It pretty much matches what I’ve seen, unfortunately, that’s only part of what Ukraine has. I’ve started this morning from a video stream where protesters were shot from a sniper rifles(a shot once in a 10 sec) and were still helping injured to escap. There are decent people in Ukraine, so please take some time and notice their existence too.

  25. Posted February 20, 2014 at 7:33 am | Permalink

    Btw

  26. Geos
    Posted March 4, 2014 at 10:08 am | Permalink

    Answer to my question about
    How to return corruption to their owner ;)
    We’ve had excellent promoters.
    Thank you US and EU.

  27. Tzofnat Peleg-Baker
    Posted April 22, 2014 at 11:03 am | Permalink

    Dear Ichak,

    Just encountered your note (below) to your readers. Many of your thoughtful insights such as thoughts about complexity, uncertainty, transformation, the dynamics of life, and learning and development resonates my own. However, not responding to most of the comments you receive, is missing a fundamental component of being in dialogic interactions–thinking together, and co-jointly generating new ideas. This is my notion of dialogue. Dialogue is certainly not a debate (“I do not answer most of them because I simply have no time to get into a debate”).

    By not responding, on a regular basis, being under the assumption that responding is creating a debate rather than dialogue, you perpetuate an individualistic, one way–monologic, hierarchical approach. Moreover, it is disrespectful to your readers, who took the time to think, compose and communicate their thoughts. Of course, it depends on your definition of respect. In my opinion, it is not about being nice to or empathetic with them! Rather, it means affirming other human beings, listening to and giving space to their voice, and accepting them as a whole person (Buberian “I-Thou”—being with the rather than “I-It,” using them).

    To conclude, I do not think dialogue is constructed here.

    Best,
    Tzofnat Peleg-Baker

  28. Posted September 6, 2014 at 3:03 am | Permalink

    I love reading a post that will make people think.

    Also, many thanks for allowing me to comment!

  29. Posted September 15, 2014 at 12:51 pm | Permalink

    Awesome article.

  30. Posted November 10, 2014 at 6:48 am | Permalink

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