Gleaming silos, towering container cranes and hulking cargo ships docked at quay sides in Europe’s biggest corn and sunflower producer should be a symbol of an agricultural exporting powerhouse.
Instead, it’s a cautionary tale of how Ukraine may squander another opportunity to plug the former Soviet republic into the global economy and give safe harbor to the world’s biggest investors.
It’s not just Ukraine’s increasingly forgotten four-year civil conflict that’s an issue. It’s also about whether authorities are committed to modernizing a nation that sits astride Russia and the European Union. The risk is that it falls back to the cronyism and corruption that has plagued the country even after two post-communist uprisings.
The government is moving ahead with a plan to complete the privatization of its maritime cargo handling system, which now handles 66 percent of all goods exported. While the land underlying 13 ports will remain state-owned, the government is pushing to hand over the final 25 percent of cargo handling to professional stevedores — or, handlers fear, the nation’s well-connected businessmen.
The running of the ports is “worse than an old Soviet pig farm,” said Oleksiy Vadaturskyy, the owner of Nibulon Ltd., a central Ukrainian farming company that handles its own grains for export in the port city of Mykolayiv.
No one doubts that the system, held together by a maze of obtuse arrangements since Ukraine’s independence in 1991, needs to be streamlined.
The aim is to bring in investment over the next two decades. A new law on port concessions passed the first reading in Parliament and the second reading is expected to take place in October. But while the government claims it wants to attract investors, there’s a lot of baggage.
Ukraine ranks 130th in Transparency International’s Corruption Perceptions Index, the lowest in Europe except for Russia and at a par with Myanmar and Sierra Leone. Then there’s geography: Russia’s takeover of the Crimea peninsula has hampered flows in and out of the Ukrainian port of Mariupol south of the embattled city of Donetsk.
“Whoever wants to invest in these ports, they are going to have to really think about it significantly because there is quite a big risk attached to it,” said Amanda Paul, a senior policy analyst at the European Policy Centre.