Remarks by Administrator Rajiv Shah at National V. Hetman Economic University, Kiev, Ukraine

Wednesday, June 18, 2014

[As Prepared]

It is a pleasure to join you this morning and meet some of your nation’s strongest civil society voices and brightest scholars.

Your studies are actually very close to my heart.

I received my Master’s in Health Economics at the same time I was studying to be a doctor, because I wanted to understand not only modern medicine, but also the economic system that underpins it.

But I hope you all received better grades in econometrics than I did.

In many ways, no degree could have better prepared me for the job I do today.

I represent America’s development and humanitarian agency, which builds partnerships in more than 80 countries around the world to end extreme poverty and promote resilient, democratic societies.

Today, we know that transparent, accountable governance is the foundation of these societies and a powerful engine of poverty reduction.

At its most basic, good governance extends opportunity for all citizens, not just those who can buy it.

For nearly 20 years, we have worked shoulder-to-shoulder with the people of Ukraine to realize these goals, and we’re proud of our long-standing partnership.

Yesterday, I had the opportunity to visit Odesa, where I spoke to business leaders eager to reinvigorate the grain sector, and doctors and health specialists at a TB center working to ensure that every patient receives the care and treatment they need—regardless of their station in life.

Throughout my visit, I’ve seen the inspiring resilience of the Ukrainian people and their determination to write their own destiny—grounded in the rule of law and a respect for human dignity.

As President Obama has said, the interests of the United States align squarely with the desires of the Ukrainian people—and we remain a committed partner as you weather this crisis and build a new future.

It will take ingenuity. It will take focus.

But most importantly, it will take the courage to confront a deeply corrosive system that has embedded corruption into the fabric of Ukrainian society.

From the massive impunity of the nation’s previous regime to the kind of petty bribery that supplements a civil servant’s meager salary, corruption has become a way of life.

It has not just infected government. It has threatened to replace government.

You know this far better than most.

Just across town, in the depths of the winter, cries for an end to corruption—an end to the abuse of power—echoed around the world.

From the Maidan, students, business leaders, pensioners, and civil society activists took up a call that has fueled protests and demonstrations from Marrakesh to Delhi.

When a young Tunisian fruit seller set himself on fire in 2010 and sparked the Arab Spring, his act represented the pain and despair of people everywhere whose livelihoods are picked clean by dishonest police and landlords.

And when the anti-graft Aam Aadmi Party won a stunning 28 seats in India’s Parliamentary elections last year, its platform represented the frustration and shame felt by people everywhere who find their dreams crushed by a culture of kick-backs, fraud, and off-the-book deals.

On his second visit to this region in two months, Vice President Biden recently made this point explicit.

“Corruption is a cancer,” he said. “It wastes the talent of entire generations. It scares away investments and jobs. And most importantly, it denies people their dignity.”

It corrodes our faith not only in government—but in each other.

And many of you have seen exactly that.

You have seen the shocking images of Mezhyhiry—the menagerie, the vintage cars, the multi-million dollar chandeliers.

You’ve seen your nation’s former leaders—and not just its former president—line their pockets with impunity.

When prosecutors searched firms connected with the ex-energy and coal industry minister, they found safes stuffed with $5 million in cash and 50 kilograms of gold bars.

You have seen how price inflation and collusion has raised the cost of basic medications beyond the reach of those who need it most. Two years ago, pricing for AIDS and TB drugs purchased by the Ukrainian Ministry of Health was found to be 150-300 percent higher than comparable drugs purchased by a local partner in the Global Fund to Fight AIDS, TB, and Malaria.

And you have seen how your fellow students once had to pay for the grades they earned. Today, those of you attending this prestigious university are here based on merit. But that was not always the case.

Overtime, as these dramatically varying cases and consequences of corruption have emerged, our understanding of how to classify and fight them has evolved.

Today, what we call “Grand Corruption” is driven by a network of elite operators funneling money to companies that their families own or taking very large bribes in exchange for huge sales of natural resources.

“Petty—or administrative—corruption” refers to everyday bribes for basic services, including health care and protection from the police. It is often facilitated by grand corruption—and neither can be addressed independently of the other.

Both are devastating to our economy and our dignity.

That’s why I am so honored to be here today with many of the leaders who have met this challenge with real courage.

…journalists who have risked their lives to uncover corruption…

…students who have protested in the streets…

…and civil society leaders who have ushered in new laws like the Reanimation Reform Package.

As many of you know, when journalists arrived at Mezhyhiry, they found 25,000 documents floating in the lake—an attempt by the fleeing oligarch to drown evidence of his regime’s rampant criminality.

The journalists knew they had only a matter of days to painstakingly dry and photograph the thousands of pages before prosecutors seized them.

They put out a call to their family and friends to help them upload the documents to a public website.

Nearly 60 volunteers arrived with their iphones and children in tow to work around the clock for days.  

When the team began posting the documents to a website, nearly 2 million people visited on its first day.

The story of this quick and courageous action is being told and retold around the world—and our Agency is proud to have been a small part of supporting and training the journalists who led it.

Together, we are embedding the principles of accountability and transparency into our partnerships across society.

In health, we are not only reaching at-risk communities with essential medicines, but also ensuring those drugs don’t go missing along the way.

In 2013, investigations into corrupt procurement practices helped reduce the prices of anti-retroviral drugs by more than half—a cost-saving that is allowing more people living with HIV/AIDS to access life-saving treatment.

In education, we’re not only bringing cutting-edge technologies into classrooms, but also ensuring those classrooms are accessed equally.

In the past, each university held its own entrance exam on a different day—a chaotic approach that enabled professors to sell admission into university.

Over the course of a six-year partnership, we helped institute external standardized testing to ensure all students have equal access and receive honest results. All results are now available electronically from a central location. 

The truth is that sometimes corruption can feel so ubiquitous and intractable that we begin to think there’s nothing we can do about it.

Working together, however, we’ve found that we can.

That is why, I am proud to announce $10 million in additional support for anti-corruption efforts and constitutional reforms—part of approximately $194 million that the United States has provided in assistance to Ukraine this year alone—in addition to USAID’s $1 billion sovereign loan guarantee agreement with the National Bank of Ukraine.

ENGAGING ALL PARTS OF SOCIETY

Our investments, however, are not enough. Real change must be led by Ukrainians—and right now, while a rare window of opportunity is open.

It starts with top-level engagement from political leaders who are not only willing to listen, but ready to act.

In 2011, President Obama launched the Open Government Partnership—a global initiative that works with these reformers to make their governments more accountable and responsive to their citizens.

In three years, it has grown to include 64 countries—including Ukraine—and 1,000 commitments.

Brazil, Croatia, and Sierra Leone all passed Access to Information Laws—some of which were stalled for years—in order to join the Partnership.

We have also focused on helping countries from Ghana to Ukraine work to join the Extractive Industries Transparency Initiative.

By insisting that all players live up to laws of the land, the global initiative has become the gold standard for ensuring that local wealth actually advances—instead of undermines—development. 

Here in Ukraine, the newly adopted Law on Public Procurement must be properly implemented and monitored. Energy policies, tariffs, and transactions must be carefully reviewed, and Ukraine must keep up its progress in meeting its Open Government Partnership commitments and in joining the Extractive Industries Transparency Initiative.

This window of opportunity will not stay open for long. Now is the time to act.

Like the nation’s political representatives, financial and business leaders have a fundamental choice to make between embracing a model that legitimizes corruption and one that rejects it.

Today, both economic systems are fully on display across the world.

At one end of the spectrum, the U.K. Anti-Bribery Act of 2010, the U.S. Foreign Corrupt Practices Act, the Dodd-Frank Act of 2010, and the commitments of the G7/G20 to fight corruption have all established a robustly competitive, open, and accountable international business environment.

At the other end of the spectrum, countries like Russia have different norms and standards. Companies profit openly from illegal land grabs; public resources disappear into private hands; inept cronies complete shoddy work; and kleptocrats continue to feed from it all.

Across the border, oligarchy is sinking the Russian economy. Their credit now rates just above junk status. And the IMF has downgraded Russia’s growth outlook from 2.0 percent to 0.2 percent this year.

Russia is an extreme case—but hardly a unique one.

In our own history, the United States has wrestled with corruption. Over a hundred years ago, public servants like myself bought their positions in government and corporate trusts dominated the economy with abusive practices.

But over several decades, our leaders made the conscientious choice to bust up trusts, root out judicial corruption, and ground our economic and political system in the rule of law.

As a result, constant innovation and open competition in America now fuel the most dynamic economy in the world.

We are not perfect. In fact, four of the last seven governors of the State of Illinois went to prison.

But the point is: they went to prison.

And we remain committed to upholding this model—and supporting international frameworks like the G20 Seoul Anti-Corruption Action Plan that enable countries and their institutions to chose accountability over corruption.

On July 27, President Poroshenko will sign the EU Accession Agreement. The window for Ukraine’s business leaders to stand up for transparency will not be open forever. The time to act is now.

But as the citizens on the Maidan knew, it takes more than high-level political and economic commitment to dislodge a culture of profound predation and mundane indignities.

It requires a global movement of passionate, engaged citizens.

Two years ago, USAID co-launched Making All Voices Count A Grand Challenge for Development to seed game-changing: technologies that help communities prevent and expose corruption.

Out of a pool of more than 500 proposals, 34 winning innovations are being tested and scaled in 12 countries.

They’re building the world’s first global search engine for public data…

…constructing a pharmaceutical pricing guide in Kenya…

…and mapping community assets in Indonesia.

We’ve seen these technologies deliver results even in the midst of difficult circumstances.

In 2011, when the Kabul Bank collapsed after insiders stole nearly $1 billion in savings, we took a tough approach—demanding the bank go after those responsible.

But we also started designing a new system that would be far less prone to corruption.

We built a network called the Better Than Cash Alliance with more than a dozen partners to accelerate the adoption of electronic payments around the world.

In fact, when the government of Afghanistan started paying its police officers through mobile phones, it immediately cut out so much graft that some employees thought they were getting a 30 percent raise.

The window of opportunity to realize the vision of the Reanimation Reform Package will not be open forever. The time to act is now.

Ultimately, the political and economic system you chose to build in Ukraine is up to you—but this is the moment for you to write it.

As you do, you’ll discover that your voices—regardless of your field—represent a force more powerful than bribery; more powerful than predation; more powerful than corruption.

It is a force that will unlock the aspirations of your generation and the potential of your nation. The time is now, and what’s at stake is your future.

Thank you. 

Kiev, Ukraine

Last updated: June 20, 2014

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