Pompeo takes on Guatemalan corruption at last, Ukraine’s renegade judges

Hello, and welcome to Oligarchy. We are tracking how Covid-19 and the world’s response to it is affecting the super-rich — and what that means for power and politics.

MAKE AMERICA BORINGLY PREDICTABLE AGAIN

I have no idea, as I write this, who will win the US presidential election. I sincerely hope, however, that – whoever it is – the president will return Washington to its traditional bipartisan support of democracy and anti-corruption campaigns around the world, rather than undermining them for short-term domestic advantage. From the oligarchs’ perspective, the Trump administration’s withdrawal of support for reform efforts in developing nations has been a real boon; for ordinary people desperate to improve their lives, it has been a betrayal.

One of the most dispiriting examples of this has been in Guatemala, where the US previously helped support far-reaching efforts to clean up administration in the country, and to provide justice for the victims of decades of misrule. Under Donald Trump, however, Washington focused far more on restricting immigration. As long as Guatemalan President Jimmy Morales – also a former TV star, coincidentally – helped the White House in its effort to stop foreigners moving to the United States, he had a free hand to do whatever else he liked. As a result, corrupt elites regained much of what they had lost.

  • “Nothing mattered except stopping brown people from coming into this country,” one State Department adviser is quoted as saying here. “All of our other policies were just subordinate to that goal.”

And that’s why this announcement from Secretary of State Michael Pompeo felt so refreshing. Once upon a time (around, say, five years ago), we would have been profoundly unsurprised if the United States Department of State imposed sanctions on Central American officials credibly accused of corruption. But for this administration to do so feels like a long-comatose friend suddenly opening his eyes, saying he feels better, and asking for a cup of tea.

  • “These designations reaffirm the commitment of the United States to combating corruption in Guatemala. We stand with the Guatemalan people in this fight,” said Pompeo’s statement. (I’d have put “reaffirm” in italics, had it been me.)

It may well be that Pompeo snuck this statement out while he knew the president was distracted with campaigning, knowing full well that Trump would never notice. However it happened, it feels good. Hopefully, it heralds a return of sorts – if only, partially – to the old normal.

  • “This new position is closer to the United States’ traditional bipartisan politics, focused on growth, security and transparency in the region,” said Stephen McFarland, the former US ambassador to Guatemala.

UKRAINE IF YOU WANT TO

Last week, I led the newsletter with Ukrainian news, thinking that it was newsworthy that the country’s top anti-corruption cop and a prominent judge were basically at war with each other. This, I thought, was a new low in the country’s retreat from the promise of its 2014 revolution. How wrong that was: it turns out that last week’s dust-up was just the warm-up fight for the big heavyweight bout, pitching the actual president against the Constitutional Court.

So, what brought this on? After the revolution, in a crucial anti-corruption reform Ukraine obliged  all top officials to declare what they owned and how much they earned. It was, in the words of an analysis by a United Nations official, “Ukraine’s breakthrough instrument to prevent corruption.” Last week, however, the constitutional court effectively defanged the entire measure, by abolishing punishments imposed on officials who falsify these declarations of income and assets.

  • “The decision of the Constitutional Court will lead to a significant rollback in Ukraine’s anti-corruption reform. These legislative provisions were the cornerstones of the anti-corruption system,” said Andrii Borovyk, TI Ukraine’s Executive Director.

This is a problem. Under the constitution, the judges are almost unimpeachable, which means their decisions cannot be overturned. And, unless this decision is cancelled, international lenders will not release the next tranche of the money Ukraine needs to stay solvent, since they have insisted that tough action against corruption is a crucial condition for the disbursement of funds. Any attempt by parliament to re-impose the punishments will just be declared unconstitutional again. Accordingly, if the judges can’t be forced to change their minds, the country goes bust.

President Volodymyr Zelensky has asked parliament to sack the judges, and appoint a new court, while accusing the judges of supporting Russia, oligarchs and corrupt officials.

  • “This is a kangaroo court,” he wrote in the FT, which was harsh on kangaroos, in my opinion.

The judges are in no mood to back down, however, with one responding by saying that Zelensky faced 150 years in prison for his threats, which would lead to war. This is now the kind of political crisis that will require international help to overcome.

That would once have been a job for the United States, which was – in the immediate post-revolution years – the major supporter of anti-corruption efforts in Ukraine. That positioning was largely abandoned by the White House, however, which focused instead on trying to co-opt Zelensky into Trump’s battle against Joe Biden. Would it be too much to hope that Pompeo might do the right thing in Ukraine, as he did in Guatemala? You’d think so but, wait a minute, what’s this on the US embassy in Kyiv’s twitter feed

  • “The United States supports the people of Ukraine, the Ukrainian Government and President Zelensky in the fight against intensifying attacks by vested interests to reverse the reforms of the past six years,” the embassy said in the kind of statement we used to expect, but have got unaccustomed to of late. 

I could get used to this.

WHAT I’M READING

There is a growing sub-genre made up of biographies of people who were once heralded as business prophets, but who turned out to be at best hype merchants benefiting from the super-cheap money that has been available since the 2007-8 financial crisis. I enjoyed Bad Blood, the story of Theranos, but I’m preferring Billion Dollar Loser, the inside story of Adam Neumann and WeWork. There is something particularly objectionable about business figures who preach self-help platitudes while stiffing their workers, and pocketing huge sums for themselves, and Neumann took this kind of hypocrisy to a new level. I started reading it yesterday and have been spitting with rage all the way through, which has distracted me very nicely from the political soap opera in the United States.

It didn’t distract me entirely, however, so I turned back and had another read of this very interesting interview that Anne Applebaum did with Senator Sheldon Whitehouse

  • “It angered me that we should have allowed our country to become a money-laundering haven, like some sleazy offshore principality. That is not a good look for the city on a hill.”

Fingers crossed that this is the moment when people like him start to turn things around.

See you next Wednesday,

Oliver

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Oliver Bullough

Oliver Bullough is an author and journalist from Wales, who specializes in writing about financial crime, often when it has links to the former Soviet Union. His most recent book is Moneyland, why thieves and crooks now rule the world and how to take it back, and he is currently trying to write another one despite lockdown.