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Let’s Not Repeat Mistakes and Corrupt a Victorious Ukraine

September 22, 2022

Corruption and War are soulmates. Even in World War II, which we celebrate as our ‘last good war’, the black marketeers and profiteers cashed in. At least 21,000 new millionaires and billionaires were made in the United States during World War II, according to their tax returns. At the other end of the feeding trough, U.S. troops in liberated France sold U.S. government issued cigarettes on the black market. Nevertheless, we did work hard against corruption, jail a lot a profiteers, keeping overall corruption below levels that would have hindered war production. Luckily for us, Germany, Japan, and Italy, despite being dictatorships (or perhaps because they were dictatorships), failed to rein in their corruption and their war production suffered. The United States also put a lot of effort in the first years after World War II into combatting corruption during our intervention in the Greek civil war and in the Korean war. Unfortunately, we lost focus on the importance of preventing corruption after the fighting ended.

The existential stakes of World War II had made fighting corruption just as important as fighting the Axis Powers. It appears that during the Cold War the stakes were not so high, and we allowed the “you are with us or against us” mentality of the Cold War to cause us to overlook the corruption of allies. That was a mistake, and now the stakes are too high to allow that to happen in Ukraine, especially if Ukraine wins.

Interestingly, post-war South Korea grew more corrupt than post-war Greece. In Korea, U.S. aid funds paid for most imported goods and 60,000 American soldiers spent millions in the country and their presence created a massive black market in goods diverted from the U.S. supply chain. In Greece per capita U.S. aid post-war to Greece was tiny by comparison to Korea and less than 500 U.S. troops stayed in the country. To put this in perspective, between 1946 and 1976, the United States provided $12.6 billion to South Korea in economic assistance; only Israel and South Vietnam received more on a per capita basis.

Vietnam offers another data point. When we intervened in Vietnam, we gave stopping corruption a low priority, perhaps because many American strategists seemed to believe that would undercut our war effort. The Vietnam War was fought for non-existential goals in a distant country.

Our tolerance for and often encouragement of large scale corruption also played a key role in the disastrous debacles in Iraq and Afghanistan. Reading the reports of SIGAR, the Special Inspector General for Afghan Reconstruction, and similar reports on Iraq should raise the hairs on the back of your neck. Depending on how you count, the U.S Government spent upwards of two trillion dollars on our two recent Middle East wars. We did not spend that money IN Iraq and Afghanistan; most of it – up to 80% according to some estimates – ended up in American pockets, personal and corporate. We paid American truck drivers $10,000 a month taking away jobs from unemployed but perfectly capable Iraqi drivers. American corporations received tens of billions in cost-plus contracts without anything approaching accountability for the costs they charged. Afghan warlords acquired million dollar villas in Dubai on the backs of these contracts. We gave the Afghan and Iraqi armed forces highly sophisticated American helicopters at $30 million a unit; helicopters that they could not maintain without massive American contractor support. They actually needed older Russian helicopters, at less than one million dollars each, that both the Iraqi and Afghan armies could maintain with their own experienced personnel and workshops. We made little effort to ensure that money we paid to the armies of Iraq and Afghanistan ended up in pay envelopes of the soldiers on the front lines, rather than the pockets of their generals.

The good news in Ukraine is that we are injecting relatively little cash into the Ukrainian economy at the moment. We have no U.S. troops on the ground, and most of our assistance so far comes in the form of military hardware and training to fight the war. Never mind that our Defense Department procurement practices are so arcane and inefficient that we are paying probably twice as much as would be the case in a properly run system. We did better in World War II, but that is for another time.

The bad news is that prior to the war, Ukraine was one of the most corrupt economies in the world. Ukrainian corruption grew out of the disorderly transition from a communist economy – that itself had grown increasingly corrupt through the decades – into a ‘capitalist’ system quickly captured by the old Soviet bosses now turned ‘businessmen’ i.e., the oligarchs. Ukrainian corruption spread its tentacles into the U.S. political system as anyone with access to a television set in 2019 can attest. Corrupt Ukrainian oligarchs currying favor with the Trump administration kicked off one of the biggest political scandals in modern American history. We saw testimony that the Trump administration fired the American ambassador, Marie Yovanovitch, at the behest of Ukrainian oligarchs. I recommend readers read the full text of the July 1, 2022, New York Times interview with Ambassador Yovanovitch. She does not rehash earlier events but speaks of the dangers if the oligarchs take over again after the war.

We talk about the need to return to old values. The old values demonstrated by our World War II leaders would be a good example. As we shift to economic assistance we must eschew sending cash; cash tends to flow, like water, into the gutter. We must also minimize the American footprint on the ground; thousands of American contractors will undoubtedly produce the same results that cost us Afghanistan.

Mostly we should only send forensic auditors to follow the money.



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