Reforming customs aka "cash cow" of corruption
20 October 2024
Ukraine is pushing forward with a major reform aimed at tackling one of the country's most entrenched sources of corruption – customs. Smuggling and tax evasion at the border cost Ukraine an estimated €2.2 to €2.8 billion in lost revenue each year. With the country desperate for funds amid Russia's ongoing invasion, the government has passed a new bill to overhaul the State Customs Service. This reform seeks to combat the deep-rooted corruption that allows smugglers both big and small to avoid customs duties through bribery and falsified paperwork, depriving the state of tax income.
Key elements of the reform include the appointment of a new head of the Customs Service, selected by an independent commission where half the members are foreign experts. This process is designed to limit corrupt political influence on the agency and avoid scenarios like the one in 2020, when a previous attempt at reform stalled after the then-head of the service, Max Nefyodov, was dismissed due to pressure from smugglers and political interests. Additionally, the bill mandates audits, independent oversight, and a recertification process for around 9,700 customs employees to vet their integrity and finances.
While the reforms could take up to three years to see the effect, they are seen as essential for Ukraine to meet International Monetary Fund (IMF) benchmarks, secure foreign aid, and prepare for future EU membership. As part of its bid to join the EU, Ukraine must align its institutions, including customs, with EU standards to maintain the integrity of the single market. Moreover, the reform will unlock crucial financial aid from the IMF, including a €13.8 billion loan package.
 | Anna Sas "We just crossed the border. Only six hours this time. Didn't even have to take the bags out. All is well." That was my mother's usual update on the phone to our relatives, that I would hear half-asleep in the backseat. Whether entering or leaving Ukraine, she always told my sister and me to pretend we were sleeping during customs checks. The idea was that sleepy kids might keep the officers from waking us and dragging us out of the car. People even shared tips about when customs officers' shifts changed, hoping for an edge. For the average citizen, the border is like a roulette wheel depending on the officer you get, their mood, and even the weather. But as long as I can remember, the border was always seen as corrupt, a place where problems could often be solved with a big enough bribe or right connections. For many Ukrainians, the dream of reaching EU standards and enjoying the freedom of Schengen travel feels distant, but not impossible. Russia's war might just be the much-needed push for real change. |
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