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Outsourcing Ukrainian Customs & Border Service?

April 6, 2015

One of the most progressive political parties in Ukraine is arguably Samopomich, headed, and in a large part financed by, Lviv Mayor Andrei Sadovyi.  It is a party in effect, sponsored millionaires and multi-millionaires rather than by the oligarchical billionaires.  It’s Rada MPs are more or less ideologically driven western-looking reformers, and it ran a more or less transparent electoral campaign, including electoral financing to a degree that should transparent political party funding ever become a statutory requirement as part of a battle against oligarchical ownership of MPs, (and parties), Samopomich would suffer the least of all political parties currently in the Rada.

It is also a party that tends to think, and  approach issues, “outside of the box” far more often than most other political parties.  Something that is a refreshing change, even if that “outside of the box thinking” is actually where it should occasionally remain – after due consideration.

Mr Sadovyi is certainly not beyond using Lviv as a trial venue for pilot projects – no pun intended in the case of this link to the “Open Skies” experiment now running at Lviv Airport.

Nobody would be particularly surprised if one future day, there is a President of Ukraine named Andrei Sadovyi.

It comes as no surprise then, that on his Facebook page a few days ago, Andrei Sadovyi floated the idea of outsourcing the customs and border control management to European nations – suggesting Germany or Switzerland.  The economic costs of this – and more – it is claimed, would be met by the reduction in corruption and increased legitimate revenue to the State.

As (almost) always when floating a trial balloon, Mr Sadovyi provides an opinion survey to participate in, for those that take the time to “click” where necessary.  Numerous surveys being all part and parcel of becoming a multi-millionaire marketing and media businessman presumably.

Mr Sadovyi does have a very valid point regarding the efficiency and corruption of those various State entities that have a role in Ukrainian customs and border control.  Ukraine ranks 61st of 160 nations assessed in the World Bank Logistics Performance Index.  Room for improvement undoubtedly – and urgently so, with the EU DCFTA coming into full effect on 1st January 2016.

But is outsourcing the Ukrainian customs border management to the Europeans a good idea?  It is, after all, not without a reasonably successful regional precedent.  A post-Communist Poland took this very route using German customs management for a period of time.  Mr Sadovyi is not claiming to have invented a new wheel with a masterstroke of creative thinking – and it is natural that Lviv, more than most Ukrainian cities, looks very closely at what worked – or didn’t – during the Polish transition, due it its adjacent geographical location.

How will Ukrainian customs and border management improve, increasing efficiency and reducing corruption, if it is outsourced to the Germans or the Swiss?  Would it remove the root causes of inefficiency or corruption currently plaguing the Ukrainian customs and border agencies?

There are undoubtedly human resources issues that have to be addressed – urgently in some cases – despite other significant progress as noted by the EUBAM team in Odessa detailed in this recent, lengthy, report on the ports of Odessa and Illichovsk.

Indeed one of the issues raised under 6 headings, listing 29 recommendations, following EUBAM Gap analysis, is human resources and the effective management thereof as one of the priorities to address.

“There is a critical need to establish stable border control services where employees can expect
reasonable remuneration for their labour, and to have their skills and potential recognised and
developed.  Currently salaries are extremely low, and as such include significant bonus elements that are sometimes withheld.  A newly appointed customs officer receives a salary that will not cover living expenses, even at the most basic level.  At the same time there are by international standards very high levels of pay compression.  So in salary terms alone incentives to seek promotion are low.  Whilst it is not the contention that addressing the salaries issue is the single remedy to address corruption, not to pay a proper living wage means to undermine all other remedies.  The situation of the newly recruited officer is critical.  These are formative years, and the time when individuals establish and develop their working behaviour patterns.  It would be surprising indeed if with a monthly salary approximately equivalent to sixty Euros, individual officers, however well-intentioned at the outset, did not feel the pressure to seek alternative ways to supplement their income. This breeds corruption.

Other aspects of employer/employee relationships and performance management are also important to achieving organisational stability and motivating individuals in order to maximise organisational effectiveness.  In recent years the average tenure of the Head of Customs in the southern region has been barely a few months.  Since June 2014 there have been four substantive or acting appointments to this position.  Similar movements have been noticed in the lower management echelons, although to a lesser degree.  Such changes may be symptomatic of several factors, but the result is undoubtedly the creation of high levels of uncertainty and instability.  On the other side of the appointments door are the dismissals.  Although no firm data is available, anecdotally numbers are significant.  Frequently, reports are received of individual customs officers being dismissed for alleged corruption.”

Undoubtedly a starting salary of Euro 60 per month is not enough to live on in Ukraine, and naturally such a woeful salary invites the solicitation of additional funds through nefarious acts, not necessarily through greed, but by necessity.  When your front line is so woefully remunerated for its internationally facing work, problems invite themselves in a domain with far more bureaucratic regulations and rules, than staff employed to implement or manipulate them.

Mountainous bureaucracy, obscure regulations, and poorly paid staff, present opportunities for corruption.  If an individual is caught and fired for corruption, the prospect of losing Euro 60 per month job, with few career enhancement opportunities based upon merit, and very limited financially appealing promotion drivers within the borders agencies, is not that much of a loss when weighed against the potential gains of soliciting bribes whilst you can.

Further, as the EUBAM report on the Odessa ports makes very clear, there is a very high turn over of management within the border agencies – most senior appointments lasting only a few months.  This is due – at least in part – to the fact that regional fiefdoms, that in turn run regionally nefarious schemes, have influence upon who gets appointed to what management position in all regional entities.  Senior management appointments are therefore extremely political locally – and corrupt.  It therefore follows that senior management retain their position only so long as the local political winds blow favourably – or they are caught for nefarious schemes.

It does however, create an ever-changing management playing field for the mere, chronically underpaid mortals, standing at the gates to Ukraine.  Stability associated with sustained management, clearly, there is not.  Neither is there the legitimate remuneration required to put personal ethics before feeding a family or clothing yourself.

MaslowsHierarchyOfNeeds.svgThe bottom rungs of Maslow’s Hierarchy of Needs is perhaps not where State enforcement agency employees should find themselves if petty (but extremely voluminous) corruption is to be avoided.

Quite how outsourced German or Swiss customs and border services management would address both chronically insufficient remuneration and compressed increases in remuneration upon the promotional ladder is somewhat unclear.  Those answers are to be found in the Ukrainian State coffers.

Neither, it has to be said, is it clear how such European management would remove unnecessary/antiquated/Soviet relic Ukrainian rules and regulations relating to border control – for that is surely an issue for the Rada to repeal such nonsense, and in doing so remove much of the bureaucracy that can be employed to generated nefariously solicited income.

Would outsourced German or Swiss customs and border management lead to a shared IT EU platform automatically recognising certain documents, weights, measures and all such technicalities?  Not unless Ukraine decides to do it.

Will outsourced European customs and borders management make those in Kyiv insure that the EU Customs Blueprints are anything more than a document gathering dust on a shelf somewhere?  Recommendations and possible solutions to a quality customs and border service are certainly not lacking within the aforementioned blueprints – indeed they are specifically designed for the ENP nations.  A German or Swiss implementation team may have some effect – but expanding the remit of the long-standing EUBAM in Odessa could also be tasked with such just as easily  – and an implementation team is not exactly the outsourced customs and borders management as currently being mulled by Mr Sadovyi and Samopomich.

How long would Ukrainian customs and borders management be outsourced?  Which agencies would have their management outsourced? – For there is more than one agency tasked at the borders of Ukraine.

What are the expectations if such management is outsourced, when the domestic underlying human resources factors effecting corruption, together with legislative/bureaucratic labyrinth of opportunity remain unchanged?

Just what can be expected by outsourcing to German or Swiss management, when their domestic subordinates remain woefully underpaid, drowning in/or making the most of opportunities presented by mountainous, antiquated, and unnecessary bureaucracy (much of which is still hard-copy and not electronically generated)?  German or Swiss management cannot correct such issues – they are issues that only the Ukrainian State can correct.

Once some fundamentals have been corrected, then there may be much more to be gained by any such outsourcing allowing the best managerial customs and borders practice to be absorbed by the next emerging Ukrainian management team tasked to assume control of the agencies eventually.  The things is, however, the Ukrainian customs and border agencies management, after numerous years of exposure to EUBAM, are quite aware of best practice already.

As such, the outsourcing of management is not an answer in and of itself – although it could be part of the answer.  Just as builders install areas rockwool amongst loft insulation to act as firebreaks, different layers of outsourced European customs and borders management, at various stages within the hierarchy, may act as numerous firebreaks against the nefarious schemes of the regional fiefdoms and power vertical, until a suitably remunerated, Ukrainian rockwool comes through the ranks of the customs and border agencies themselves.

Simply outsourcing the (management) problems to the Germans or Swiss, without them having the domestic tools to put some fundamental internal problems right, seems otherwise pointless.

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