Balancing Oversight and Risk: Transparency for U.S. Foreign Assistance to Ukraine
July 5, 2022
Since Russia’s unprovoked invasion of Ukraine in February, the United States has provided unprecedented levels of security, economic, and humanitarian assistance to Ukraine. This assistance reflects the United States’ remarkable commitment to a country fighting for its right to exist as a sovereign democratic country. In two separate packages, Congress has appropriated $54 billion in assistance to Ukraine. On an inflation-adjusted basis, the United States has already allocated more money for assistance to Ukraine in the past five months than it did on a yearly basis during the height of the Marshall Plan.
Given the unprecedented levels of assistance, and that Ukraine has a history with corruption issues, proper oversight of these funds will be critical. The most recent bill faced a delay due to oversight concerns. Senator Rand Paul (R-KY) held up the bill because he wanted to appoint the leader of the watchdog of Afghanistan’s reconstruction (Special Inspector General for Afghanistan Reconstruction, or SIGAR), John F. Sopko, to take on a similar position to provide oversight for Ukraine’s reconstruction. Senator Paul’s concerns are the same that he voices with every piece of foreign assistance legislation; however, 10 other Republican senators and 57 Republican House members also ultimately joined him in voting against the final spending bills. The assistance bill eventually passed Congress, but the delay reflects what will likely be increasing calls for oversight on foreign assistance to Ukraine.
Since 2014, Ukraine has made significant progress in transparency, including through the digitization of city planning and public procurement, monitoring of public officials' assets and lifestyles, and investigative journalism, yet endemic corruption remains a challenge. Estimates in 2021 still showed that Ukraine’s budget was losing $37 billion a year due to corruption. In recent months, Kyiv has in some cases returned to relying on oligarchs for government funding of both immediate assistance and future reconstruction, which opens the door for oligarchs to be able to promote their self-interest through the government. Down the line, instances of corruption, and especially misuse of foreign assistance, could cost Ukraine its good standing and endanger further aid from the United States.
Oversight for U.S. assistance to Ukraine is necessary to ensure continued support for aid packages by both the American public and the congresspeople who represent them. But it is not clear that more oversight than what is already provided by the inspectors general at the U.S. Agency for International Development (USAID) and the State Department is needed. In addition, the recent supplemental Ukraine bill included additional provisions related to the direct economic assistance provided to Ukraine. An additional layer of oversight along the lines of the special inspectors general used in Iraq and Afghanistan is not immediately necessary. Indeed, such an approach could hinder the effective delivery of foreign assistance at a time when speed, flexibility, and effectiveness should guide U.S. support for Ukraine.
A SIGAR for Ukraine Is Not the Answer
The U.S. withdrawal from Afghanistan in August 2021 and almost immediate takeover by the Taliban shortly after raised immense concerns about the amount and effectiveness of U.S. assistance provided to Afghanistan over a 20-year period. This debacle looms large as the United States once again makes a large commitment to support an allied government. There are obvious differences between Ukraine and the situations in Iraq and Afghanistan, but the constant is the significant volumes of security, humanitarian, and economic assistance the United States provides. The American people and their representatives will demand that the significant sums of money given to Ukraine will be put to good use. Using the situation to his advantage, Senator Paul attached an amendment that would create a special inspector general for Ukraine; the amendment ultimately failed. However, SIGAR was not without problems, and it is important to take into consideration some of its unintended consequences on the quality of U.S. aid to Afghanistan.
Between 2002 and 2021, the U.S. provided over $146.4 billion to Afghanistan to support reconstruction efforts and provide humanitarian relief. SIGAR was created in 2008 as an independent body to conduct oversight for any assistance given for Afghanistan’s reconstruction efforts. Over time it identified several issues with U.S. assistance to Afghanistan, including instances of fraud and harmful spending patterns, the unsustainable infrastructure projects, and a lack of a comprehensive reconstruction strategy or consideration of local capacity and needs. Although it was important to identify areas where spending may have been misused, SIGAR also criticized aid agencies for not taking enough risk to successfully implement programing. In many cases, however, it was often fear over the role of SIGAR that made agencies risk-averse, creating an unproductive cycle. Critics have argued that SIGAR is seeking out imperfections in USAID’s work without taking the difficult governance environment into account. There is a healthy debate within aid and development circles over whether on balance SIGAR helped or hindered the reconstruction and development side of the war in Afghanistan. Ultimately it is unclear whether the work of SIGAR altered the outcome of the war in Afghanistan, but it may have hindered sector-specific progress that could have contributed to broader gains. The United States should not go down the road of creating another inspector general for Ukraine, which created unnecessary layers of oversight that at times hindered smart risk-taking in Afghanistan and took an overly adversarial approach to its mission.
Balancing Oversight and Risk
Presently, the necessary mechanisms to create immediate accountability for U.S. assistance to Ukraine largely exist, and the funding bill passed included several additional oversight mechanisms. The most recent aid package to Ukraine included over $8 billion in direct economic assistance to Ukraine’s government. The spending bill include requirements that these funds are subject to a memorandum of understanding between the U.S. government and government of Ukraine that includes descriptions of how the funds will be used. Additionally, the money must be kept in a separate account that cannot be combined with other funds. The bill also asked for reporting from the State Department and USAID, specifically noting that “the Secretary of State or the Administrator of USAID, as appropriate, shall report to the appropriate congressional committees on the uses of any funds provided for direct financial support to the Government of Ukraine . . . and the results achieved, not later than 90 days after the date of enactment of this Act and every 90 days thereafter.” This funding for oversight and legislative provisions will provide transparency over the economic support funds provided directly to the government of Ukraine. Finally, the bill also included funding for oversight of various U.S. agencies’ spending, including $5 million for the Department of State inspector general and $1 million for the USAID inspector general. This additional money provides the Office of Inspector General at both agencies with the resources needed to monitor assistance for Ukraine.
The pressure for effective oversight of the large amount of money appropriated to support Ukraine’s defense of its country is understandable. There are real and serious concerns about the level of corruption in prewar Ukraine; however, there is little evidence that this corruption has affected the significant volumes of aid that Ukraine has received since the 2014 Maidan revolution. Given the stakes involved—Ukraine’s continued existence as an independent, democratic state—there is significant incentive for the government in Kyiv to ensure that the money provided is put to its intended uses. On the other hand, the relevant U.S. agencies must respond to congressional demands for oversight and work with Ukrainian partners in a transparent way to highlight the significant impact foreign assistance is having on the outcome of the war. The U.S. government must utilize existing mechanisms to demonstrate transparency and provide accountability to Congress on this important money. Political dynamics in Congress demand that the administration do so. Otherwise, the flow of aid may stop, or additional oversight mechanisms will be created that disincentivize the necessary risk-taking critical for Ukraine’s success both during the war and throughout subsequent reconstruction efforts.
Conor M. Savoy is a senior fellow with the Project on Prosperity and Development at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Janina Staguhn is a research associate for the Project on Prosperity and Development at CSIS.
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