Ukraine’s Broken Road to Europe

If you want to get an idea of the state of governance in today’s Ukraine, all you need to do is take a drive. You might start with the notorious M15 highway, which winds its way from the city of Odessa on the country’s southern coast to the Romanian border 180 miles to the west — all the way to the doorstep of the European Union. In theory, it’s a part of an important trade route that links Ukraine’s largest seaport to Europe and Turkey. In reality, it’s something of a national embarrassment.

The highway was built by the Soviet government around the middle of the last century, but precious little has been done since then in the way of upkeep. The asphalt is pitted with potholes ranging in size from baseballs to kiddie pools, and the roadside doubles as a graveyard for blown tires and broken hubcaps. In places the road is so badly damaged that drivers prefer to use makeshift dirt paths that have sprung up parallel to it. At least there they can maintain a steady, if not exactly expedient, 25 miles per hour.

As bad as it is, the M15 highway is more or less representative of most provincial Ukrainian roads, whose poor conditions will cost the country up to $4.8 billion (about 5 percent of GDP) over the next two years, officials say. Earlier this spring, a top official at Ukravtodor, a rough equivalent to the United States’ Federal Highway Administration, announced that some 97 percent of Ukraine’s roads are in need of repair. That unsettling fact is as good an indicator as many others that the country is still struggling to improve its notoriously corrupt and ineffective government. “The Putin regime presents Ukraine as a failed state, and nothing supports that notion more than weak governmental institutions and the absence of roads,” says Sasha Borovik, the former deputy governor of Odessa and an outspoken reformer. “And in Ukraine, you pretty much have both.”

In recent months, most international media coverage of Ukraine has focused on the political crisis that led to the formation of a new government in April, as well as the authorities’ apparent unwillingness to satisfy public demands for reform after the 2014 Euromaidan revolution. The simmering separatist conflict in the east, meanwhile, continues to sap resources and stir nationalist anger against the government.

But the state of the country’s 105,000-mile road network sheds light on a lesser-seen facet of Ukraine’s slow trundle toward Western-style management and economic modernization. While war and political turmoil command headlines, matters of finance and budgeting are decidedly unsexy. But an efficient bureaucracy and number-crunching knowhow are exactly what rebuilding the country’s decrepit motorways would take. Neither are currently points of strength for Ukraine — and the extent to which the country manages to improve its roads in the coming years will be a telling indicator of whether it is moving forward.

The good news is that a record amount of funding for road repair — nearly $800 million — has been allocated for the 2016 budget, according to Volodymyr Omelyan, the newly minted infrastructure minister. The bad news is that it’s still nowhere near enough: in a recent interview with a Ukrainian newspaper, he claimed it would take 100 years to properly fix all the country’s roads with the financial resources currently at the government’s disposal.

Predictably, corruption is a major cause of the disrepair. Besides the disturbing tendency for budget money to disappear, drivers often flout weight controls by bribing officials, and their massively overweight trucks wreak havoc on the roadbeds. It’s also not unusual, observers say, to find lines of trucks parked alongside highways waiting for the weigh station ahead to close before driving on unchecked.

But corruption isn’t the only problem. Ukraine’s broken roads are also the result of poorly managed federal money, says Valentyna Malchevska, a transport industry lobbyist in Kiev. Currently, state funds meant for road reconstruction come from excise taxes and import duties on petroleum products, vehicles, and tires. But the misallocation of money makes long-term planning difficult: instead of going straight back to Ukravtodor, which is responsible for fixing the roads, the tax funds are funneled back into the general budget, after which the finance ministry or parliament ultimately decide where to spend it. Out of the $1.5 billion Ukraine typically receives from these taxes yearly, the Ministry of Infrastructure says, only 20-30 percent actually goes to repairs.

Establishing a state road fund would streamline the process and ensure that a guaranteed sum is available for repairs each year. Prime Minister Volodymyr Groysman recently promised that such a fund would be up and running within a couple of years — a welcome sign for those who believe it’s a crucial first step. “We have to start somewhere, and at the very least with directing finances where they’re supposed to go, building financial discipline and creating a culture of proper behavior [in the transportation sector],” Malchevska says. Reform-minded officials also hope to decentralize repairs by giving local authorities more say over which roads of local and regional significance receive priority attention.

The M15 highway, consistently ranked by journalists and industry experts as one of Ukraine’s worst, reflects both the difficulties of rebuilding the country’s road network and the potential for change. Odessa Governor Mikheil Saakashvili made fixing the road a priority shortly after he took office last year. The project has been divided into two parts: reconstructing the existing road and, eventually, building a brand new highway, estimated to cost $4.6 billion, that will completely bypass the neighboring ex-Soviet republic of Moldova. (There are currently two points where drivers, somewhat awkwardly, are required to pass through Ukraine’s smaller neighbor without even exiting the highway.)

In a cash-strapped country still hamstrung by a clunky bureaucracy, however, reconstructing the highway can proceed only as quickly as funds become available. Officials are hoping to tackle the most damaged parts — around 50 miles — by the end of the year, with public funding they’ve already been promised. One of the key sources are tariffs collected by the regional customs service, part of a new federal experiment that earmarks customs profits specifically for road repair. The highway has been divided into dozens of separate parcels for which contractors can openly apply, says Georgii Zubko, Saakashvili’s curator for the project, in part to facilitate those step-by-step repairs. It’s also meant to prevent any single entity from securing a monopoly. Two companies are already working on about 25 miles of the road, while construction tenders for another 20 miles have been completed.

But building an entirely new highway — which would be one of Ukraine’s first toll roads — will be far more complicated. Just planning it out, for instance, means identifying and securing rights to every inch of local land, public or private, through which the highway will pass. More than anything else, according to Volodymyr Shemayev, who oversees infrastructure investments for the regional government, the project requires serious political will in Kiev. That’s partly because building the new highway is only possible with help from foreign investors, who would expect it to generate revenues from tolls and other sources, and will seek compensation if traffic intensity remains low. Investors will also need assurances from the highest levels that the tender process will be clear-cut and transparent. The whole thing, planners admit, is little more than a dream without the central government leading the way.

That’s why they’re hoping for small successes, at least for now. A partially reconstructed road might first attract more freight truckers, many of whom currently take a 120-mile detour through Moldova just to stay off the M15. Then, the European Union’s approval of a visa-free regime with Ukraine — later this year, officials hope — could help boost traffic in the region, which in turn would make a brand new toll road more attractive to the government and investors. Farther down the line, Zubko says, “Ukraine could become a big industrial hub.”

If it fails, however, the highway will remain just another potholed indicator that, when it comes to good governance and efficient planning, Ukraine still has lots to learn.

The photo shows the M15 highway.

Photo credit: Dan Peleschuk