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The Odessa project

At the top of the famous Potemkin Steps in the Ukrainian city of Odessa stands a bronze toga-clad statue of the city’s most famous governor, the Frenchman the Duke of Richelieu writes Thomas de Waal. When Richelieu was governor of Odessa for a decade at the beginning of the nineteenth century, the city boomed into the Russian Empire’s greatest port on the Black Sea.

Now, Mikheil Saakashvili, a former president of Georgia appointed as governor of the Odessa region in May 2015, is trying to repeat the feat. Saakashvili has had little success so far, but his Odessa Project has elevated him into a big figure on the Ukrainian political scene.

Ukraine is in the middle of a prolonged political crisis. President Petro Poroshenko asked Prime Minister Arseniy Yatsenyuk to resign on February 16, as the prime minister’s political rating has plummeted to almost zero, but backed off from forcing him to step down through a parliamentary vote of no confidence. The president wants to avoid new elections that would burn up time the country cannot afford.

The IMF is stalling on releasing a new loan to Ukraine after two reformist officials—former economy minister Aivaras Abromavičius and deputy general prosecutor Vitaly Kasko—resigned, saying their efforts were being obstructed.

So is there an alternative? The name of Saakashvili is mentioned frequently as a replacement prime minister. He has ripped into Yatsenyuk in public. Appointed to Odessa by Poroshenko, Saakashvili is not eligible to run for elected office but could head the government.

Saakashvili has certainly opened up new space for Ukraine’s young Maidan generation, identifying political corruption as the country’s biggest problem and singling out officials by name. But many, including the U.S. government, see him as a loose cannon.

Which brings us to the question of whether, as he promised, Saakashvili has made Odessa a “showcase of reform” and could credibly lead a new wave of reforms in Ukraine as a whole. The case is definitely not proven. “Everyone celebrated,” Odessa businessman and writer Yevgeny Demenok told me when Saakashvili was appointed. Hopes were high that a man who cut his teeth as an anticorruption reformer could tackle the city’s deep-encrusted criminality and inefficiency.

“Odessa is his platform,” says Odessa political scientist Sergii Glebov. “He needs to show he succeeded in Odessa and Ukraine to be able to return to Georgia.” But, says Demenok, after a series of missteps and the sight of Saakashvili “distracted” by Kiev politics, “90 percent of people here are disappointed.”

Saakashvili had a stormy nine years as president of Georgia from 2004 to 2013. Misha, as he is known, is recalled for his brilliant communication skills, for boldly fighting everyday corruption and organized crime, and for building new infrastructure. But he is also remembered for picking fights and cutting corners, for not seeing projects through to the end, for not listening to advice, and for labeling his critics “Russian agents.”

Odessa has seen both Mishas. In a programmatic speech on June 14, 2015, Saakashvili told an enthusiastic audience about some of the things he planned to do. He would build “houses of justice” on the model that proved successful in Georgia, allowing ordinary citizens to obtain documents electronically without facing bribe-hungry bureaucrats.

He would replace the current potholed road that leads to the Romanian border with a brand-new highway, giving Odessa proper road access to the European Union. He would clean up the massively corrupt customs authority in the city’s port.

He would deal with notorious cases of corruption in which the city and region had lost money. One of these cases he named as an opaque 2011 agreement in which the city council, “under pressure from [former Ukrainian president Viktor] Yanukovych,” gave away the international airport for free. “Everyone is taking a cut,” Saakashvili said of the deal. Eight months on, the biggest success is that a public services centre has opened on the model of the house of justice. Up to 1,000 people can use it a day and 50 services are available to the public.

However, nothing has been done on the highway to Romania, a project that should interest international investors. How so? Saakashvili’s deputy governor is Sasha Borovik, a Ukrainian-born, Havard-educated businessman who was brought in to attract investment. He also ran and lost in the mayoral elections for the city in October 2015—a failure that was a big blow for Regional Governor Saakashvili.

Borovik told me that Odessa’s investment projects were being blocked both by the newly elected city authorities and by ill-wishers in Kiev. Borovik also said that in January 2016, he and Saakashvili had finally made a profit from the customs terminal and would invest half the proceeds into road building.

But the biggest controversy—one that raises questions about Saakashvili’s whole approach to reform—is around the airport. Odessa has a terrible airport. The runway is bumpy, and the main building looks more like a bus station than an international airport terminal. In 2011, in a classic Ukrainian oligarchic tale, the Odessa city administration handed ownership of the airport to a new company named Odessa Airport Development Limited with a murky ownership structure stretching to London, Cyprus, and the British Virgin Islands.

Behind the new company were two local businessmen, Boris Kaufman and Alexander Granovsky, said to be close to Yanukovych. They paid nothing to receive 75 percent ownership of the airport, on the promise that they would attract investment for a new terminal and runway. But not only did they fail to build anything, they even received extra state funds from the Yanukovych government in 2012.

After the 2014 Maidan revolution, civil society activists and Odessa politicians demanded that the deal be scrapped, the airport be returned to the city, and a new tender be offered. A legal case challenging the legality of the contract progressed through three courts. Yet, Saakashvili had talks with Kaufman, one of the owners, and did a U-turn. The court case was dropped. The governor said the two owners had agreed to complete the construction project in 2016. “I need the airport, already by next year,” he told Ukraine’s Channel 7 TV station.

Borovik told me that it was a choice between finishing the airport project and starting again. “We scared them, we forced them to repair the airport. We couldn’t take the airport from them,” he said.

So, in effect, the desire for a quick deliverable—an infrastructure project to open in 2016—took precedence over the commitment to clear up a famously shady project. But if you want to attract foreign investors and build a new transparent investment climate, is it not better to cancel a scheme like this and show the world that you are open for a new kind of business? I like to think that the Duke of Richelieu would have thought so.

Moreover, Saakashvili raised more eyebrows locally when he rented the building for his new public services centre from the same two businessmen, Granovsky and Kaufman, and held a much-publicized anticorruption forum in Odessa’s Hotel Bristol, which they own.

The city’s new governor is at least—in contrast to the vast majority of the political elite—in pursuit of glory rather than personal enrichment. For many Odessans, however, this is not enough if their city proves to be just another phase in Saakashvili’s tumultuous political career, with a few shiny projects but no promise of long-term change.

Thomas de Waalis a senior associate with Carnegie Europe, specialising in Eastern Europe and the Caucusus region. This article was first published by Judy Dempsey’s Strategic Europe under the auspices of Carnegie Europe. More information can be found at

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