Some officials over in Ukraine have been stuffing their pockets with $100 million stolen from the energy sector. Before you get worried that someone has been dipping into the US or EU aid…this dates back long before all that started flowing in.
Summary of Zeihan’s Discussion on the Ukraine Energy Corruption Scandal
Peter Zeihan explains that Ukraine is dealing with a major corruption scandal involving former allies of President Zelensky, who are accused of stealing roughly $100 million—mainly from the energy sector. He emphasizes that this has nothing to do with Western aid. The weapons and financial support provided by the EU and U.S. are tracked through a highly transparent digital system that records every step from delivery to battlefield use, making theft of foreign aid extremely unlikely. Claims that aid is being stolen are largely Russian disinformation.
The real issue lies in Ukraine’s legacy Soviet-style energy system. For decades—starting with independence in 1992—Ukraine relied on Russian natural gas transiting through the country. The Ukrainian state-run system took gas as payment in-kind, charged transit fees, and operated like a Soviet bureaucracy where corruption (“I get 2%”) was built into the structure. Because energy was basically free and abundant, the country had little incentive to modernize or become efficient. Ukraine became one of the least energy-efficient economies in Europe.
Corruption flourished because officials made money based on throughput volume, not performance, so they resisted any modernization that would reduce their cut.
The war fundamentally changed this dynamic. Russian attacks have repeatedly damaged energy infrastructure, forcing Ukraine to rebuild and repair its power plants and grid. This pushed parts of the system from rigid state control into more market-based, hybrid structures that prioritize efficiency. As more infrastructure was destroyed and replaced, these newer, cleaner systems expanded, bringing the old corrupt actors into conflict with reformers.
That clash finally broke into the open. Some of the key corrupt figures have now fled the country, and Ukraine appears poised for a major overhaul of what remains of the old statist energy apparatus. This reckoning was inevitable not only because of wartime pressures but also because Europe no longer uses Russian oil and gas transiting through Ukraine, rendering the old corrupt pipeline model economically obsolete.
Zeihan notes that Zelensky inevitably worked with some of these old-guard figures because he inherited the system while trying to keep the lights on during a war. Could reforms have come earlier? Possibly, but judging a wartime leader is difficult.
The bottom line: Ukraine’s corruption scandal is real, rooted in a long-standing structural problem—not in aid theft. The war, combined with Europe’s exit from Russian gas, is accelerating a long-overdue transformation of Ukraine’s energy sector—politically, economically, and physically.
