Economic Analysis

The causes and consequences of delaying IMF tranche

The International Monetary Fund decided to postpone the allocation of the next tranche of $ 1 billion to Ukraine. First of all it is important to identify the root causes of postponement. The official version is the Donbas blockade. But it is important to clarify that it is not about blockade participants, but about the actual decision of the NSDC about the governance effectiveness as for 2 months after the blockade there hadn`t been done any quality calculations and plan out of the crisis. Director of the Economic Department Angela Bochi notes that it is obvious that the IMF decision cannot be fully associated with the Donbas blockade. One of the important tasks posed by the IMF is the anti-corruption reform. Particular attention was paid to the implementation of anti-corruption courts in Ukraine that hasn`t been started, as well as the election of the NACB auditor was called into question. Formally, our reform of anti-corruption bodies means only their creation because the international business and investors don`t see changes in the country's anti-corruption field and don`t feel the pressure reduction. In fact, postponement of the fourth tranche in March hasn`t become the news, because we had to get this tranche in December 2016. I remind that the third tranche was delayed because it has already been clear that the issue of the next tranche will be postponed. In addition, the third tranche would still be an advance because Ukraine formally didn`t fulfil the requirements concerning implementation of pension reform (the retirement age raising), land reform (the introduction of land turnover), launch of anti-corruption courts. Speaking in fact, we have only fulfilled 3 of the 11 structural lighthouses in the last period. Preliminary requirements – the budget and "Privatbank" nationalization - our country is ostensibly satisfied but, for example, SFS reform hasn`t been carried out since 2015. In other words, the second tranche was given in advance to Ukraine and the third, most likely, won`t be given in advance. The expert also noted that it is likely that IMF program for Ukraine will be stopped altogether, as in 2009, and then the main issue for the government will be curbing the exchange rate. And this question is not in gold and forex reserves which are enough now, but in another factor - the panic among the population. This situation could further deepen the political crisis in the country. Senior economist Vasyl Povoroznyk also noted that the IMF is often a signal for foreign partners: is it worthily to trust the country or not. If the assistance stops, it is a red light for other international partners.

ICPS Press
22.03.2017
Internal Policy

ICPS held diplomatic briefing "Inside Ukraine"

Traditionally, ICPS team of experts supported by the Embassy of Switzerland held a briefing for representatives of diplomatic corps on the most pressing domestic political developments. Evgen Yaroshenko in the content “Public Policies - Donbas blockade” noted that the lack of national consensus on the blockade issue allows political forces to use social contradictions as a tool of struggle for power. Recent developments may open a new cycle of political struggle “all against all”. NSDC decision on blockade in non-controlled territories could change the geopolitical situation around the conflict in Donbas. Russia, Germany, France, the USA and other international players will consider NSDC decision on the blockade as a violation of the Minsk agreements. In response the international community reinforce pressure on Ukraine with in order to return to the Minsk process. As a result, the conflict in Donbas may occur in two scenarios. Scenario I: the restoration of full-scale hostilities. The representative of Russia in Trilateral contact group Borys Gryzlov stated that the NSDC decision is a violation of paragraph 8 of the Minsk agreements providing for the restoration of social and economic relations between Ukraine and non-controlled territories. The implementation of NSDC decision will significantly worsen the socio-economic situation in non-controlled territories and can provoke the attack of DPR and LPR militants. In turn, the Armed Forces of Ukraine and volunteer battalions will be ready to counterattack. Scenario II: preservation of low intensity conflict. Blockade in non-controlled territories will give an additional argument in favour to lift the EU and USA sanctions in connection with the conflict in Donbas. In this case, Russia will try to use non-military instruments of pressure on Ukraine to force Kyiv to political concessions. In turn, Ukraine will avoid the worst effects of hostilities, but the conflict in Donbas will continue to split the society and political elite. The content “Political Competition” devoted to High-profile criminal cases: fight against corruption or redivision of influence spheres? Anatoly Oktysyuk stressed that over the past two years no top official or influential politician was brought to criminal liability in Ukraine. The majority of criminal cases led by the NABU collapsed in courts due to a weak evidence base (i.e. the cases of Odesa Port Plant and United Mining and Chemical Company) or were initiated by the Presidential Administration as an instrument of political competition and were never completed (i.e. the case of Mykola Martynenko, which became one of the factors for political weakening and resignation of Prime Minister Yatsenyuk ). The fight against corruption has become a tool of political competition therefore the arrest and trial over SFS Head Roman Nasirov may demonstrate the real intentions of the Ukrainian authorities as regards fight against corruption to the society and international community or permanently discredit the new anti-corruption bodies and the authorities. The expert Veronica Kharuk presented Prospects for establishment of Anti-Corruption Court. The establishment of independent anti-corruption courts is envisaged by the Memorandum between Ukraine and the IMF, as well as by strategic documents for implementation of the anti-corruption reform. An important fact in the implementation of anti-corruption courts is that the authorities should complete the judicial reform, which provides for overcoming corruption in the existing courts and reboot of the judicial corps on the principles of integrity, independence and accountability. Senior economist Vasily Povoroznyk noted about Privatization in Ukraine: Problems and Prospects. In general, in 2016- 2017 years there are about 450 objects considered for privatization. These are 20 large enterprises, 50 medium-sized companies and about 380 objects of small privatization. After privatization of state property no more than 300 enterprises should remain. The SPF planned to fill up the budget with 17.1 billion UAH from the sale of state companies in 2016.

ICPS Press
16.03.2017
Economic Analysis

ICPS held a conference "Transparency, financial health and competitive municipalities: presentation of online platforms"

Within the project “Transrarent, financially healthy and competitive local governments in Ukraine” which is implemented by the Institute for Economic and Social Reforms in Slovakia (INEKO), in partnership with the International Centre for Policy Studies (ICPS) and with financial support of the Official assistance for development of the Slovak Republic – SlovakAid there was held a presentation of online platforms. "The transparency of 50 largest cities in Ukraine” (http://transparency.icps.com.ua), its purpose is to increase the transparency of local governments by developing and implementing appropriate recommendations and monitoring of current level transparency of municipal councils in 50 major cities of Ukraine. Transparency rating of 50 largest local governments in Ukraine is based on data which are obtained from the following sources: The responses to the questionnaire were sent by ICPS to 50 city councils. Each questionnaire contained 23 questions. The responses to the requests for information were sent by ICPS informally - through a third person ("secret client request"). Each request contained three questions           and was intended to detect city councils` reactions to requests from citizens. Information is publicly available on official websites of local councils. “Transparency of local budgets and their capital cities in Ukraine” (http://budgets.icps.com.ua), portal target is promoting the financial health of regions, cities and towns. Whereas, the transparency, the financial stability and the formation of regional competitive advantages - all these are the basic principles for the effective functioning of local authorities in the long term. The site contains data on local governments` budgets of all 24 regions of Ukraine and their administrative centers. According to Slovak experience, the data are divided into the following types: geographical data, short description of areas, indicators of the financial stability and financial health. "The competitive capability of regions and measuring regional business environment in Ukraine" (http://competitiveness.icps.com.ua/) Analysis of the competitive capability of regions should provide stakeholders the information on business environment current state in the regions, as well as the specific problems of economic development in the regions. The project will provide the local government representatives a useful tool for regional development and eliminating the local barriers of business environment. The assessment model of the competitive capability of regions in Ukraine covers 24 regions of Ukraine (all areas excluding the Crimea). Regional Business Environment Index (RIDS) is calculated on the basis of 103 independent indicators that are calculated on the basis of two sources of information: statistical data for 2014-2015 and companies` survey concerning assessment of business conditions in the regions. Project partners Robert Kičina (Business Alliance of Slovakia), Peter Golias (Director of the Institute for Economic and Social Reforms) and Michal Piško (Project Coordinator of Transparency International Slovakia) presented the implementation experience of the project in Slovakia. National Deputy Oksana Prodan as representative of the Chairman of the Cities Association of Ukraine in the Verkhovna Rada on behalf of the community noted about the local governments` transparency factor as an important prerequisite for creating a favorable business environment and investment climate in general. Advisor to the Mayor of the Dnipro city, Yanika Merylo in her speech focused about the necessity to introduce online services that will allow every citizen to keep track of their city, from the procurement to the infrastructure facilities map.    

ICPS Press
03.03.2017
Foreign Policy

Round table "International interim administration as a model of Donbas conflict settlement"

International Centre for Policy Studies supported by the International Fund “Renaissance” held a roundtable discussion “International Interim Administration as a model for conflict resolution in Donbas”.  The event is the continuation of series of ICPS's developments devoted to conflict resolution. In particular, on October, 2016 the experts presented the study “Models and costs of Donbas conflict  settlement: International Experience and Ukrainian Realities”. It should be noted that since the Minsk agreements have been deadlocked, the conflict resolution requires new ideas and suggestions. In this regard the establishing of the International Transitional Administration in non-controlled territories can unlock the Minsk process and promote the peaceful settlement and reintegration of uncontrolled parts into Ukraine. Within the project “Modeling the implementation of the Minsk agreements” ICPS experts presented a study in which the opportunities and obstacles to the establishing of the Transitional Administration in non-controlled territories were analyzed. ICPS Chairman Vasyl Filipchuk as the moderator of the event stressed the importance of analyzing the practical aspect as how is it possible to restore the sovereignty.  The Deputy Minister of temporarily occupied territories and IDPs George Tuka noted that Ukraine should do everything to return under control the temporarily occupied territories of Donbas and not to abandon the region. Senior ICPS analyst Evgeny Yaroshenko during the presentation emphasized that the mechanism of the transitional administration is the international practice that allows us to establish on the transitional period the legitimate government in a certain territory which has been gripped by conflict or become the victim of aggression of another state. Introduction of administration provides problem solving in military and civilian spheres. In particular, the task of the military sphere is to maintain peace through deployment of the "blue helmets" which has to reduce the violence from both sides. In turn, the civil sector concerns establishing the public order, creating and training the police forces and holding local elections. There are many examples in the world of how the interim or transitional administration has contributed to the return of the states territories. Such administration operated in Kosovo, eastern Slavonia (region of Croatia) and East Timor. “From the perspective of Ukraine, the most revealing example is the peaceful reintegration of Eastern Slavonia by Croatian example. In the information space, we usually understand the forcible return of the territory under the Croatian scenario. If clarify most of the territory of the Serbian margin, which in the early 90s was controlled by the Croatian government troops, it was returned by force. But Eastern Slavonia was re-integrated into the Croatian constitutional space due to the important international mechanism, as the transitional administration”- said Yevgeniy Yaroshenko. 

ICPS Press
28.02.2017
Foreign Policy

Ukrainian issue on the Munich Security Conference 2017

On February 17-19, 2017 the 53rd Munich Security Conference was held. The Security Forum was attended by more than two dozen heads of state and government (including Federal Chancellor of Germany Angela Merkel, President of Poland Andrzej Duda, Prime Minister of Turkey Binali Yıldırım, President of Ukraine Petro Poroshenko), Vice President of the USA Mike Pence, Secretary General of the UN António Guterres, Secretary General of the NATO Jens Stoltenberg, dozens of foreign ministers (France, Germany, the Great Britain, China, Russia, Ukraine, Poland, Sweden, the Netherlands, Turkey, Saudi Arabia), defence ministers and prominent politicians, diplomats and experts. Participants discussed the problems of the European Union, the NATO, transatlantic relations, democracy, terrorism, the Syrian crisis, the situation in East Asia and other challenges to international security. The Chairman of the Munich Security Conference was a prominent German ambassador Wolfgang Ischinger. On the first day of the Conference the President of Ukraine Petro Poroshenko delivered a speech. In the President’s speech, there are the following messages:  to refrain from appeasement of Russia not to repeat the experience of the Munich Agreement in 1938 on Nazi Germany;  to strengthen the transatlantic unity; ​ "Supporting Ukraine is the cheapest investment into security of Free World"; ​ No deals on Ukraine's future behind Ukraine;  to continue sanctions until Russia withdraws its troops from Crimea and Donbas;  to deepen rapprochement between the EU and Ukraine as " Ukraine now is the most Euro-optimistic nation on the European continent". Poroshenko's speech contains a lot of calls to the West for supporting Ukraine and countering Russian aggression. However, apart from continuing sanctions, the President of Ukraine did not submit any new proposals to restrain Russia. Poroshenko also said nothing about the contribution that Ukraine was could make into the European and Euro-Atlantic security. Primarily, key partners are interested in Ukraine’s possibilities in addressing common challenges, and not only in solving the problem of Crimea and Donbas. On the second day of the Conference a meeting of the Normandy Four Foreign Ministers (Ukraine, Germany, France and Russia) was held. The diplomats agreed that the ceasefire and the withdrawal of heavy weapons should be a precondition for the start of the political process. In addition, the parties agreed to provide access of the Red Cross to the occupied territories of Eastern Ukraine. However, it was stressed that negotiations in Normandy format should not be extended by the State Secretary of US Rex Tillerson. The meeting in the Normandy format has not shown any breakthrough. Instead, it was once again emphasized that the implementation of the political provisions of the Minsk agreements should be preceded by the creation of a proper security environment. The main innovation was the German Foreign Minister Sigmar Gabriel first participation in Normandy Group. In general, this year's Munich Security Conference has not provided a separate panel for Ukrainian issue n. The conflict in Donbas and the annexation in Crimea were only indirectly mentioned during the discussion of other international security issues. Meanwhile, world leaders were waiting for concrete proposals from Ukraine to address common security challenges, but not the repetition of the old messages.

ICPS Press
20.02.2017
Social policy and human rights

Ukraine presented the report at UN Committee on the Elimination of Discrimination against Women

February 14, 2017 at the UN headquarters in Geneva Ukraine presented its eighth periodic report for 66-th session Committee on the Elimination of Discrimination against Women (Committee CEDAW). According to the procedure of the reports presentation, public organizations of Ukraine prepared and submitted independent reports and participated in discussions with the Committee members. Mariia Veselovska, ICPS expert on gender issues, said that according to the report of the Committee the appropriate recommendations to the Ukrainian government were provided. In the report was presented the main problems of men and women equality in Ukraine as follows: • Women in Ukraine are 24% paid less than men. This indicator has not changed since 2009. • Gender-based violence is very widespread in Ukraine. 22% of women and girls aged 15-49 have suffered from physical or sexual violence at least once in their lifetime. •The percentage of women in power is quite low. The part of women working in the Parliament is 11% and in government - 12%. Overall, 16% of civil servants in Ukraine are women. Accordingly, the Committee members were interested in state level mechanisms existence addressing these problems in Ukraine, what obstacles should be removed to ensure equality between men and women, especially in politics and decision-making positions, as well as the problems of vulnerable groups of women as older women, women with disabilities, women from rural territories. NGOs highlighted in the reports a number of challenges faced by women in Ukraine: Reduction of social spending and jobs adversely affect the economic situation of women. A) Women and families are the primary beneficiaries of state social spending. B) That is women who are widely involved in areas affected by jobs reduction (education, medicine, social services). The report indicates problems for women in rural areas, in particular: "More than two-thirds of women from rural territories of active working age are working or self-employed unofficially. Thus, they are not protected by labor laws, have no social insurance and therefore can not receive pension». Separately highlights the problem of social payments for IDPs, most of them - 62% - are women, and a lack of sources of income for women who are in areas close to the line of conflict.

ICPS Press
15.02.2017