2018 was accompanied by constant political turbulence, which in fact became a systemic phenomenon in Ukrainian politics. There was no serious breakthrough in structural reforms, but some point changes were managed to realize. 2019 will be marked by the elections. The parade of candidates will increase political uncertainty in the first half of the year. Structural reforms will go to the background, at least until the end of the entire election period. Any qualitative changes in all the hot issues of internal politics will be possible only after the parliamentary elections, but the vector of these changes is difficult to predict, as Ukraine once again finds itself at a crossroads.
Achievements and failures of 2018
The achievements of the Ukrainian authorities in 2018 include:
1. Preservation of authorities` efficiency. Presidential Administration, BPP and NF managed to preserve the existing political structure and provide the opportunity to make decisions. However, the crisis in the relations between BPP and NF is deepened, and, besides finding allies for important voting, these parties spend a lot of time to coordinate positions between them. It is increasingly difficult for the president to keep his own agenda in parliament. Parliament, though with difficulty, but continues to adopt government laws, the government works without much shocks and stupor. The duality of the executive branch though intensifies the relationship between the president and the prime minister, but does not lead to catastrophic conflicts between them.
2. Continued implementation of reforms. In 2018, the implementation of decentralization, health-care and education reforms continued. The decentralization reform is the most successful, as evidenced by the dynamics of the creation of new UTCs and the increase of local budgets. As for the implementation of the health-care reform, the transition to a family doctor system has started and it has results in the form of millions of signed declarations of citizens with doctors, but real changes are still poorly felt. Some family doctors began to receive new wages. The reform of education system has more problems, in particular through realization at local level, but its implementation continues. In addition, Ukrainian politicians finally managed to adopt the law on the anti-corruption court, the formation of which will allow continuation of the implementation of anti-corruption reform. However, one should understand that its adoption is largely the merit of international partners of Ukraine and the public sector, rather than the representatives of the authorities themselves. It is also possible to note the adoption of the law on privatization, which, according to the people's deputies' plan, should create transparent and understandable conditions for privatization in Ukraine. However, the law has been adopted, but the privatization itself has not actually been carried out. Finally, the launch of the SBI, however, was accompanied by numerous scandals.
3. Preservation of cooperation between Ukraine and IMF. Given the high debt burden on the budget of Ukraine, as well as the fragile financial stability of Ukraine, it is important to conclude a new program of cooperation between Ukraine and IMF. Ukraine is planning to receive the first tranche in 2018, subject to a positive decision by the IMF Board of Directors on December 18 this year. It should also be emphasized that the conditions of cooperation between Ukraine and IMF act as a basis (main driver) for carrying out structural reforms. In addition, continued cooperation between Ukraine and IMF automatically expands the list of potential sources for attraction of funds on foreign markets by Ukraine.
The failures of the Ukrainian authorities in 2018 include:
1. The low quality of democracy, the strengthening of anti-liberal tendencies. Despite a certain weakening of the president's position, he continues to monopolize the power in his hands. Formally, while not belonging to any of the branches of government, due to the exclusive influence on the GPU and the SSU, the informal mechanisms of personal commitments, as well as the largest faction in the parliament, president Poroshenko has an exclusive influence both on the government and parliament, and on the judicial branch, which, after judicial reform, actually came out under the influence of the Verkhovna Rada. Currently, there is practically no criticism of the president among the Ukrainian media, and the authorities' attacks on media have increased, which allow criticism of the current president. Pressure on journalists and representatives of civil society organizations (the use of physical violence against them) by law enforcement agencies and various “titushki”, as well as representatives of nationalist movements, became a common phenomenon. Against the background of increasing the role of representatives of the public sector in state-building processes, the opposition of the authorities to this trend increases proportionally. Representatives of the authorities continue to use fake or manual NGOs, which are members of the supervisory boards of state bodies. There were frequent cases of open hostility between government officials and civil organizations and activists. An apogee in 2018 was the murder of activist Kateryna Gandzyuk and the apparent sabotage of the crime investigation process by law enforcement agencies. There are numerous attacks on activists in the regions.
2. Critical politicization of the work of state authorities. In terms of the pre-election year, voting in the parliament was more like election campaigning than real legislative work. The pressure on political forces by opening criminal cases on separate deputies, holding dirty PR campaigns to discredit political opponents, etc., became merely common. All this has a very negative effect on the institutional capacity of the entire state machinery. The distrust of citizens towards state authorities is critical. The GPU, the SSU, the Ministry of Internal Affairs, and recently SAP and NABU are used in Ukraine as institutes of political competition; in most cases the law enforcement function is secondary to them.
3. Security situation. Today, the level of insecurity among Ukrainian citizens is the largest in the history of Ukraine's independence. The streets of the Ukrainian capital and other cities are no longer safe for politicians, businessmen, journalists, ordinary citizens. The security issue is being actualized not so much in the context of the war in the East, but in increasing the number of publicly commissioned murders, gang raids, terrorist attacks, and explosions of military warehouses in the deep rear. The level of security in Ukraine is approaching a threatening level, when the state actually becomes unable to meet the basic needs of society, which in the end can lead to the destruction of statehood.
4. The war in Donbas and Crimea. In 2018, the issue of de-occupation of non-controlled territories did not have any positive dynamics. This concerns not only the actual issue of the return of the temporarily occupied territories, but also the question of establishing a strategy for the gradual reintegration of these areas, ensuring the rights (in particular electoral) of IDPs and implementing their social guarantees. The authorities are actively using Russian aggression for internal political use in order to receive electoral dividends during future elections.
5. Lack of results in the fight against corruption. Despite the fact that almost all the necessary anti-corruption infrastructure was established before 2018, these authorities continue to demonstrate the lack of real results in the fight against corruption. The reason for this is, first of all, the political engagement of anti-corruption bodies, which increasingly play along with the authorities, in particular Presidential Administration and less engaged in a real fight against corruption. Also, the conflict between NABU and SAP, GPU, Security Service of Ukraine and Ministry of Internal Affairs, also has a negative impact on the actual result of the anti-corruption policy and law-enforcement system as a whole.In addition, the SSU has not lost its non-specific functions of combating corruption, which requires business, public sector and international partners of Ukraine. Also at the stage of creation of the High Anti-Corruption Court there was a series of attempts on the part of the authorities to gain control over this anti-corruption institution.
Positions of the main political players
The president has lost some of his influence, but continues to be a figure №1. Yulia Tymoshenko is gaining strength, who, with her political strength, is firmly entrenched in the first place in political ratings. Narodnyi Front is increasingly moving away from Poroshenko, trying to build his own game, looking for new allies and new playback formats in power.The white and blue camp ends the year with a split day of "Opposition bloc", where "gasovyky" and "akhmetivtsi" can not agree on the candidature of a single candidate for president. The liberal-democratic opposition was not able to unite and goes to elections in different columns, headed by Sadovy and Grytsenko.There was also no complete consolidation in the nationalist camp, from which Ruslan Koshulynsky and “Svoboda” and Andriy Biletsky “National Corps” run for the presidency.
Yulia Tymoshenko and “Batkivshchyna”. Yulia Tymoshenko started her unofficial presidential campaign in the beginning of summer. She was the first who announced her intention to run for the presidency and introduced her program "New course". She and her political force are now the leaders of all sociological ratings According to the latest sociological research conducted by the Kyiv International Institute of Sociology among Ukrainians, who decided to vote, 21.2% are ready to vote for Yulia Tymoshenko, 23.4% - for the All-Ukrainian Association “Batkivshchyna”. Tymoshenko is always open to the search for new allies. Today, her allies include Valentyn Nalyvaichenko and his party “Spravedlyvist”, as well as Sergiy Taruta and his “Osnova” party. She establishes a dialogue with the leaders of the “Narodnyi Front”. And given not very attractive prospects for this party (its rating according to the latest results of social surveys is 0.2%), parliamentary deputies are often seen next to Tymoshenko's office. It's no secret that there is a good communication between Lady Yu and Arsen Avakov. His control of the security forces in the country can be useful while protecting election results. Friendship with the NF can be observed in her proposals for limiting the president's powers and turning Ukraine into a parliamentary republic, as previously stated by the "veterans".
Also, recently, Yulia Tymoshenko stated that she is ready to cooperate with “Samopomich” party, Svyatoslav Vakarchuk, if he goes to politics and Anatoly Grytsenko.
Petro Poroshenko and BPP. The current president, Petro Poroshenko, has not officially announced his intentions to run for presidency, and promised to do it after the start of the election campaign. And he has something to think about. Low electoral support and humiliating ratings still open up to him insignificant prospects and uncomfortable electoral position. Of course, now he can not state that he is not going to the next elections, because he will immediately lose all his influence on decision-making in the country. Therefore, he is now actively demonstrating full readiness and positioning himself the only possible candidate from the authorities. Also, Petro Poroshenko is attempting to postpone the presidential elections or even unite their holding with parliamentary elections, which could give him the opportunity to preserve immunity, if not presidential, then at least get a deputy one. The president builds his pre-election rhetoric with the slogans: “Army. Language. Faith.”, “We Go Our Way,” “Get Away From Moscow.” However, such a rhetoric does not receive a special response from the public, as evidenced by the latest sociological data that records the support of the current president at 11.6% (among those who have been decided to vote), and 11.2% of the country's population support his party.
Despite the third place in the rating, Poroshenko has a chance to go to the second round, but it will be very difficult to win because according to sociological research, he will lose to all his possible opponents.
Although not everything is so simple. Once the closest companion, “one`s” prime minister, Volodymyr Groysman, shows more independence. First, he has his own political ambitions, and secondly, after a long conversation and bidding, he didn't want to lead the presidential political force and sit in the same boat with the president's team, and thirdly, he establishes close ties and looks for partners with other political forces, including Arseniy Yatsenyuk and Narodnyi Front. All this leads to the thought that there may be a serious split within the authorities.
“Narodnyy front”. The recent appearance of Arseniy Yatsenyuk on billboards showed that the former prime minister apparently had forgotten about his complete fiasco in the government and also dreams of returning to the political Olympus. The tensions in his relationship with the president became especially noticeable. After all, the BPP and the NF don’t have a particular ideological difference, so Yatsenyuk, albeit with a poor rating, will still take away the president's electorate. The NF leader is clearly going to take over the pre-election campaign agenda of Poroshenko because Yatsenyuk's new advertisement sarcastically interprets the main pre-election slogans of the president. At present, the disparity of the faction is intensifying, various groups of influence in the party are actively looking for ways to play in power, picking up allies. It is likely that the NF will participate in the elections as different columns within political organizations. As of today, the NF has a part of the administrative resources, which the main applicants for power in the country want to get.
Liberal-Democratic Powers. The union of liberal-democratic forces, which their leaders have been talking for so long, didn’t happen.
A few months ago, the most recognizable of them - the head of "Hromadyanska pozytsiya" Anatoliy Hrytsenko, mayor of Lviv and leader of the "Samopomich" Andriy Sadovy, as well as people's deputy and the head of “Narodnyy kontrol” party Dmytro Dobrodomov publicly called on to leave personal political ambitions and unite. The first one to leave “the ship” was Sadovyy. He announced that he would run for the presidency and united with the “Democratic Alliance” political party of Vasyl Gatsko. Dmytro Dobrodomov also announced the intention to strive for the presidential post. Grytsenko, after unsuccessful attempt to create a joint platform with Dobrodomov, united efforts on presidential and parliamentary elections with the leader of the "Hromadskyy rukh "Khvylya" Viktor Chumak, who headed his election headquarters. Mykola Tomenko, leader of the "Ridna krayina" party and leader of the "European Party" Mykola Katerenchuk also expressed support for Anatoliy Hrytsenko as a candidate for president of Ukraine.
Anatoliy Hrytsenko has the highest rating in this camp, who are ready to support 8.2% (among those who already determined their choice) of voters, and 9.1% of Ukrainian citizens are ready to vote for his "Hromadyanska pozytsiya". 2.2% of voters are ready to vote for Andriy Sadovy, 3.6% for the "Samopomich" Association". 0.5% are ready to support Dmytro Dobrodomov, and 0.4% - his party “Narodnyy kontrol”.
There will be no special differences in their programs, although they position themselves differently. According to Sadovy, key elements of his campaign will be "mobilization of young people, breaking the corruptive esprit de corps in politics and technological modernization of the country". Grytsenko’s campaign will be based on several key statements: legality, order, responsibility, honesty. Dobrodomov positions himself as an outspoken fighter against corruption.
“Opposition block”. In the white-and-blue camp, a very difficult situation arose - the split between the two main groups of the party's influence, which had previously been conflicting, but never brought the opposition into the public plane. As a result, Yuriy Boyko and Serhiy Lyovochkin were expelled from the OB faction in the Verkhovna Rada, while Vadym Novinsky became the head of the faction. After that, Boyko and Lyovochkin created a separate parliamentary group in the parliament - "Opposition platform - For life". That is, in this field, we have two main centres of influence: the first one is represented by the so-called "Akhmetovs" (Akhmetov, Novinsky, Kolesnikov), and the second by the so-called "gasmen" and "pro-Russian politicians" - Boyko, Levochkin, Firtash, Medvedchuk and Rabinovich. At the moment, these two groups are leading a struggle for control over the "Opposition block". This confrontation doesn’t give political dividends, but only leads to the dispersal of the electorate and obviously complicates the chances of passing their candidates to the second round of the presidential election. It is likely that, both in the presidential and parliamentary elections, these politicians will move as two, separate and quarrelling with each other, columns.
Nationalist powers. Ukrainian nationalists failed to unite. "Natsionalnyy korpus" decided not to support a compromise figure from the rest of nationalist organizations Ruslan Koshulinsky, a representative of the "The All-Ukrainian Union "Svoboda". Thus, Andriy Biletsky announced his independent campaign for the presidential election. According to the latest sociological research, Ukrainian nationalists don't have much support among Ukrainians. As follows, currently, Koshulinsky can count on the support of 0.9% of Ukrainian voters, and Biletsky - of 0.4%. The political party "VO "Svoboda" today has support in 2.2% of voters, and "Natsionalnyy korpus" - 0.6%. Most likely, Ukrainian nationalists will play the role of "violence traffickers", which will be used to pressure certain candidates or even to break the election in a particular district.
The Jokers of Ukrainian politics. Ukrainian showman Vladimir Zelensky continues to increase his rating. According to the latest sociological research, he ranked second, 14.6% of voters (among those who already determined their choice) are ready to vote for him, and 13% for his political party "Servant of the people". And this despite the fact that Zelensky didn’t confirm his intention to participate. Interest in Zelensky as a presidential candidate was well-heated in the run-up to the election of a new part of the popular TV series "Servant of the people", where, according to the scenario, a simple teacher Vasyl Goloborodko, performed by Volodymyr Zelensky, receives the power in Ukraine. The series very successfully shows the real state of affairs in Ukrainian politics and prompts Ukrainians to vote for a non-systemic candidate - a simple guy from the people who is fed up with corruption, injustice, poverty, and who seeks to change everything by joining the struggle with the Ukrainian oligarchs. In fact, Ukrainians want to vote not so much for Zelensky, but for the image created by him in the series. His electorate is people, deeply disappointed with the classic politicians, who seek for the way to break the vicious circle of esprit de corps in Ukraine. However, when Zelensky will begin to speak political language, making the relevant statements and offering his options for solving the problems of our state, it's unlikely that his rating, will remain the same or will keep growing. Given the proximity of Zelensky to the oligarch Igor Kolomoisky, who in return supports Yulia Tymoshenko, there is a likelihood of Zelensky's refusal to take part in the presidential race. Nevertheless, we will most likely see his party in the election ballot at parliamentary elections.
The rating of the musician Svyatoslav Vakarchuk "subsided" essentially: from the top three he moved to the 9th position with the assets of 3.8% of voters (among those who already determined their choice), essentially "subsided". Obviously, his electorate was tired of waiting for him to confirm his participation in the presidential election and began to consider alternative options. It is believed that Vakarchuk could become a reserve option for Poroshenko by “giving the way”, but at the same time he will solely run for parliamentary elections within “Vakarchuk block”. But such a variant may be beneficial for the current president only in the case of simultaneous holding of presidential and parliamentary elections. Perhaps a military state will be able to help Poroshenko in this "special operation". It is also worth noting that so-called “Vakarchuk block” can count on only 4.1% of the support of Ukrainian voters.
There is a high probability that the 2019 elections will be a battle of jokers. Under these conditions, we will have Vakarchuk and Zelensky in the second round, however, behind their backs one can see quite familiar oligarchic silhouettes.
General forecast of the situation
The defining trend for 2019 will be presidential elections and the further domestic development of Ukraine's political will depend on how they will be held. Accordingly, we distinguish three baseline scenarios.
The first scenario (pessimistic). Failure of the election process, destabilization, Maidan 3.0. In this scenario, Ukraine faces great political instability, massive mass protests and a high probability of street violence. In such a situation, our country will be on the verge of entering the category of "failed state". There is a high probability that Russia will want to use such a state of affairs, and will be able to at least expand its zone of effective control or even occupate; as a maximum, it will carry out a military sweep of the country and ultimately return Ukraine to its womb. The other side of this scenario could become an adoption of authoritarian power in Ukraine by the current authorities.
Second scenario (basic). Presidential elections will take place, but they will be accompanied by an active use of violence and a debate on the recognition or non-recognition of their results both inside the country and abroad (other states). A similar situation will be repeated in parliamentary elections. The confidence in the state bodies thus formed will be low, the decision-making process is complicated, but in general, the institutional capacity of the state will be at a more or less acceptable level, although the implementation of structural reforms will be complicated by a high level of political conflict.
The third scenario (optimistic). Presidential elections will take place in a civilized way. The transfer of power (or its preservation under the current president) will take place under all democratic procedures. Parliamentary elections will be held democratically and without systemic violations. And by the end of the year, Ukraine will have a legitimate president, a parliament and a government that can effectively carry out structural reforms and develop the country. Of course, political conflict will remain, but in such a scenario, it will be at a minimal level and will not constitute a serious threat.
In any case, the results of the presidential election will have a decisive influence on parliamentary races. The latter will determine the political life in the second half of 2019. The situation is complicated by the fact that it is almost impossible to foresee parliamentary elections. First, because of the uncertainty of the election results of the head of state, and secondly, due to the large number of political forces and the small electoral gap between them. The results of the presidential elections structure the political field, promote the formation of new political alliances and the crystallization of political forces through the power opposition.
Given the victory of Yulia Tymoshenko, there is an option to hold a constitutional assembly, which will turn Ukraine into a parliamentary republic of the chancellor type. For this, Tymoshenko will have to initiate an all-Ukrainian referendum, which legitimizes her plan and will launch a radical change in the system of public administration in the country. Under such a scenario, it is possible to postpone parliamentary elections at a later time after the referendum, and then the price of such elections will be very high, since the whole power of power in the country will stand on the horse. It should be noted that constitutional changes to simplify the president's position and the introduction of a parliamentary republic are supported by most of the NF. In addition, the transformation of Ukraine into a parliamentary republic may also be beneficial to the political forces of the white-and-blue camp. To prevent such a course of events may be a significant political turbulence, the economic crisis, as well as the peak period of payments for external borrowing.
A separate issue that deserves attention is the relationship between the president (old / new) and the government in the period after the presidential and parliamentary elections. The fact is that, in accordance with the Constitution, the Cabinet of Ministers terminates its work in the following cases: the conferral of powers to the newly elected VRU; voluntary resignation of the prime minister; the Verkhovna Rada of Ukraine adopted a resolution of no confidence in the Cabinet of Ministers of Ukraine. That is, the election of a new president does not directly affect the resignation of the government, without the influence on which head of state is very difficult to promote their will. With the abandonment of the post of Petro Poroshenko, these special changes are unlikely to happen. However, in case the president will pick up a new person, there are still several options for his interaction with the government (see below).
Option 1 - the new president will be able to reform the government and appoint a nominal prime minister to parliamentary elections.
Option 2 - the current composition of the government and the newly elected president will find a common language, will consolidate areas of interest and in more or less consensus will reach the parliamentary elections.
Option 3 - the president and the government will enter the clinch and will resist each other. In fact, Ukraine will burgeal in the times of the presidency of Viktor Yushchenko and Prime Minister Viktor Yanukovych and Yulia Tymoshenko.
By the end of November, the process of formation of state-political institutes in Ukraine will be completed.
It is also worth bearing in mind that in addition to the threats posed by the elections in Ukraine, there are other dangers that will in one or another way determine the agenda for domestic political discourse, namely aggression of the Russian Federation, the war in the Donbass, the occupation of the Crimea, the Azov crisis, the need for payments for external borrowing. Decisive influence on the outlined situation may be the introduction of martial law throughout the country.
ICPS held a traditional monthly briefing for diplomatic missions
On Wednesday, January 26, the ICPS held a traditional monthly briefing for diplomatic missions. This time, the briefing took place in the office of the International Centre for Policy Studies, discussing threats and challenges of destabilization in Ukraine. During the event, Senior Advisor to the International Centre for Policy Studies Vasyl Filipchuk, Ukrainian diplomat Oleksandr Chalyi, as well as ICPS experts Anastacia Galouchka, Mykola Kapitonenko and Yehor Kyian presented the 101th issue of "Inside Ukraine". The ICPS discussed with the diplomats political, security, and economic threats and challenges facing Ukraine, including the possibility of a new Russian invasion. Please contact for more information, ordering, reviewing the issue and acquaintance with the terms of the subscription via e-mail: [email protected]
Еconomic and banking reforms towards Ukraine’s European integration
On behalf of the Henry Jackson Society and the International Center for Policy Studies (ICPS), we invite you to participate in an expert discussion on the topic “Еconomic and banking reforms towards ukraine’s european integration”, which will take place on the 20th of December 2021 at 17:00 (Kyiv time) in online format in Zoom. The link for participation is the following: https://us06web.zoom.us/webinar/register/WN_imT6teDhS7W6O0euLvFcMg Background Since Ukraine signed an Association Agreement with the European Union (EU) in 2014, the country has introduced a wide range of reforms towards its integration into a Deep and Comprehensive Free Trade Agreement (DCFTA) and achievement of a visa free regime with the Schengen Zone. However, despite positive achievements, there is a number of “blind spots”. The banking sector was also an important area where these reforms took place and its overhaul contributed towards Ukraine’s fight against corruption. Increasing the capacity of banks to effectively prevent financial crises and to provide services is seen as a necessary prerequisite for successful economic policy. At the same time, the impact of problematic factors of the global pandemic, in particular the slowdown in the world economy and the quarantine restrictions in the country have affected the banking sector of Ukraine. The panel will discuss what areas of reforms need to be improved as part of Ukraine’s European integration. The invited experts, representatives of the banking sector and interested organizations and institutions will outline the current state of state of reforms and will cover the following points: What are the main successes and failures of key economic reforms in Ukraine on the road to the EU? What are the main economic achievements of the year 2021 and the forecast for 2022? Are there any "blind spots" of the current reforms? What are the results of long-term banking reform? Is the current NBU management effective and independent? Will banks be able to become a driver of the Ukrainian economy and help bridge the gaps in economic development?
ICPS held a traditional monthly briefing for diplomatic missions
On Wednesday, December 15, the ICPS held a traditional monthly briefing for diplomatic missions. This time, the briefing took place in the office of the International Centre for Policy Studies, drawing conclusions of the eventful 2021 and making predictions for 2022. During the event, Senior Advisor to the International Centre for Policy Studies Vasyl Filipchuk and ICPS experts Mykola Kapitonenko and Yehor Kyian presented the 100th issue of "Inside Ukraine". The ICPS discussed with the diplomats the political, security, and economic conclusions of the year, at the same presenting the ICPS prognosis for 2022. Please contact for more information, ordering, reviewing the issue and acquaintance with the terms of the subscription via e-mail: [email protected]
ICPS issued an assessment of local/regional measures for August - September 2021
In this bulletin, the experts collected interesting materials about the measures that were implemented in different parts of Ukraine and analyzed their impact on the community and regions. In particular, they assessed an important measure that will bring Ukraine closer to energy independence and reduce the dependence from the Russian Federation: the opening of a storage facility for used nuclear fuel in Chernobyl by the 30th anniversary of Ukraine's independence. Measures in the field of education are important for Ukraine's approach to intellectual independence. Experts positively assessed the launch of the public budget for schools in order to involve students in the development of public space and in the cooperation with local governments in Ternopil. This practice is being picked up and implemented by other cities in Ukraine. These measures will have a positive effect in the future. Also, given the lack of schools in large cities and the lack of good conditions in educational institutions in many regions of the country, the renovation of the school in Odessa with the support of the European Investment Bank will affect the quality of education of schoolchildren and increase the level of education in general. An expert from the city of Khmelnytsky tested on her own experience whether a rail bus was launched on the route "Shepetivka - Kamyanets-Podilsky", which the residents of Khmelnytsky region were waiting for and the launch of which, according to the official website of Khmelnytsky Regional State Administration, is the first example of successful cooperation between local authorities and JSC “Ukrzaliznytsia”. The text is supplemented by author's photos of the train. The development of the new "Open Data Portal" in Dnipro was positively assessed, however there is a number of comments and questions from experts. It was also interesting to analyze the work of the Institute of Commissioners for Prevention and Detection of Corruption in Local Self-Government Bodies and its impact on corruption. The measure has received the lowest evaluation from experts; however, such cases are worth considering to work on errors and to develop effective action plans for the future. RANKING OF BEST AND WORST MEASURES Case Quality [-3; +3] Relevance [0%; 100%] Final score [-300; 300] Ranks Opening of a storage facility for storage of spent nuclear fuel in Chernobyl 2.5 88.33 220.83 I Involvement of students in the development of the territorial community in Ternopil 2.67 81.67 217.78 II Odessa: renovation of the school with the financial support of the European Investment Bank 2.5 85 212.5 III The suburban train connected the north and south of Khmelnytsky region 2.33 71.67 167.22 IV A new "Open Data Portal" has been developed in Dnipro 2 60.83 121.67 V The work of the Institute of Commissioners for Prevention and Detection of Corruption in Local Self-Government Bodies -2.2 60.6 -133.32 VI In addition, this publication summarizes the policy evaluation results for 2020-2021. The final rating of the 2020-2021 measures is as follows: Ranks Case Final score [-300; 300] Summary edition* 1 The first open auctions for the sale of amber were held in Volyn region 257,36 3rd edition 2 Malashivets landfill degassing 228,89 3rd edition 3 Opening of a storage facility for storage of spent nuclear fuel in Chernobyl 220,83 5th edition 4 Involvement of students in the development of the territorial community in Ternopil 217,78 5th edition 5 Implementation of the first automatic cameras for recording violations of traffic rules in Western Ukraine 217,78 2nd edition 6 Odessa: renovation of the school with the financial support of the European Investment Bank 212,50 5th edition 7 Development of tourist infrastructure of Ivano-Frankivsk region 208,33 2nd edition 8 Airport renewal in Chernivtsi 192,80 1st edition 9 All Transcarpathian wood will be sold through the ProZorro-Sale system 189,60 1st edition 10 The airport in Zhytomyr is preparing for the reconstruction and acceptance of international flights 175,00 4th edition 11 Implementation of the investment plan in the Berdyansk port 169,72 2nd edition 12 Interactive panels for schools of Stanychno-Luhansk district 169,17 2nd edition 13 The suburban train connected the north and south of Khmelnytsky region 167,22 5th edition 14 Organization of the educational process during a pandemic 162,50 4th edition 15 Dnipro city program to promote condominiums 140,56 3rd edition 16 Challenges towards implementation of local reforms 140,00 3rd edition 17 Creation of a GIS portal in the Kherson region 130,00 2nd edition 18 Approval of co-financing for the Katerynopil Center for Primary Health Care (Cherkasy region) 128,30 1st edition 19 Kryukiv Wagon-Building Plant: difficulties and further prospects 122,22 4th edition 20 A new "Open Data Portal" has been developed in Dnipro 121,67 5th edition 21 Development of tourism in Kropyvnytskyi 118,80 4th edition 22 Rivne territorial community and e-ticket 100,00 4th edition 23 Loan and grant agreement for the Solid Waste Infrastructure Modernization Project was signed between "Spetskomuntrans" and the EBRD (Khmelnytsky city) 96,00 1st edition 24 Mykolaiv region: QR-codes for tourism development 80,97 2nd edition 25 The largest state flags with flagpoles 40,83 3rd edition 26 About the creation of the municipal non-profit enterprise of the Mariupol city council "Hockey club" Mariupol" -27,20 1st edition 27 Kharkiv region: payments to doctors in case of COVID-19 illness -70,00 3rd edition 28 500 million loan for Odessa -80,70 1st edition 29 The work of the Institute of Commissioners for Prevention and Detection of Corruption in Local Self-Government Bodies -133,32 5th edition 30 Sumy region: abolition of wastewater control of enterprises -204,44 4th edition The analysis of measures implemented by local governments is a relevant and important factor in determining their effectiveness - both economic and social. In addition, it provides an opportunity to identify different aspects of the measure and to build a strategy for further decision-making and elimination of shortcomings. The detailed evaluation and the full document can be found here: Monitoring of Local and Development Policies in Ukraine (August 2021 - September 2021) *The first publication can be found by the link: http://icps.com.ua/assets/uploads/images/files/ineko/ua_local_measures_oct_2020_eng_.pdf The second publication can be found by the link: http://icps.com.ua/assets/uploads/images/files/ineko/ua_local_measures_jan_2021_eng_.pdf The third publication can be found by the link: http://icps.com.ua/assets/uploads/images/files/ineko/local_measures_apr_2021_eng.pdf The fourth publication can be found by the link: http://icps.com.ua/assets/uploads/images/files/ineko/local_measures_jul_2021_eng.pdf **The current summary was developed within the project “Strengthening democratic resilience of key public institutions in Ukraine”. The initiative is being implemented by the International Centre for Policy Studies (ICPS) in partnership with the Institute for Economic and Social Reforms in Slovakia (INEKO) and is financially supported by the Embassy of the United States in Kyiv, Ukraine. The project aims to improve the efficiency of the state administration, self-government and civil society in the area of creation and oversight of regional policies. It also aims to increase transparency and independence of key regulatory and judiciary institutions as well as transparency and financial stability of the biggest state-owned enterprises and local authorities in Ukraine. The main objective of this publication is to improve the quality of regional and/or municipal regulation and legislation through publishing a regular expert assessment of the socio-economic measures proposed or implemented by local governments in Ukraine. The purpose of the evaluation is to describe and promote reform and anti-corruption practices that can be transferred to other localities as well. At the same time, the critical assessment of non-transparent and inefficient measures should discourage representatives of local and regional authorities from their implementation. The policies included in the current summary were identified and analyzed with the support of the Evaluation Council experts who were selected by the International Centre for Policy Studies on the basis of their experience. In this bulletin, experts collected 6 measures implemented by local governments during August - September 2021. window.dataLayer = window.dataLayer || []; function gtag(){dataLayer.push(arguments);} gtag('js', new Date()); gtag('config', 'UA-122353741-2');
ICPS issued an assessment of local/regional measures for May - July 2021
The current summary was developed within the project “Strengthening democratic resilience of key public institutions in Ukraine”. The initiative is being implemented by the International Centre for Policy Studies (ICPS) in partnership with the Institute for Economic and Social Reforms in Slovakia (INEKO) and is financially supported by the Embassy of the United States in Kyiv, Ukraine. The project aims to improve the efficiency of the state administration, self-government and civil society in the area of creation and oversight of regional policies. It also aims to increase transparency and independence of key regulatory and judiciary institutions as well as transparency and financial stability of the biggest state-owned enterprises and local authorities in Ukraine. The main objective of this publication is to improve the quality of regional and/or municipal regulation and legislation through publishing a regular expert assessment of the socio-economic measures proposed or implemented by local governments in Ukraine. The purpose of the evaluation is to describe and promote reform and anti-corruption practices that can be transferred to other localities as well. At the same time, the critical assessment of non-transparent and inefficient measures should discourage representatives of local and regional authorities from their implementation. The policies included in the current summary were identified and analyzed with the support of the Evaluation Council experts who were selected by the International Centre for Policy Studies on the basis of their experience. In this bulletin, experts collected 6 positive measures implemented by local governments during May - July 2021. Selected cases of this issue show the lack of in-depth analysis before making a decision by local authorities, ignoration of the interests of various participants in the process, as well as lack of strategic planning and vision of the results of decisions, absence of financially sound indicators and other problems. The decision of the Sumy City Council to abolish the control over wastewater of enterprises has significant risks for the environmental situation in the city and region (and the health of citizens), as well as for the financial condition of the utility company engaged in wastewater treatment. The adoption of such a serious decision by deputies without proper justification does not comply with the principles of proper public and accountable governance, exacerbates the problem in the field of environmental protection and defends a small number of stakeholders. The introduction of an electronic fare system is a very important task for all municipalities in Ukraine. However, in Rivne for a long time the city authorities cannot decide on the choice of provider to implement an electronic ticket system. The lack of explanation for the delay by local governments and the non-transparency of the decision-making process regarding the selection of a contractor (that is beneficial to the city) is a source of distrust and concern for the community. During the period of the pandemic spread, the issue of providing quality educational services throughout Ukraine is also acute. In this bulletin, experts evaluated the decision to purchase laptops for teachers. The solution is good; however, such an initiative should have been introduced after the first wave of the epidemic. Tenders will stretch the buying process in time and it will not be completed until the beginning of the third wave of the epidemic. It is also important to implement a comprehensive approach to ensure the quality educational process. Almost every bulletin contains material on the development of tourism in a particular region. This bulletin contains a block dedicated to the tourist forum held in Kropyvnytskyi. The city and Kirovohrad region have a good potential to attract tourists, which will contribute to the formation of a positive image of the region and increase the interest of tourists and business. At the same time, the management's decision-making (especially regarding the direction of budget funds) should be preceded by the calculation of the economic effect of implementation of measures and evidence that the interests of the community are be taken into account in the first place. The presence of the airport significantly increases the capabilities of any region, and, therefore, the desire of the Zhytomyr authorities to reconstruct their airport is quite understandable and logical. However, from the point of view of expediency, the priority of state support for the reconstruction of this airport may raise questions due to there are two airports in Kyiv (150 kilometers away) and the airport in Rivne (200 kilometers away), which also have international status. The decision to open the new airport should be made only after a careful analysis of the fact that this airport indeed covers an area where it can generate significant volumes of passenger traffic and can be profitable in its activities. Also, this bulletin reviews the problem of government procurement, which constantly arises in PJSC "Kryukiv Carriage Plant". The enterprise is an important object of industry of Poltava region. However, its operation depends on government orders and timely payments for the execution of orders. Due to there is no clear plan at the state level to upgrade the country's railway depot, the company cannot plan the operation of its own production facilities. This situation should direct management forces to find new ideas for the company or to find potential customers who can ensure the stable operation of the plant. RANKING OF BEST AND WORST MEASURES Case Quality [-3; +3] Relevance [0%; 100%] Final score [-300; 300] Ranks The airport in Zhytomyr is preparing for the reconstruction and acceptance of international flights 2.33 75 175 I Organization of the educational process during a pandemic 2.17 75 162.5 II Kryukiv Wagon-Building Plant: difficulties and further prospects 1.67 73.33 122.22 III Development of tourism in Kropyvnytskyi 2.2 54 118.8 IV Rivne territorial community and e-ticket 1.5 66.67 100 V Sumy region: abolition of wastewater control of enterprises -2.67 76.67 -204.44 VI Thus, a detailed analysis, calculation of the economic and social impact of the measures will help to make better use of available resources, to consider more effective decisions and to ensure the interests of the majority of the community, which in turn will increase the trust and support of the local government and will ensure sustainable development. The detailed evaluation and the full document can be found here: Monitoring of Local and Development Policies in Ukraine (May 2021 - July 2021) window.dataLayer = window.dataLayer || []; function gtag(){dataLayer.push(arguments);} gtag('js', new Date()); gtag('config', 'UA-122353741-2');
Ukraine’s Customs Service vs. Smuggling: Shadowboxing?
One should not underestimate the role of customs in the Ukrainian economy. In 2020, its contribution to the budget amounted to 360 billion UAH, constituting 33% of the budget’s total revenues. According to the latest data, in January-June 2021, the State Customs Service contributed 207.5 billion UAH to the Ukrainian budget, thus exceeding the revenue plan by 108%. However, these figures fall short of the potential that customs could bring to Ukraine’s economy. To improve its efficiency, the State Customs Service began work in the format of a single legal entity starting from July 1, 2021. However, it remains to be seen whether the changes will solve systemic problems of the customs. Following the present-day needs and the memorandum concluded with the International Monetary Fund, the customs was reformatted into a single legal entity – the State Customs Service subordinate to Ukraine’s Ministry of Finance. However, the new format may fail to change the substance. As per the ICPS’ recent study on the independence of state institutions, the State Customs Service and the State Tax Service of Ukraine proved to be the least legally protected from interference and external influence, having a plethora of legislative loopholes and shortcomings. In the study, they were negatively underscored in the areas of the appointment and dismissal of senior management, sovereignty, the transparency of the appointed management’s income, as well as the transparency of the competition for the position to head these institutions. The lack of changes in the legislative field regarding the State Customs Service only confirms the fears that the change of form may not lead to the change of its content. This, in turn, is just a part of the problem. Overall, according to various data, losses from gaps in legislation, the "inefficiency" of customs and smuggling reach over 4-5 billion USD per year. These figures were named by Ukraine’s Minister of Internal Affairs Arsen Avakov, former head of the State Customs Service Maksym Nefyodov, and Minister of Finance Serhiy Marchenko. The numbers are rather impressive, as these funds could be used to address key economic and social issues of the Ukrainian economy. The money could also diminish the need to attract loans from the IMF, the EU and the World Bank, which now serve as a burden to the Ukrainian budget. With this, it’s quite easy to evaluate the extent of the institution’s "inefficiency". It’s enough to compare official data on exports and imports from Ukraine with the corresponding statistics on Ukraine coming from the state’s trading partners. For example, in 2020, according to Ukraine, the country’s exports to the EU amounted to $18.66 billion. As per the EU data, the figure was $19.57 billion. Similarly, as per Ukrainian statistics, imports amounted to $23.74 billion, while European statistics showed $27.43 billion. Surely, akin discrepancies could arise for various reasons; however, smuggling is one of the key problems accounting for the said differences. According to the State Border Guard Service of Ukraine, cars, tobacco and alcohol predominate among the smuggled goods. It’s worth noting that the scale of smuggling and the scale of the shadow economy are interrelated. At the same time, the volume of the latter ranges from 30% to 50%. This, in turn, may be a "normal phenomenon" during the economic recession (creating a "safety cushion" and smoothing the "sharp corners" of public policy, but it’s a highly negative occurrence during economic growth. It hinders the prospects for development and creates asymmetries. At the same time, no systemic solutions to combat the shadow economy and "gray" imports have been proposed. Reformatting, hiring new staff, dismissing chairmen and employees has not led to the desired effect. Moreover, the Economic Security Bureau was invented to deal with smuggling. There is also Bill № 5420 on establishing criminal liability for smuggling and inaccurate declaration of goods. Nevertheless, the bill is rather ambiguous, as it provides for higher fines on goods worth 50-100 thousand UAH. This, in turn, may affect regular citizens of Ukraine. Unfortunately, all the measures described above target "small fish": they deal with symptoms rather than causes of the problem. With this, it’s worth highlighting the recent decision of the National Security and Defense Council to impose sanctions on top smugglers, even though its results will not be felt immediately. Moreover, it remains unclear whether high-ranking officials involved in smuggling would be affected by the decision. As a result, smuggling shall remain one of the main causes of Ukraine’s budget loss for quite a while. The problem is rather multifaceted: on one hand, there are efforts of small businesses to survive and compete; on the other hand, big businesses strive to minimize the costs. Customs officers and officials, in turn, desire to make money in the face of weak institutions and relative impunity. The solution is simple – minimizing the human factor. Additionally, some of the recommendations are: • To strengthen interdepartmental cooperation; • To synchronize import-export databases, conducting information exchange with major trading partners; • To introduce the New Computerised Transit System (NCTS); • To strengthen diplomatic ties and accelerate the above-mentioned cooperation process; • To diminish legislative loopholes in the functioning of customs; • To accelerate the implementation of the Law "On Economic Operator" and the Law "On Joint Transit"; • To annul the decriminalization of smuggling on a particularly large scale; • To develop domestic production of substitutes and complementary goods; • To review the customs tariff grid (the higher the duty or excise duty, the greater the "gray" imports); • The issue of illegal export of forests and natural resources deserves special attention. Surely, the list is not exclusive. In general, the attempts to solve current problems (such as combatting cross-border small-scale trading and the restrictions imposed on individual entrepreneurs) fall under the Pareto principle, though not in the best way. According to the principle, roughly 80% of consequences come from 20% of the causes. In the case of Ukraine, 80% of work – requiring significant effort and time – may lead to merely 20% of the results. Clearly, the 20% of work should be targeting “big fish”. However, there is not enough political will to do that. Large-scale smuggling cannot exist without political protection. While the Security Service and the Ministry of Internal Affairs divide the spheres of influence in regards to customs, Ukrainians shall face another peak of debt payments in the fall. Having customs as a single legal entity – or not – will not solve the major problem.