Editor's Note: The Kyiv Post tracks the progress made by Ukraine's post-EuroMaidan Revolution leaders in making structural changes in the public interest in six key areas: economy & finance, security & defense, energy, rule of law, public administration and land. The following measures were in focus on July 9 - 16.
Overview
The U.S.-Ukraine Business Forum in Washington, D.C. made it clear that the time for flattering words about the Ukrainian government’s reform drive had run out. If Ukraine doesn’t tackle corruption, the flow of foreign investment to fuel economic growth will dry up.
“This is it, Mr. prime minister,” U.S. Vice President Joe Biden told Arseniy Yatsenyuk during his closing speech on July 13. “Success in Ukraine will tell the story about what Europe will look like in the next 10 or 15 years.”
Only investors can bring prosperity to a state, not soldiers or activists, Biden warned.
“Any experiment in democratization not followed by economic growth has failed in the last 100 years,” he said.
Economy & finance
Parliament on July 16 approved four laws required by the International Monetary Fund, World Bank, Japan and Germany to unlock a total of $3.2 billion in credit. The laws raise utility tariffs to cost-recovery levels and provide firmer guarantees for bank deposits.
Finance Minister Natalie Jaresko on July 15 held talks in Washington, D.C. with Ukraine’s creditors’ committee to reach a deal on the restructuring of sovereign Eurobonds. The talks took place against the backdrop of a looming $120 million coupon payment expected from Ukraine on July 24. A joint statement issued after the talks mentioned “narrowing the gaps,” but gave no specifics.
In other comments, Jaresko said she expected the government to cut the public sector deficit to 3.7 percent of gross domestic product in 2016, down from 4.2 percent in 2015 and 4.6 percent the previous year.
And in an effort to widen the tax base for the cash-strapped country, Jaresko said Ukraine and Cyprus would agree on measures to end the widespread practice of using the Mediterranean island as a tax haven.
Rule of law
On July 14, the legislature improved an important anti-corruption bill, making data on the ownership of land plots, residential property and vehicles accessible to the public. The law makes it easier to track whether officials have a lifestyle not compatible with their income level – an indication of possible corruption. “Unjust enrichment and the registration of property to third parties becomes impossible under the new law,” Yegor Sobolev, chairman of the parliament’s anti-corruption committee, said on July 14.
The Ministry of Justice launched an extended version of the online registry on corrupt officials, with searches by name, post, sentence, and the date and number of court rulings now available.
While not directly affecting Ukraine’s relationship with Western donors, these initiatives were closely watched by the West, and came in unison with the law on local elections (see below), and were indicative of the overall pace of reforms, Dragon Capital said in a commentary.
In order to refresh the ranks of discredited prosecutors, Deputy Prosecutor General Davit Sakvarelidze on July 16 invited anyone with a degree in law to apply for one of 700 positions.
Security & defense
This week’s visit by a NATO delegation will result in the approval of a joint project in the near future to rebuild Ukraine’s navy, the Defense Ministry said in a July 15 statement.
Lawmakers helped the Defense Ministry save Hr 228 million on public procurement, People’s Front lawmaker Tetyana Chornovol said on July 14. Parliament and the ministry had jointly managed to break up one corrupt scheme, end one monopoly, and attract new bidders.
National Security chief Oleksandr Turchynov said front line fortifications would be completed by July 15. Turchynov said he believed “the defenses now set up will be able to stop not only Russian terrorist groups but also regular army forces of the Russian Federation.”
As of July 9, more than 26,000 of Ukrainian citizens had electronically registered for permits to cross the demarcation line in the east, according to SBU security service spokeswoman Olena Hitlyanska.
Public administration
On July 16 parliament approved changes to the constitution giving more powers to regional and local governments as foreseen by the Minsk II peace agreement. (See article on decentralization bill on page 3).
Parliament on July 14 adopted a new set of rules for the local elections scheduled for October 25 (please see article on page 3.)
Energy
To boost the domestic gas extraction and decrease energy dependence on imports from Russia, Finance Minister Natalie Jaresko on July 13 proposed that parliament decrease two-tier royalty taxes from 55 percent and 29 percent, to 29 percent and 14 percent. If adopted, the lower royalty rates will apply to high-cost gas production from wells with depths of more than 5,000 meters.
Parliament on July 15 ratified a loan agreement with the European Investment Bank for a €150 million credit line to upgrade the nation’s vast Soviet-era gas pipeline system. Under the agreement, which was signed in December last year, another institutional investor, the European Bank for Reconstruction and Development, will fund the rest of the €355 million project.
