On Sept. 25 for the first time in Ukraine’s new history, the president of Ukraine
declared just that, not a new round of “deregulation” or “liberalization,” but
called “to destroy the neo-feudalistic political and economic model, dismantle the
mechanism, which enriches the small circle of oligarchs and corrupted bureaucrats,
which in fact privatized the state…”
President Petro Poroshenko went further stating that
“our sheer existence, for Ukraine to be or not to be, depends on the reforms.” We could not agree more! The Ukrainian
legal community has been calling for a massive, coordinated, systematic and on-going
reform targeting the entire governance and legal system (and all of its
components), and replacing it with a modern, transparent, competitive, liberalized and simplified,
as well as decentralized system, fitted with new legislation and regulatory
practices, and implemented by a new non-corrupt class of civil servants, protected by
fair courts.
The U.S.-Ukraine Business Council on Sept. 22 released the White Paper with a high-level outline of our proposed proposed measures.
The current system stems from the old
Soviet bureaucratic fundamentals, which were aimed at suppressing any
initiative, entrepreneurship, civic society, human rights and freedoms.
On top of
these Soviet fundamentals the successive governments of Ukraine built a
manually governed special interests system, or actually an anti-system, which
benefited only limited “elite” groups of society with special benefits, privileges and
exemptions – at the legislative level, and even more so at the practical level. At the
same time, the rest of the society was left at the mercy of this anti-system and the
hostile and utterly corrupt bureaucratic class, deprived of any practical rights, or any
chance to defend their rights in the equally archaic and corrupt law enforcement and
judiciary.
This anti-system was outfitted with
camouflage institutions, which in practice did the opposite of what they were designated to
do. The Anti-Monopoly Committee, for example, in the past few years presided
over the largest monopolization of Ukraine’s economy in the hands of a select few,
while turning from an antimonopoly regulator into a fiscal collector concerning all
others.
The web of these schemes for years was
weaved through laws and regulations, regulatory and court practices, and it
cannot be eliminated by amending one law or another. Therefore, the myth, often
repeated by various government officials, that “Ukraine has good laws, but needs better
enforcement” could not be further from reality.
This myth is used by special interest
groups to preserve the corrupt anti-system and to avoid real reforms. This anti-system is serviced by a
massive archaic, conflicting and incomprehensible body of legislation (laws and
regulations), with various corrupt schemes incorporated behind most of its
provisions, which benefit one “elite” group or It is clear that the Association
Agreement between the European Union and Ukraine, including the Deep and Comprehensive Free Trade
Area when implemented, will be a powerful external instrument for
modernizing Ukraine’s governance and legal system and moving them closer to EU
standards. There are many other external instruments, such as international
treaties and conventions, to which Ukraine is a party, various international
organizations, institutions and donors, etc. that can also assist with this process.
At the same time, these external
instruments cannot achieve what only can be achieved internally within Ukraine –
fundamental structural redesign of the governance and legal system. To this end
Ukraine can benefit from the know-how and practical experience of several
countries in the region, which have gone through similar transitions before
Ukraine, and today demonstrate successful results – such as the Baltic States,
Poland, Slovakia and others. These countries, however, have gone through fundamental
reforms very early on and very fast, becoming EU members and not being
influenced by several key factors that Ukraine is experiencing at this time.
It appears that the closest blueprint
for Ukraine to follow is Georgia, which in 2004-2012 prepared, adopted and implemented a
comprehensive package of reforms covering the entire spectrum of its
governance and legal system, while minimizing corruption to a negligible level.
Georgia has done it under circumstances similar to Ukraine’s: on the negative side – under
a trade embargo on Georgian exports to the Russian Federation, a cut off of gas
supplies, a military invasion with subsequent occupation of significant parts of
Georgian territory; and on the positive side – under the prospect of signing the Association
Agreement with the European Union.
Ukraine may have the benefit of learning not only from
Georgia’s undeniable overall success, but also from its less significant practical
mistakes made during the transition period.
As Kakha Bendukidze, the architect of
Georgia’s economic reforms, said – there is nothing in the current system worth
keeping. Any arguments about taking it slowly, gradually, step by step, or adjusting
the reforms to Ukrainian reality must be rejected outright as a recipe that did not work
for 23 years of Ukraine’s independence and led to its near collapse, as we are
witnessing today. The current anti-system is beyond fixing, liberalizing and deregulating,
and the current bureaucratic, law enforcement and judicial class is beyond modernizing
and convincing to carry out the reforms and function in the new transparent and
non-corrupt system. It is, therefore, high time now to change the reality instead of
adjusting to the current reality.
One of the advantages Ukraine has at
present, which other countries that went through whole-scale modernization did
not have even a decade ago, is the benefit of new technologies. Using advanced IT
solutions for governance and legal reform (including those already developed and
tested in Estonia for example), can save a tremendous amount of time and effort,
and to minimize corruption.
Ukraine’s reforms should be as much about software
and IT solutions as it is about new laws. We all need to change both the mind-set
and the rhetoric now, the Ukraine story is no longer about the agony of fixing the
unfixable, but about building a brand new modern and fair service-based system for
Ukrainian citizens and businesses.
Irina Paliashvili is the Washington-based
RULG-Ukrainian Legal Group, P.A., where she serves as the President and Senior
Counsel.
