Ukraine ended 2017 with disappointment at the lack of change and the continuance of old corrupt practices. In the spirit of a fresh start to 2018, the Kyiv Post offers a to-do list.
Create an anti-corruption court
The understaffed and under siege corruption-fighting agencies created after the EuroMaidan Revolution toppled President Viktor Yanukovych in 2014 will not be effective as long as their cases end up in old discredited courts. Creation of a credible court — any credible court — is at the top of the list for Ukrainians and their international friends. President Petro Poroshenko, however, has been resistant to such a court, half-heartedly offering weak legislation at year’s end. The reason is that Ukraine’s politicians have historically wanted to control the dispensation of justice. And that means controlling law enforcement agencies and judges. This is shaping up as the showdown of the year.
Deoligarchize Ukraine
Poroshenko was elected in 2014 on several promises, one of them being to free the country from the suffocating grip of oligarchs. It was also a suspicious promise, since Poroshenko is one of the oligarchs. Now, four years later, the country’s top oligarchs are as much in command as ever — getting richer, avoiding investigations, securing economic favors and paying secretive night-time visits to the Presidential Administration.
Ukraine’s oligarchs are starting to come under more legal scrutiny in other nations, but not in Ukraine.
Until Ukraine’s politics and economy are de-oligarchized, there is no hope to be a democratic and prosperous nation. More than 1 million Ukrainians are working in Poland, perhaps another 5 million throughout the globe. They are fleeing the lack of economic opportunities at home.
Honest elections
With presidential and parliamentary elections set to take place in 2019, the need for fairer elections is critical.
According to the current electoral legislation, introduced in 2011 and used to elect parliament in 2012 and 2014, half of the parliament’s 450 seats are awarded to lawmakers elected in individual districts, while the other half of the seats are divided between candidates on the party tickets that get more than 5 percent of the votes.
Since the EuroMaidan Revolution, cancellation of the individual district constituencies has been a priority, since they are more prone to corruption. The Verkhovna Rada on Nov. 7 took the first step to approving a proportional election system with open party lists — so voters know who they are electing.
Much more needs to be done also to get “dirty” money out of politics, with more transparency in campaign donations and possibly public financing. In the past, members of parliaments have bought their seats — and voters.
Lift ban on farmland sales
The moratorium on the sale of agricultural land has been in place since 2001 and looks to be in place for another year. Populists justify the ban by saying it is needed to prevent large landholders and agricultural companies from squeezing small farmers out of the market and controlling Ukraine’s fertile black soil.
The ban means that agricultural businesses can’t purchase farmland, only rent it. Some 60 percent of farmland in Ukraine is used by leaseholders instead of owners. With no market to sell the land, rent prices are artificially low. If the ban is lifted, they will rise.
Various experts have estimated that the moratorium could boost the country’s gross domestic product by several percentage points and fuel a credit boom of up to $50 billion to finance greater productivity and efficiency in the vital sector.
Accelerate privatization
For the past three years, Ukraine has consistently fallen short of ambitious privatization targets. In 2017, Ukraine raised $120 million by selling off some of the more than 3,400 state enteprises. But vested interests have blocked most sales because state firms are good ways to privatize profits for insiders while nationalizing losses. Other enterprises are so encumbered by lawsuits and bad debts that they can’t be sold. For example, the State Property Fund has spent years trying to selling the Odesa Portside Plant, bogged down by a more than $20 million debt to Firtash.
The government could see breakthroughs in privatization in 2018 by actively pitching a wider range of state-owned enterprises, while making sure that the conditions for those sales match investors’ expectations and by easing legislative criteria on privatizations.
Real court, law enforcement reform
An attempt to overhaul the Supreme Court failed to eliminate the appointment of questionable judges. In fact, 25 out of 114 judges were appointed despite their dubious reputations. The changes have failed in their main goal: restoring trust to the judiciary. Ukraine’s judges have shown they are unable to dispense justice in any timely or fair way, fueling continued suspicion they remain under the control of politicians or the highest bidder.
A well-functioning court has to be combined with the strengthening of the new anti-corruption institutions, including the National Anti-Corruption
Bureau of Ukraine.
Other changes to law enforcement are also required.
The reputation of the Security Service of Ukraine, or SBU, was never too good, but in 2017 it worsened tremendously. The agency was involved in persecution of the anti-corruption activists and harassment of businesses, and failed to prevent several high-profile murders in Kyiv. The secretive agency has seemingly diverted from its original function — counter-intelligence — and became a tool for persecution.
Back in March, Poroshenko promised to strip the SBU of its non-core functions. It hasn’t happened yet.
Coupled with that is an overhaul of Ukraine’s bloated, politicized and incompetent General Prosecutor’s Office, starting with the firing of Prosecutor General Yuriy Lutsenko, who has no credibility.
Solve murders of Pavel Sheremet, Georgiy Gongadze and EuroMaidan Revolution protesters
When the EuroMaidan Revolution triumphed in February 2014, it was impossible to believe that those who ordered and performed the murders of some 100 of its participants would remain unpunished four years later. And yet, on Nov. 20, the fourth anniversary of the protests’ beginning, prosecutor Serhiy Horbatiuk said that the investigation of the EuroMaidan murders has nearly come to a halt.
According to him, the new Criminal Code stripped prosecutors of the authority to investigate these cases in order to pass them to the General Bureau of Investigations — an investigative body that is yet to be created.
Authorities have showed astonishing incompetence in investigating high-profile murders, including those of journalists Pavel Sheremet in 2016 and Georgiy Gongadze in 2000. In Gongadze’s case, those who ordered the murder have never been punished. Ex-President Leonid Kuchma is the prime suspect.
The investigation of the car-bomb murder of Sheremet has shown no progress, even though Poroshenko vowed to take it under his personal control. In 2017, a documentary “Killing Pavel” demonstrated that investigators omitted key details and witnesses.
Solving a major crime — any crime — would be a good way to start to restore public trust in Ukraine’s law enforcement agencies.
Lobby for tougher sanctions on Russia, corrupt elites
Ukraine still doesn’t have control of 7 percent of its territory — the Crimean peninsula and parts of the eastern Donbas. And that’s the way it’s been for nearly four years. To avoid a permanent demarcation, Ukraine must lobby intensively all governments to increase economic sanctions on Russia and win greater military aid in a bid to put pressure on Russian President Vladimir Putin to back off. Putin’s hand is weakening with Russia’s economy and his perpetual dictatorship. Now is the time to turn the heat up on him.
Simultaneously, Ukraine’s friends in the West — whose banks are the favorite destination of Ukraine’s corrupt elite — should be persuaded to conduct more investigations into the source and legality of these assets. Ukraine loses upwards of $5 billion a year in capital flight — 5 percent of its national economy. Offshore tax havens are still the main way of doing business among Ukraine’s corrupt elites and the West could put a stop to it with greater political will.
Promote tourism
Give Ukraine this: It’s a beautiful nation, with two seas, many rivers, mountains and other natural wonders. And it’s never boring. It also offers citizens of many nations visa-free travel at affordable prices. Such ingredients should yield a tourism boom. But Ukraine is near the bottom of tourist destinations because government and businesses have never worked together to establish a prosperous tourism industry with top-notch promotion.
There are many reasons for this: Tourism revenues are hard to monopolize, so Ukraine’s oligarchs and elite may have no interest in seeing a tourist boom. They seem more intent on protecting their market advantages rather than allowing free competition, most conspicuously in the airlines industry, where Kolomoisky’s Ukraine International Airlines still runs the show.
Attracting more tourists would be easy money — and an easy way to acquaint the world with Ukraine’s charms.
Start Financial Investigations Service
The Financial Investigations Service is a proposed new agency designed to take over complex financial investigations, since the State Fiscal Service (which oversees taxes and customs), the Security Service of Ukraine and the Prosecutor General’s Office have proven themselves alternately incompetent and heavy-handed in the task.
Finance Minister Oleksandr Danyliuk has been a leading proponent, but its creation has been bogged down. The suspicion is Ukraine’s elite don’t want an effective agency investigating financial crimes.
Improve infrastructure
While making improvement in recent years, the government needs to accelerate improvements of the nation’s roads, railways, ports and airline service.
State railroad monopolist Ukrzaliznytsya has been taking faced a shortage of cargo cars and the inability to charge market rates while doling out non-transparency discounts to such big customers as billionaire oligarch Rinat Akhmetov and other heavy users. Moreover, the railways are burdened with twice as many employees — 250,000 as needed. The condition of some railway tracks also does not permit higher speeds.
To save Ukraine’s poor roads, the state needs to more effectively control weight. Questions still remain about the effectiveness of state road builder Ukravtodor.
Additionally, Ukraine needs to fully implement an open skies approach to encourage the entry of more airlines to break the near-monopoly status of Ukraine International Airlines, a flagship carrier owned by billionaire oligarch Ihor Kolomoisky. In 2017, the world’s biggest low-cost carrier Ryanair tried and failed to enter the Ukrainian market after failing to come to rental terms with Kyiv Boryspil International Airport, seen as protecting Kolomoisky’s interests. Infrastructure Minister Volodymyr Omelyan said that Ryanair might succeed in 2018.
Boost energy independence
Ukraine has the resources to be energy independent. But mismanagement and favoritism have led to stagnant oil and natural gas production. Political battles over control of state-owned monopoly Naftogaz have delayed the unbundling of its production and distribution functions. The National Energy Regulator, designed to be independent, fell under Poroshenko’s control in December.
Parliament recently lowered its tariff on gas extraction, which should spur production. But it’s not clear whether Ukraine’s government has the commitment to introduce competition and fair play to the sector, traditionally one of the biggest sources of corruption and ill-gained riches in Ukraine.
A simple step forward: Eliminate the Rotterdam+ formula, which unfairly enriches such domestic coal producers as billionaire Rinat Akhmetov.
Strengthen public broadcaster
Ukraine’s airwaves are controlled by Ukraine’s oligarchs and it shows: Scant attention is given on the major networks to corruption or criticism of Ukraine’s oligarchy. After two decades of failed attempts, a public broadcaster was finally launched in 2017. The newly created broadcasting company, Suspilne, is supposed to supplant the outdated state-owned network of TV and radio stations to give Ukrainians a vibrant, independent source of news.
However, Suspilne suffers from severe underfunding. The public broadcaster gets 0.2 percent of the nearly $40 billion national budget yearly, which would mean a funding of some 40 million euros for 2017. In reality, it only got 32 million euros. For 2018, the budget only allocates some 25 million euros for the broadcaster. It looks like oligarchs — let by Poroshenko, who owns Channel 5 — don’t a public broadcaster that could dent their control of the airwaves.
Accelerate government decentralization
Ever since its independence in 1991, Ukraine has been a state fully run from its center, Kyiv. Only in 2014 it began the process of decentralization to give more power to the regions and small communities.
So far, decentralization has passed its first stage, where 665 territorial communities were created and held elections. Ahead lies the revamping of the old regional administrations into supervisory agencies of a new kind. For that, parliament needs to pass the changes to the Constitution.
Municipalities and regional governments simply must have taxing powers and more governance responsibilities. Even Kyiv is unable to impose a meaningful property tax, control parking or remove blighted and abandoned properties because it lacks the authority. That’s why parts of Kyiv look like a ghetto while smart city planning is ignored.
Free Ukrainian POWs
At the end of 2017, Ukraine and Russia-backed separatists exchanged more than 300 prisoners in the war-torn Donbas, in one of the largest swaps since the start of Russian war against Ukraine in 2014. But at least 103 captive Ukrainian soldiers and civilians are on a waiting list to be exchanged. According to human rights activists, there are 61 Ukrainians in detention facilities in Russia and in the annexed Crimea.
Bring transparency to defense sector, Ukroboronprom
The 2018 budget increases spending on Ukraine’s army and the defense industry to $5 billion or 5 percent of gross domestic product. However, unlike in other areas, the money is spent in full secrecy that fuels corruption.
Much of it goes through Ukroboronprom, a state holding of defense companies that has often been the target of investigative reporters because of its high corruption risks. The reform of the holding has been in the talks for a long time, but it never went further than talks.
In December, the Transparency International’s Independent Defense Anti-Corruption Committee, which had been advising Ukroboronprom about such reform, announced that it stopped working with the holding because the government and President’s Administration didn’t cooperate.
Law for Russian-occupied areas
According to Ukrainian legislation, any anti-terror operation must be run by the police, National Guard, or Security Service of Ukraine. This leaves the Ukrainian army with an unclear legal status. Legislation would give the military formal legal standing and end the anti-terrorist operation designation. The new operation would be run by the army’s Joint Operation Headquarters, although Ukraine’s leaders still refuse to officially call this a war.
Secondly, the legislation would formally name Russia as administering the occupied territories through its occupation authorities, a designation needed to sue the Kremlin in international court, as well as to stop it from participating in an international peacemaking mission in Ukraine.
Thirdly, Ukraine still has no strict plan of reintegrating the Russian-occupied parts of the Donbas and Crimea. The legislation is needed to introduce an official roadmap of how the Donbas war will be settled in the future.
A bill that would partly solve these issues was passed in first hearing in October, but caused a lot of debate and is being changed before the second hearing.
Execute education, pension and health reforms
Three long-anticipated reforms were launched in 2017, aimed at the areas that influence Ukrainians’ daily lives the most and at the same time are among the most neglected.
The new education law gives schools broader autonomy and brings them to modern-day standards.
Pension reform will gradually increase the minimum number of years a person must spend in the workforce to qualify for a state pension, and increase payments.
Health reform, the most debated among the three, aims to create a medical services market while enabling patients to choose their doctors, a break from the current free yet poor health care of the Soviet kind.
The implementation of these reforms must be ensured in 2018.
