The Verkhovna Rada this week passed several bills required for cooperation with the International Monetary Fund and other Western lenders.
These important pieces of legislation concern judicial reform, deoligarchization and restored jail terms for officials who lie on their mandatory asset declarations.
In February, the IMF suspended talks with Ukraine on a $700 million loan tranche due to the country’s failure to deliver on several reforms, including overhauling the distrusted judiciary.
The bills were also passed just in time for a planned meeting between President Volodymyr Zelensky and U. S. President Joe Biden in July.
“The mood music is turning more positive, but the devil in all the bills will likely be in the details,” said Tim Ash, an emerging markets strategist at Bluebay Asset Management. “I hope that this is all not just window dressing for that particular meeting. Helping provide a nice family photo for Zelensky but then all things reversing again a few weeks later.”
Ash said that the key question is whether Zelensky is committed to fighting corruption.
“Have we actually seen any progress at all over the past two years in actually fighting corruption? I simply don’t know — too hard to tell, few people have been sent to jail, brought to account, and I don’t sense that behavior is changing. But again, time will tell.”
The President’s Office did not respond to requests for comment.
High Qualification Commission
On June 29, the Verkhovna Rada approved the final reading of a bill giving foreign experts a decisive role in the appointment of a new High Qualification Commission — a body that hires and fires judges.
The selection panel for choosing the Qualification Commission would consist of three Ukrainian judges and three foreign experts. At least four panelists will be needed to approve candidates. When the vote is split three to three, the foreign experts’ opinion will prevail, according to the legislation.
However, there are still obstacles that may block the reform.
One problem is that the discredited High Council of Justice, the judiciary’s unreformed governing body, will have a lot of say over who gets chosen, which may sabotage the attempt at reform. The council will choose 16 appointees out of 32 candidates nominated by the selection panel, according to the legislation.
Under the new bill, half of the new High Qualification Commission members would be judges. Civic activists think this will preserve the old corrupt judiciary.
Moreover, it is not clear when the legislation will be implemented, if at all. In 2019, Zelensky signed similar legislation to reform the High Qualification Commission but it was not implemented due to the High Council of Justice’s refusal to carry it out.
Vitaly Tytytch, ex-head of judicial watchdog Public Integrity Council, argued that the passage of the legislation was a trick by the Zelensky administration to get an IMF loan. After the money is disbursed, the authorities will likely derail the judicial reform to avoid losing control over judges, similar to what happened in 2019, he said.
Zelensky dismissed such accusations in a Facebook post on June 29.
“I hope nobody managed to hide legal loopholes in the bill or distort its meaning with ‘spam’ amendments,” he said. “The High Qualification Commission must and will be created in such a way that none of its members will have obligations before or links to the so-called judicial mafia.”
High Council of Justice
On June 30, the Verkhovna Rada’s legal policy committee also approved a bill giving foreign experts a crucial role on the Ethics Council, a body responsible for firing tainted members of the High Council of Justice, the judiciary’s main governing body. The bill has been passed in the first reading and may be considered in the second reading on July 13–16.
However, this version of the bill has also been criticized by anti-corruption watchdogs.
“Some clauses of the bill may completely block the Ethics Council’s work, jeopardizing genuine judicial reform in Ukraine,” legal think tank Dejure said.
If the Ethics Council rules that a High Council of Justice member violated ethics and integrity standards, that member would be suspended temporarily. The problem is that the bodies that appointed High Council of Justice members — associations of judges, lawyers and prosecutors — may decide not to fire the suspended member.
Moreover, it will be possible to appeal the Ethics Council’s decisions in the Supreme Court on any grounds, under the bill. This will allow the Supreme Court to block the Ethics Council’s decisions; the grounds for appeal should be limited in the final version of the bill, Dejure said.
The High Council of Justice has been involved in numerous corruption scandals.
In wiretapped conversations released by the National Anti-Corruption Bureau of Ukraine, notorious judge Pavlo Vovk, a graft suspect, mentioned the involvement of Andrii Ovsiienko, head of the High Council of Justice, along with other council members in his alleged corruption schemes. Council members did not respond to requests for comment.
Asset declarations
Parliament on June 29 also passed the final reading of a bill reinstating prison terms for lying on asset declarations.
The previous version of the bill was passed on June 3 but it was undercut by a clause exempting officials from having to disclose their relatives’ property. That version was vetoed by Zelensky, and parliament had to approve a new version without this loophole.
Asset declarations, one of the pillars of Ukraine’s anti-corruption reform, was all but destroyed in October, when the Constitutional Court eliminated penalties for lying and deprived the National Agency for Preventing Corruption (NAPC), which is tasked with checking declarations, of most of its powers.
Deoligarchization
The parliament also supported Zelensky’s bill on deoligarchization in the first reading on July 1.
For the first time ever, it legally defines what an “oligarch” is and imposes restrictions on anyone who meets this definition. They will be banned from donating directly or indirectly to political parties and participating in the privatization of state assets.
To be recognized as an oligarch, a person must meet at least three out of four criteria: involvement in political activities, considerable influence on mass media, being a beneficiary of monopolies recognized by antitrust authorities and ownership of assets exceeding Hr 2.2 billion ($81 million), excluding media assets.
The influence on the media could be both direct or indirect meaning that even a person without official ownership of media outlets could still be defined as an oligarch, according to the authors of the law.
Involvement in political activities is a more precise criterion. A person must either hold a top-level public office or be affiliated with one in such a position. All top government officials will be required to declare any non-public contacts or meetings with oligarchs.
Moreover, a person who has financed political parties, ads or protests can also be defined as an oligarch, according to the legislation.
The National Defense and Security Council will be in charge of deciding who is an oligarch and will maintain a public registry.
Opponents of the legislation say it won’t do what it’s supposed to.
“They will be defining people as oligarchs and adding them to the registry without clear criteria,” said Viktoria Siumar, a member of European Solidarity faction, which voted against the bill. “The oligarchs will gladly support this bill to put on a show for the electorate.”
Anti-Akhmetov bill
Lawmakers also supported the so-called “anti-Akhmetov law” in the first reading on July 1. The law would raise rents for iron ore mining companies in Ukraine. This would primarily affect Rinat Akhmetov, whose companies mine over half of all iron ore in the country.
If the bill is signed into law, the companies will pay rent based on the iron ore market price and not on the cost of production, which could bring over Hr 3 billion to the state budget.
The government also wants to introduce an excise tax on the sale of “green” electricity, offering a wide range of rates from 3.2% to 40%. This decision will hit Akhmetov’s energy conglomerate DTEK, which controls almost a fifth of the renewable energy market.
National resistance
On June 29, parliament also passed in the first reading a “national resistance” bill with 318 votes.
The long-awaited document is expected to finally incorporate militias into the country’s armed forces. It introduces the Territorial Defense Force, an 11,000-strong auxiliary unit that could be deployed in the rear to do checkpoint security or counter-sabotage operations.
The territorial defense troops would be incorporated into the regular military, which increases the number of active-duty personnel to 261,000.
The bill suggests a so-called “Resistance Movement” — an irregular voluntary force that could wage guerrilla warfare in the enemy rear: cutting off supplies, sabotaging assets, assassinating key figures and so on. The resistance movement would answer to the Special Operations Command.
Lastly, the bill envisages educating the general population on civil defense and war zone survival in case of an all-out Russian invasion and occupation of Ukraine.
Kyiv Post staff writer Alexander Query contributed to this story.
