It’s almost a political tradition: a new president comes to office and sets an agenda for the Ukrainian government. But this time, it may be different.
On Sept. 2, President Volodymyr Zelensky sat down with the newly-appointed leaders of the parliament, the Cabinet of Ministers and law enforcement agencies and outlined their tasks. He also set deadlines for them — something of an innovation in Ukrainian political agendas.
The to-do list is hardly new: It contains many reforms that civil society and Ukraine’s Western partners have been pushing for years. But for the first time in the country’s history, the president appears to have the tools he needs to accomplish his goals: a majority in the Verkhovna Rada and total control of the Cabinet.
“At the moment we have a unique situation, a truly unique chance to carry out all necessary reforms. And I want it very much,” Zelensky said in his address to the gathered lawmakers and officials.
“The only thing we lack is time. Society will not wait for a few years until something starts to work in Ukraine.”
The Kyiv Post has outlined Zelensky’s agenda, its time-frame, and the political and economic issues that may frustrate his government’s efforts.
Economy and business environment
Submit 2020 budget
— by Sept. 15, 2019
The Finance Ministry must submit the 2020 budget plan by Sept. 15. Before, the budget was usually considered in the last weeks, or even days, of the year.
Cut subsidies to agroholdings
— by 2020
The 2020 state budget should eliminate subsidies to large agroholdings and redirect the money to supporting small farms. Under the existing system, the more agricultural companies produce and pay taxes and dividends, the more they receive state subsidies. This has benefitted large argoholdings such as MHP and Ukrlandfarming, leaving individual farmers and small enterprises out.
Earlier in July, Zelensky ordered anti-corruption agencies to investigate how oligarch-owned MHP, Ukraine’s biggest meat and dairy producer and the main exporter of chicken to Europe, had received the largest share of state subsidies — billions of hryvnias.
Open farmland market
— by Dec. 1, 2019
The government has to submit two laws on lifting the ban on farmland sales and on creating a private market for farmland by Oct. 1. The parliament must then pass both laws by Dec. 1. Moreover, the State land registry must be updated to include data on all agricultural land plots in the country by 2021.
The ban on farmland sales has been in place since 2001, depriving private landowners of access to financing, since land plots cannot be sold or used as collateral. Lifting the moratorium and creating an open farmland market was one of the key requirements of the International Monetary Fund as a measure to boost Ukraine’s investment-hungry agricultural sector.
Despite reformers’ enthusiasm for a land market, the idea has proven highly controversial. Populist politicking has led many Ukrainians believe that the reform will allow foreigners to buy up all the country’s land.
“Explain to the people that nobody is taking away their land. The land reform is directed at the development of Ukraine’s agriculture and, first and foremost, the interests of small owners,” Zelensky said.
Restart privatization
— by April 1, 2020
Zelensky wants to speed up the privatization of state enterprises, which had experienced many delays and setbacks in the previous years. Privatization is a major demand of international financial donors. Ukraine has about 3,500 state-owned enterprises.
Conflicts of interest with enterprise leadership and a lack of political will have stymied previous privatization drives. State enterprises can be lucrative cash cows for corrupt officials and their business associates. Meanwhile, dubious privatization schemes have funneled some state enterprises into the hands of dishonest businesses, analysts told the Kyiv Post.
The Cabinet has until Dec. 1 to submit a list of 500 state-owned small and medium enterprises to be sold via the ProZorro online procurement platform. The government will also do away with the current list of companies exempt from privatization. A new list, to be drafted by Oct. 1, will be much shorter.
Large state companies must have privatization plans by Dec. 1. They should be drawn up with the help of investment advisers. The first tender must be held no later than April 1, 2020.
Allow concessions of public property
— by Oct. 1, 2019
The parliament must pass a law on concessions and a law on the lease of state and communal property by Oct. 1. These laws will allow for the government to partner with private enterprise.
The Infrastructure Ministry also has to run pilot tenders for the concession of the Olvia and Kherson seaports by Jan. 1, 2020.
Investment protection law
— by Jan. 1, 2020
A new law on stimulating and protecting foreign investment has to be passed by the parliament by Jan. 1, 2020.
Currently, foreign investment is regulated by a different, but deeply flawed set of laws. The last amendments to them were made in November 2018 and gave foreign investors easier access to the Ukrainian securities market. These changes ruled that investors no longer need to sign direct contracts with Ukrainian national custodians and can use the services of financial intermediaries instead.
However, the Anti-Corruption Action Center has criticized the law for allowing foreign companies to hide their beneficial owners. It does not oblige the financial intermediaries, or simply foreign banks, to report who owns the company to the Ukrainian authorities. Moreover, purchased securities could be used to legalize laundered money, the anti-corruption activists said.
Reform financial sector
— by Oct. 1, 2019
The parliament must pass the so-called “split” bill by Oct. 1. This will eliminate the financial services regulatory body and split its functions among the central bank and the securities commission.
The National Bank of Ukraine would regulate insurance, leasing, credit unions and pawn shops. The securities commission would regulate pension funds, construction financing and real estate. “Split” legislation was passed in its first reading in July 2016, but has since languished in parliament.
The current regulator has been criticized for its limited capacity to oversee non-banking services. As a result, the financial services market has become clogged with financial schemes. Going ahead with the split is the only way to clean up the sector, proponents say.
But opponents have asked Zelensky to stop the split, complaining that it is unconstitutional and would cause a decline in the financial services market.
Sign gas and oil production sharing agreements
— by Dec. 1, 2019
The Ukrainian government must close deals on gas and oil production and exploration with the winners of subsoil auctions by Dec 1. These contracts will bring Ukraine $430 million in investments — the winners have to finance the exploration work during a five-year period.
Gas and oil developers bid for nine hydrocarbon blocks through the ProZorro public procurement system. According to the bidding results, Ukrgazvydobuvannya, a subsidiary of a state-owned oil and gas monopoly Naftogaz, won four tenders in total.
International tenders for oil, gas and coal production were launched in Ukraine in December 2018 as the previous government angled to minimize gas imports and boost domestic production. Ukraine currently produces 1.2 percent of its known reserves each year while. The global average is 4–5 percent.
Prepare for oil and gas exploration tenders
— by Jan. 1, 2020
The Energy Ministry must prepare lots for open tenders for oil and gas exploration permits by Jan. 1, 2020.
Lower commercial loan and mortgage interest rates
— by Oct. 1, 2019
The government must create conditions for banks to lower loan and mortgage rates by Oct. 1. Currently, customer lending interest stands at 17 percent. Mortgage rates are around 20 percent.
Legalize casinos and amber mining
— by Dec. 1, 2019
The laws on legalizing casinos and amber mining must be submitted to the parliament by Oct. 1 and passed by Dec. 1. The measure comes as part of a broader effort to fight the shadow economy.
Gambling has been banned in Ukraine since 2009, but underground clubs and casinos continue to operate illegally, generating millions of dollars in untaxed revenues. Zelensky suggested licensing casinos in five-star hotels in a bid to boost tourism.
Only nine companies hold licenses to mine amber legally. As a result, lucrative illegal amber production is largely controlled by criminal gangs, and wildcat mining has caused significant environmental damage.
New Labor Code
— by Jan. 1, 2020
A new labor code must be approved by Jan. 1, 2020. This reform aims to reduce informal employment by stiffening penalties for shadow accounting. Huge numbers of Ukrainians are employed in the informal economy, working and earning a salary, but not paying taxes on their income.
Infrastructure
Open railways
— by Jan. 1, 2020
By year-end, the Infrastructure Ministry must prepare a plan to abolish the monopoly of state railways authority Ukrzaliznytsya by allowing privately-owned locomotives on the country’s tracks. The open railway market is supposed to bring independent train operating companies to Ukraine and resolve the country’s pervasive logistics issue. Currently, there is a shortage of grain cars and locomotives, which negatively affects the agricultural sector.
Pass the bill on river shipping
— by Nov. 1, 2019
By Nov. 1, the parliament should pass a law on inland waterborne transport that could give a boost to the development of river shipping and lower agricultural producers’ dependence on railways.
The Infrastructure Ministry and the majority of market players previously supported the idea of letting ships under foreign flags and foreign shippers onto Ukrainian rivers. However, the law met strong opposition from Nibulon, the second largest river shipping company, which used its lobby in parliament to hamper the law.
Pass legislation to fix bad roads
— by Nov. 1, 2019
By Nov. 1, the parliament must pass a law on mid-term financing for the construction and repairs of Ukraine’s notoriously bad roads. It also must pass a law on bringing the price of road construction and repairs to the standards of the international financial institutions.
These measures are necessary to eliminate corruption, in which the cost of work is artificially inflated so that dishonest actors can pocket government money.
E-government
E-services
— by Jan. 1, 2020
By January, the government has to approve the plan for deregulation and issuing state permits electronically. Moreover, the top 30 most popular government services have to be provided to citizens and businesses online on a single portal for e-services.
Reduce paperwork
— by Oct. 1, 2019
The government also wants to reduce the use of paper in exchanges between various ministries and agencies and increase their efficiency by moving paperwork online. Minister of the Cabinet of Ministers Dmytro Dubilet said the complete transition to digital paperwork is a goal for the next year or two, but the process has to start by Oct. 1.
E-identity
— no hard deadline
The government must audit all state registries, verify and update data on all citizens and assign e-identities to them. This is a prerequisite for the creation of the State Demographic Registry and holding elections and census counts online.
Defense
Westernize military
In the defense and security sector, Zelensky has supported the continued military buildup and westernization of the country’s Armed Forces following NATO benchmarks. He described his priority as building a “powerful, combat-ready army” and ordered the government to “propose changes to legislation necessary to create a strong force,” as well as a “Defense Plan,” a strategy for repelling Russian aggression.
Newly appointed Defense Minister Andriy Zahorodniuk said that state policies should focus on the average military serviceperson.
Stop corruption in defense industry
The government also announced important deadlines at Ukroboronprom, the state-run military production giant mired in corruption and inefficiency. The organization’s new director general, Aivaras Abromavicius, promised to select a new manager for the Ukroboronprom “for the first time via a competitive contest rather than through political arrangements” by the end of 2019.
According to Abromavicius, the organizations transformation should result in Ukraine’s arms exports increasing by a factor of five, from nearly $400 million in 2018 to $2 billion by 2025. Missile and aircraft manufacturing will get top priority.
However, the first key step to that is a competitive audit of Ukroboronprom, which should be completed by spring 2020, according to Serhiy Kryvonos, deputy secretary of Ukraine’s National Defense and Security Council. Additionally, Ukroboronprom’s management should be forced to undergo lie detector tests.
Changes to parliament
Ukrainian parliament on Sept. 3 voted in the first reading on several constitutional changes. Now it is up to the Constitutional Court to approve them. After that, the parliament will take the final vote on them — but due to the procedure, it has to happen at the next session, which starts in February. One of the biggest changes was already made: the parliament
Decrease the number of lawmakers
The parliament will consider the amendment on decreasing the number of lawmakers from 450 to 300 people. The same amendment also rules that the parliament is to be elected only on the party lists, and not as independent representatives in single-member constituencies. It reflects the legislation that was passed several months before, cementing this electoral system by adding it to the Constitution.
Dismiss lawmakers for truancy
When this amendment is adopted, lawmakers will be dismissed for missing over a third of parliament and parliamentary committee meetings in one session without a good reason, such as a sick leave.
The same will apply to lawmakers who will be caught voting for their absentee colleagues — something that has been a common practice in the Ukrainian parliament.
Give the people the right to initiate bills
Ukraine’s constitution allows lawmakers, ministers and the president to draft laws and present them for a vote in parliament. This constitutional amendment proposed by Zelensky will also give this right to the people. However, the exact process by which the people will propose legislatin is yet to be determined.
The president’s representative in the Constitutional Court hinted that a proposed legislature will need to attract a certain number of signatures to be presented in parliament.
Parliament to get advisory bodies
Two constitutional amendments will give the parliament the right to appoint special commissioners and to create advisory bodies. Currently the parliament has only one commissioner, on human rights.
Judiciary and law enforcement
See more about this agenda here.
Restart the most corrupt state agencies
— by Jan. 1, 2020
Zelensky also ordered the government to hire new staff for the most corrupt agencies, which are responsible for inspecting businesses and issuing permits, by Jan. 1, 2020. Among them are the state services for cartography, geology and mineral resources, architecture and construction, environment protection, and transport safety, as well as the main road authority, Ukravtodor.
Independent financial investigations service
— by Dec. 1, 2019
A law on the newly established State Service for Financial Investigations must be submitted to the parliament by Oct. 1 and passed by Dec. 1. The National Police and the State Security Service will be stripped of their authority to investigate economic crimes, a power that has often been abused to extort money from and seize businesses.
Relaunch the State Customs Service
— by Dec.1, 2019
The State Customs Service must be relaunched by Dec. 1, to eliminate corrupt officials. One of the most notorious corrupt state agencies, the customs service was separated from the fiscal service last December. The customs service must also launch a “one-stop shop” system by Jan. 1, 2020.
Curb SBU powers
— no hard deadline
On Sept. 2, Zelensky ordered a long-overdue reform of the SBU security service. Such reform efforts had seen no progress since at least 2016. He ordered the government to approve the SBU reform concept and introduce the corresponding legal amendments.
The reform is expected to drastically cut the secret service’s power and strip it of unnecessary functions (such as investigating economic crime), making it a demilitarized, purely counter-terror and domestic intelligence agency.
The president said that the service would be reformed in compliance with the 2018 National Security Law, which envisages the SBU answering to the parliament.
Fix Anti-Corruption Court
The long-anticipated High Anti-Corruption Court was launched on Sept. 5. However, if the current legislation is not changed, the court will be overloaded with about 3,500 cases and will not be able to function.
A bill submitted by Zelensky envisages transferring to the court only 200 cases investigated by the National Anti-Corruption Bureau of Ukraine without overburdening it with minor cases.
New High Qualification Commission
— 1 month after relevant bill is passed
A bill proposed by Zelensky envisages replacing the current High Qualification Commission of Judges, a judicial governing body that has been accused of blocking judicial reform and promoting tainted judges. The commission denied the accusations. The bill is submitted to the Verkhovna Rada and can be passed in September, meaning that the commission will be replaced in October.
Fire tainted judges
— by Jan. 1, 2020
By the end of the year, the High Qualification Commission should vet and hire 2,000 new judges for the court of first instance.
Relaunch Supreme Court
— by the end of 2019
Zelensky’s judicial reform bill stipulates halving the number of Supreme Court judges from 200 to 100. The Supreme Court must be relaunched within two months after the High Qualification Commission is replaced, meaning it is most likely will take place by the end of 2019.
The new High Qualification Commission of Judges will select a new, smaller Supreme Court out of the old judges of the court. Those of them who are deemed not worthy of the Supreme Court will be either fired or transferred to appeal courts.
Cement the president’s right to appoint heads of investigative agencies
A constitutional amendment adopted in the first reading is set to cement in the Constitution the president’s right to appoint and fire heads of Ukraine’s National Anti-Corruption Bureau and the State Investigations Bureau. Formally the president already has these powers — they’re given to him by the laws regulating these agencies. The amendment also adds this right to the Constitution, increasing the president’s influence. The amendment must be passed during the next session of the Verkhovna Rada, which begins in February 2019.
