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 a broad range of areas, from the defense and energy sectors, to taxation and pensions. Below are the main issues in focus from Oct. 13–20.
Summary
Public discontent with the slowing pace of reform in Ukraine erupted in a rally on Oct. 17 outside the Verkhovna Rada, Ukraine’s parliament. Led among others by Mikheil Saakashvili, a former ally but now foe of Ukrainian President Petro Poroshenko, between 6,000 and 10,000 people, drawn from a wide range of opposition political parties and groups, demanded the passing of laws to strip members of parliament of their immunity from prosecution and to amend Ukraine’s election law.
While the protests began peacefully, clashes between rally participants and the large force of police and National Guard protecting the building broke out as parliament began its evening session on Oct. 17. Repeating the tactics of Ukraine’s EuroMaidan and other mass protests, rally participants brought tents and began to set them up outside the parliament building. The protesters vowed to continue their action until their demands are met.
All the same, the rally was relatively small and there appears to be little public appetite for further mass protests. There were more scuffles with police on Oct. 18, but by the next day the sides had settled into a standoff, with a tent camp having been erected on the roadway in front of the Rada, and to its side. Police sealed off the area with fences.
Health care
Ukraine’s reform efforts got a boost on Oct. 19 when the parliament finally passed a long-awaited law to reform the health sector. A total of 240 lawmakers voted for the law. The new system is based on Western models, and replaces the current Soviet-era one, which is widely seen as corrupt and inefficient. Lawmakers also approved supporting legislation on telemedicine and amendments to the financial code that will ease the funding of the system. Five amendments to the law were also approved.
Voting on the law took place over three days. As heated protests continued outside parliament, lawmakers inside the Rada on Oct. 17 started to consider 900 proposed amendments to the healthcare reform bill. Voting proceeded briskly, at a rate of about one amendment every two minutes.
However, with only around 60 or 70 parliament members actively voting, none of the amendments were passed on Oct. 17.
Voting on the amendments in the Rada resumed on Oct. 18, again at a rate of one every two minutes or so, and again with only 70–80 lawmakers voting — too few for any of the amendments to pass. Voting on amendments continued in the same manner into the morning session on Oct. 19, until the Rada hall suddenly started to fill up with lawmakers, and Prime Minister Volodymyr Groysman and Acting Health Minister Ulana Suprun arrived for the vote on the bill itself. With a firm supporting majority now in place, the bill was quickly passed.
The reform introduces an “e-health” system, in which patients register with doctors of their choice, and then doctors sign contracts with the health ministry. The level of payments will be based on the number of patients, as well as the costs of procedures, hospital visits, and other services.
According to Suprun, by linking payments directly to the patient, rather than to institutions, administrators and city bureaucrats, opportunities for corruption will be reduced, and doctors will be able to make more money. She says that under the new system doctors will see their wages rise from
Hr 5,000 per month to at least Hr 15,000, and possibly as much as Hr 60,000.
The system of payments for medical care will be tracked electronically, again reducing the opportunity for fraud, according to Suprun. She says at least 30 percent of current health spending in Ukraine will be saved by eliminating corruption and waste, and this money will be available for reinvestment in patient care.
According to a poll taken this summer by Rating Group, 72 percent of Ukrainians support the changes envisioned in the reformed health legislation.
Opposition to the changes comes from politicians with connections to the health sector, and medical suppliers and drug companies that have won lucrative contracts in the past through lobbying the government.
Ukraine has allocated Hr 98 billion (about $3.7 billion) on health sector spending in 2017, which is about 3.8 percent of gross domestic product.
Funding is set to rise by a further Hr 11 billion in 2018. According to the health reform package, funding of the health sector in Ukraine should rise to 5 percent of GDP by 2020. Most developed countries spend around 10 percent of GDP on healthcare.
Governance
As protests continued outside the Rada on Oct. 19, lawmakers held a vote on one of the demonstrators’ key demands — the removal of immunity from prosecution for members of parliament. The privilege, existing since the Soviet era and seen as a way to protect lawmakers from undue influence, has become notorious in independent Ukraine as a way for businessmen and politicians alike to escape punishment for wrongdoing by winning a seat in parliament.
Lawmakers voted to send two bills on removing immunity from prosecution, one drawn up by President Poroshenko, and another by the lawmakers themselves, to the Constitutional Court for consideration.
However, the move could be seen as a stalling tactic, as the court has been in limbo since last year, when a law to reform it was passed. Under the reform, new appointees to the 18-member court are to be selected in a competition, rather than being appointed by the president, parliament and
Congress of Judges as before. However, no legislation on the selection competitions has been passed, the court currently has only 13 members, and it has not made any rulings this year.
Economy
Ukraine risks losing the progress it has made so far if it decides to pause its efforts to reform, IMF First Deputy Managing Director David Lipton warned in an interview with news agency Interfax-Ukraine published on Oct. 17.
He said Ukraine’s government should not allow itself to be distracted by the upcoming parliamentary elections in 2019, which he said were “very substantially in the future.” He said that if Ukraine concentrated on moving ahead with reforms then “everyone will be able to have an election period in the environment of a stronger economy.”
Lipton said that Ukraine’s budget discipline had been better in recent years, and that this had allowed the country to move on from stabilizing the economy to starting to develop it.
However, he stressed that Ukraine had to continue with its economic reforms in order to ensure money from backers like the IMF, World Bank, European Union and European Bank for Reconstruction and Development continued to flow into the country. He said this would encourage inflows from other sources of money, and that the improved economic performance would also bring the government funds.
The IMF was to have disbursed about $1.9 billion to Ukraine this summer in the fifth tranche of its $17.5 billion loan to Ukraine, agreed in 2015.
However, Ukraine has failed to make progress on key reforms such as creating a fully functioning land market, and has been dragging its heels on the creation of an anti-corruption court.
In another sign that reforms in Ukraine could be stalling, the last two independent members of the supervisory board of Naftogaz of Ukraine, the state oil and gas firm, resigned on Sept 19 after complaining that the government had broken reform commitments made five months earlier. Lipton said there “has been some discontent about the lack of progress in improving governance at Naftogaz.”
Meanwhile, Ukrainian Finance Minister Oleksandr Danyliuk told the Atlantic Council’s Melinda Haring in an interview published on Oct. 17 that Ukraine would tackle some difficult reforms this fall. He said he was pressing for the adoption of a law to replace the hated Tax Police with a new Financial Investigation Service, which he said would eliminate pressure on business. He also said there may be progress in land reform before Christmas, although his optimism isn’t shared by many in Ukraine.
