THE SUPPORT GROUP OF UKRAINE (SGUA)

The Support Group for Ukraine (SGUA) was established by decision of the President of the European Commission in April 2014. The European Commission supports political and economic reforms necessary to consolidate a democratic, independent, united and prosperous Ukraine.

SGUA was created as a Task Force to support Ukraine in the implementation of the Association Agreement with the EU (including the Deep and Comprehensive Free Trade Area), and of the Association Agenda which stems from it.

The Support Group for Ukraine (SGUA) consists of about 40 officials from the Commission and member states. The operational staff of the Support Group is drawn from a wide range of European Commission services, experts seconded from national administrations and contracted staff.

The Support Group is divided into seven sector teams corresponding to the essential reform priorities set out in the Association Agenda, as follows:

1. Agriculture and Sanitary/Phytosanitary Matters
2. Economic and Fiscal Reforms
3. Financial Cooperation
4. Energy and Environment
5. Justice and Home Affairs, including anti-corruption
6. Policy Coordination
7. Science, Education and Social Matters
    

The SGUA works closely with the European External Action Service, with the Delegation of the European Union yo Ukraine and with the European Union Advisory Mission..

SGUA ensures that support provided by the European Commission – advice, expertise and financial cooperation drawn from across the services of the Commission – is focused and concentrated according to the Association Agenda, itself a core part of Ukraine's overall reform programme.

SGUA also helps to mobilise EU Member States' expertise and enhance strategic upstream coordination with other donors and the International Financing Institutions. 

The SGUA aims to act as a ‘catalyst, facilitator and supporter of reforms’. Among EU institutions, it is the main coordinating body for assistance to Ukraine across various directorates-general in the European Commission and European External Action Service. At the same time, SGUA experts have gained detailed knowledge of specific sectors in Ukraine. Some of the officials are based in the country as part of the operational section of the EU delegation.

The SGUA has also coordinated the efforts of other European and international donors. As a result, the SGUA is able to liaise with various parts of the Commission (such as the directorates-general for trade and energy) to identify the country’s needs and tailor assistance accordingly. Unlike some other donors, the EU in general (and the SGUA in particular) has promoted a sector-focused approach in Ukraine since 2014. It also matters that SGUA members bring specific sectoral experience from their work in their own countries (EU member states).

The sector-focused approach allows for a comprehensive strategy – from capacity-building to policy implementation – that is more effective than isolated and sporadic interventions aimed at single state institutions or policy measures. The SGUA focuses on state-building issues (e.g. justice and anti-corruption), as well as on the strategic coordination and programming of assistance. The Commission and the SGUA have also taken on a broader mandate with regard to fundamental reforms, such as public administration.

The SGUA and EU delegation are able to coordinate assistance in areas such as public administration reform (PAR) with other donors, including EU member states, which provide considerable assistance to Ukraine . This also allows different assistance instruments to be mixed and blended, often in coordination with financial institutions such as the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank.

At the same time, the EU can only provide support once the legal and political frameworks for the reforms of public institutions are decided by the Ukrainian government. This is not a simple task. It requires pressuring the Ukrainian government to prepare sectoral strategies, which then can be supported by the EU and other international donors.

Overall, the SGUA, alongside a large EU delegation in Kyiv, benefits from broad support within the European External Action Service; and high-level backing from the commissioner for European neighbourhood policy and enlargement negotiations, and the deputy director-general of the Directorate-General for European Neighbourhood Policy and Enlargement Negotiations (DG NEAR), both of whom adapt their institutions’ assistance to Ukraine in response to challenges on the ground.

At the macro level, the SGUA is able to tailor its supply of assistance and expertise to Ukrainian needs. As a result, assistance has become more systemic, focusing on strengthening state capacity rather than merely facilitating legal approximation. The EU has been able to deploy a mix of instruments in a comprehensive way, with clear conditions and accompanying policy dialogue, as well as coordinating strategically with member states and other donors. This hybrid approach is not in itself a particular innovation – it has been done elsewhere by the EU – but its application to the challenges of reform in Ukraine represents an important innovation. With the SGUA and its considerable staff capacity, together with the European delegation, the EU is able to assist with implementation of reform much more robustly than before.

The SGUA mediates between Kyiv and Brussels by helping the Ukrainian authorities to access the relevant directorates of the European Commission. However, the Commission’s staff can only devote limited attention to Ukraine, given their wide responsibilities. This has hampered the process. While the EU has concluded ambitious and complex agreements with the countries of the EaP, including Ukraine, capacity within individual directorates has not increased accordingly. Moreover, such agreements have added to the already heavy workload of staff. DG NEAR and the directorates dealing with trade, health and food safety have chiefly been able to focus on Ukraine to complement the work of other EU bodies. This reflects the rather diffuse ‘ownership’ of the AA implementation process across EU institutions.

Recommendations

1. The EU must have realistic expectations of how long it will take for Ukraine to reform. The EU must maintain strong conditionality in the long term to stimulate real, rather than partial or cosmetic, reforms. Ukraine must recognize that European integration is impossible without delivery of political and economic transformation.
2. The EU’s Support Group for Ukraine (SGU) has been a particularly successful innovation in policy towards Ukraine. The SGU has matched the supply of expertise to need. The EU should rely on this tailored and agile mechanism when planning assistance for Ukraine.
3. The EU’s support should move away from classic, pre-scripted technical assistance projects – the effectiveness of which is very low – to tailored, more flexible and longer-term programmes of at least four to five years in duration. The EU should consider using some instruments that have been successfully deployed in Romania (and learn lessons from failure in Bulgaria) to support the rule of law and judicial reforms.
4. Support for Ukrainian businesses, especially small and medium-sized enterprises, is needed to help them withstand competitive pressure. This gap remains a major weakness in the EU’s strategy towards Ukraine (especially at the regional level), and contrasts with the support available to EU accession candidate countries.
5. Land reform – allowing and facilitating a functioning market for land – is badly needed to ensure that Ukraine’s large but low-productivity agricultural sector is a powerhouse for longer-term economic growth.
6. Further reform of Ukraine’s more than 3,000 state-owned enterprises is essential. Efforts should focus on three areas: improving the corporate governance of strategic entities identified as likely to remain in state ownership; privatizing the remaining enterprises and assets for which there is a ready market; and closing the rest. Reform should also include the sale of over 10 million hectares of agricultural land currently in state ownership, which could potentially raise big sums for the state budget.
7. Civil society and the international community should place as much stress on electoral and institutional reform as on anti-corruption measures, to encourage a break with the old system and allow a new generation of genuine reformers to shape laws and policies. Wider use of institutional exchanges between Ukrainian government entities and EU member state governments will encourage best practice in administration and better policy formulation and implementation.
8. Building public trust is of critical importance. Responsibility for this lies first and foremost with the Ukrainian political class, which needs to convince the population and Ukraine’s foreign friends and partners that there is serious political will to reform the corrupt political system. Civil society can help to do this ‘from the top’, by joining forces with reformers in the legislature and executive. Civil society also needs to work from the ‘bottom up’ to ensure that citizens can engage in their country’s governance and exercise civic oversight. Active citizenship could help establish a larger and more reformist political class in the future. Unless Ukrainian politicians, judges and civil servants accept the need for their system to change fundamentally – through the creation of robust institutions, genuine safeguards against corruption, and true political and legal accountability – old habits will continue, Western partners will grow weary.
9. Western donors should integrate requirements for wider popular participation into their grant-making. They should fund projects that build civic support networks. They should promote action-based rather than adversarial revolutionary activism. The expansion of housing associations, farmers’ unions, credit unions, teachers’ associations and business associations would make decentralization of power more effective and local government more accountable.
10. Through international development assistance, Western partners must assist Ukrainian NGOs and nascent political parties, as well as universities and management schools, in the creation of a new political and managerial class.
11. Western countries must sustain pressure for judicial reform and the prosecution of high-level officials who have abused their office. There must be continued pressure for progress towards zero tolerance of corruption at all levels. The establishment of a special trial court or chamber free from political interference is essential for further progress in the battle against corruption and the development of a new legal culture. The appeal system must be similarly independent. Any signs of backtracking on these issues must be addressed robustly. An independent judiciary is the ultimate test of Ukraine’s reforms.
12. To maintain the momentum of the anti-corruption effort, the government must speed up privatization of state-owned enterprises using transparent tender procedures. Further deregulation should also be a high priority, in order to reduce opportunities for officials to extort money from business.
13. Ukraine’s anti-corruption reformers must communicate their achievements to society and address the perception that ‘nothing has changed’ since 2014. Important progress has been made on reducing the space for corruption, but the Ukrainian public is generally not aware of these changes.
14. Progress in Ukraine is clearly discernible on many fronts, but it is in danger. Incomplete reforms threaten to undermine the credibility of ‘new forces’ and lead to the disillusionment of millions of Ukrainians. This would open the way for revanchist and populist forces to hijack Ukraine’s transformation agenda. Delivering on the policy recommendations proposed above would pave the way for a more open and efficient system of governance and make Ukraine more resilient.