REFORMS IN UKRAINE OR THE OLIGARCH POLITICS OF OLD

Positive Steps in Reforms

• Anti-Corruption Laws have been passed and Head of the new Anti-Corruption Bureau has been appointed
• There has been a purge of the authorities and a round of sackings has begun. But civil servants are fighting the round of sackings in the courts.
• A new law on education has been introduced, which will bring the Ukrainian system closer to European standards.
• The sale of confiscated criminal assets has become more transparent, and the level of corruption has been reduced in state purchases.
• Theft in state tenders has decreased. The difference between prices of state purchases and the market rate has decreased to 10-15% whereas before it was 30-40%.
• The National Bank has begun to work more transparently, publishing detailed notices about the refinancing of commercial banks. A purge of the banking system has begun, focused on weak banks and fraudulent banks channelling money to the black market. In total, 40 banks have been shut down.
• The government has also cut billions in subsidies to the coal industry.
• The rights of regions have been noticeably expanded. However, these rights have not yet been exercised in full measure because the necessary laws and by-laws have not yet come into force.
• The post of business ombudsman has been confirmed.
• The process of hiring foreigners has been simplified, and the tax and bookkeeping rules have been harmonised.
• Pensions have been cancelled for several categories of working pensioners and pensions have been decreased by 15% for remaining working pensioners.
• Rent payments on gas production have been increased from 20% to 70% for small deposits of up to 5 km in depth. The Parliament has also agreed new laws to reform the gas sector and restructure Naftogaz to make the sector more modern and market-based, with more competitive prices, and more secure energy.
• Bank owners have now increased responsibility in cases of bankruptcy
• Communal tariffs have been increased.

Oligarchs and populists

There are two main political players in Ukraine: President Petro Poroshenko and Prime Minister Arseny Yatsenyuk. These figures control the most powerful factions in Ukraine’s parliament and important representatives in the cabinet. Both have declared their intentions to implement reforms; and their parties are part of a coalition of five.

But the number of coalition partners renders this government weak and unstable, and in reality, Poroshenko and Yatsenyuk are constantly fighting amongst themselves for power. For example, Yatsenyuk managed to force the resignation of the head of the National Bank, Valeria Gontareva, who was considered to be close to Poroshenko. In response, Yury Lutsenko, the head of the Poroshenko Bloc, in parliament threatened to fire government ministers. Conflict between Yatsenyuk and Poroshenko or organised opposition to reform on the part of the oligarchs could break this brittle union. A possible split in the coalition is a new source of political instability.

At the same time, Poroshenko and Yatsenyuk are far from the biggest populists in parliament. Other less popular politicians seek to improve their ratings by making promises, which cannot be delivered in the current economic climate. Among the most noted populists are Yulia Tymoshenko, Oleh Lyashko and his Radical Party, as well as Yury Boiko from Opposition Bloc, built from the remnants of the Party of Regions.

Oligarchs such as Dmytro Firtash, Ihor Kolomoisky,  Rinat Akhmetov, and Viktor Pinchuk are also playing their own game, and have representatives of their interests in parliament and the cabinet. They also control the most popular Ukrainian television channels and formulate public opinion. The oligarchs have weighted heavily on Ukraine’s economic and political development for years. Most of them amassed their wealth by exploiting their closeness to those in power rather than through efficient management. The tycoons use their money to secure political influence, either by wrangling positions in government for themselves or by purchasing access to politicians. They can siphon off the profits from state-owned property or bid for government contracts without facing pesky competition. Others sell their products to government buyers at inflated prices. The oligarchs also use their ownership of media outlets to block any attempts to undermine their interests. It’s clear, in any case, that Ukraine’s business elites continue to shape the country’s political agenda despite the wishes of the Maidan revolutionaries to the contrary.

Local elections are due to take place in Ukraine on 25 October 2015. But, in truth, no new law on local elections has been drafted. This has not stopped politicians from engaging in unofficial pre-electoral campaigns. Before elections, even local ones, politicians are loathe to slash budgets.

Disputing reforms in court

The court system is another weak link. Any reform or dismissal can be derailed in court. Since 2011, judges are the only professional group in Ukraine to receive a pension ten times higher than the minimum wage, and have used the constitutional court to secure these favourable conditions for themselves. On 2 March 2015, lawmakers set limits on the pensions of judges, but this decision can still be appealed. Unfortunately, Ukraine does not yet have a sufficiently trusted court system to rely on the decisions it makes. The press has so far paid little attention to judges and the work they do.

REFORMS IN UKRAINE  OR THE OLIGARCH POLITICS OF OLD