Reform Watch – Oct. 1, 2015

Overview

With local elections scheduled for Oct. 25 and
wages across the economy being eroded by high inflation, political factions are
scrambling to please the voters. Increased prices for utilities, a requirement
under the International Monetary Fund lending program for Ukraine, are a soft
target for the Batkivshchyna party, which has stopped voting in parliament
until prices on natural gas for households are lowered. This has severely hampered
parliament, where the governing coalition had yet to regain its footing after
the recent exit of one of its junior partners, the Radical Party of Oleh
Lyashko.

Batkivshchyna leader and former Prime Minister
Yulia Tymoshenko has gone on the offensive, rejecting an offer to coordinate
the work of the coalition. She claimed that an inner circle of de-facto
decision makers “decide everything
singlehandedly” just as ex-Party of Regions deputy parliamentary leader Mykhailo Chechetov used to do under
ex-President Vicktor Yanukovych.

Economy & Finance

Parliament on Sept. 17 passed law changes
required to conclude a deal that cuts Ukraine’s debts on privately held bonds by
20 percent. The Finance Ministry published the
2016 draft state budget on Sept. 29. The minimum wage is set to increase from
Hr 1,378 to Hr 1,550 by the end of 2016. An earlier draft was withdrawn over
uncertainty over tax revenues pending changes to taxation rules, defense
spending, and the possible legalization of the gambling business. On
Sept. 15, the Finance Ministry launched an official platform disclosing
transactions of the consolidated state treasury account, accessible at www.e-data.gov.ua. Ukraine’s Finance Minister Natalie Jaresko called the platform
“revolutionary” in its transparency.

Rule of law

On Oct. 1, the first 70
detectives of the newly established National Anti-Corruption Bureau, which will
investigate high-profile graft cases, started work. Picked on merit in a
vetting and testing process, only about half of them had worked in law enforcement
previously. They received training sponsored by the U.S. Federal Bureau of
Investigation and by the European Union.

On Sept. 17, the Verkhovna Rada
elected its seven members to the commission to appoint a key anti-corruption
prosecutor.

Poroshenko told the detectives
to serve in manner that would justify the trust of the people. “We won’t
tolerate corruption, regardless of the position a corrupt official holds,”
president said.

One of the most notorious judges
of the regime of ex-President Viktor Yanukovych, Oksana Tsarevych, was
suspended from Pechersky District Court for two months on Sept. 9. The
dismissal of the judge was initiated by Prosecutor General Viktor Shokin.
Tsarevych is suspected of making improper rulings in a number of cases, including
some against activists of the EuroMaidan Revolution.

Security & Defense

During the October-November draft campaign, the
armed forces are planning to recruit some 11,600 soldiers.

On Sept. 30, the United States
announced it would provide an additional $7.5 million to support humanitarian
relief efforts in Ukraine, bringing total U.S. humanitarian assistance to the
nation since the start of the war to nearly $69 million. In addition, the
United States will grant the country $21.5 million in aid for military
purposes.

Poroshenko has approved the country’s new
military doctrine. An overhaul of the national security system, as required for
membership of the European Union and NATO, is named as a key task.

On Sept. 15, parliament set a new official date
of the beginning of Russia’s occupation of Crimea: Feb. 20, 2014. This measure
is aimed to remove ambiguity, Ukraine’s Foreign Affairs Minister, Pavlo Klimkin
explained. “The seizure of Crimea took place on Feb. 26, while Russia’s
violations of the procedure for crossing the border (first) occurred on Feb.
20,” Klimkin said.

Parliament strengthened social guarantees for
Ukrainian military servicemen. Military service will be included in labor
records, and servicemen will be entitled to pensions on preferential terms.

Public Administration

The Ministry of Justice will
open access to data held in the business, cadastral, real estate and automobile
registers on Oct. 6, Justice Minister Pavlo Petrenko announced on Sept. 30
during a Cabinet meeting. He said he hoped that the step would foster effective
public anti-corruption control.

Ukraine’s new multimedia foreign
broadcasting platform was launched on Oct. 1. Yurii Stets, the minister of
Information Policy, said he hopes that this media outlet “will be watched on
every continent, in hundreds of countries around the world, by hundreds of
millions of people.” However, to complete this process it is necessary to adopt
a law on the system of foreign broadcasting in Ukraine, minister said.

On Sept. 24, after the meeting
with Jan Tombinski, the head of the EU Delegation to
Ukraine, Poroshenko reconsidered his decision to delay civil service
reform.

“Today we had a comprehensive
discussion… which makes us confident that president fully supports the
Verkhovna Rada’s initiative to pass the civil service bill at final reading,”
reads Tombinski’s statement. He also added that after
the adoption of the bill and the presentation of the strategy for its
implementation, the European Union will be ready to allot Ukraine about 800
million euros.

A total of 132 political parties
will take part in local elections on Oct. 25. The progress of the election
campaign, as well as recorded violations, can be tracked using the
Elections-2015 information system at http://91.227.69.61/

On Sept. 16, Rada adopted a
long-expected bill on public procurement, one of two laws urgently needed, to
save the country Hr 50 billion, or $2.3 billion a year, Economy Minister
Aivaras Abromavicius said.

Apart from harmonizing rules for
Ukraine’s public purchases with World Trade Organization requirements, the bill
helps cut corruption risks and promotes deregulation. It obliges bidders to
provide information on the ultimate beneficiaries of tender winners, makes
tender committee protocols and financial proposals publicly accessible, and
introduces a transparent appeals system. In addition, bidders will now only
have to prove their eligibility to bid if they win a tender.

On Sep. 15, Ukraine’s Interior
Minister Arsen Avakov promised that the strength of the new patrol police force
in Ukraine will reach 6,000 by the end of the year. Currently, 2,000 police
officers operate in Kyiv, while 800 operate in Lviv and Odesa, according to
ministry’s spokesperson. On Sept. 26, the new police force was launched in Kharkiv,
while the selection process has started in Slovyansk and Kramatorsk.

Currently, there are about
152,000 old police, or militia officers. So “there is a long way ahead,” Avakov
said.

Energy

A key law on the natural gas
market, passed in April, came into effect on Oct. 1. If implemented, Naftogaz
will gradually lose its monopoly over the gas trade, creating a free market for
gas.

Ukrainian Prime Minister Arseniy
Yatsenyuk said that the gas reform enabled government to provide gas discounts
for household consumers. “We have promised the country that every Ukrainian
citizen, each household that consumes less than 200 cubic meters of gas, will
receive the discounted price for gas,” said Yatsenyuk. While the market price
for one cubic meter of gas is Hr 7,188, these consumers will receive gas at Hr
3,600, Yatsenyuk said.

On Sept. 30, the European Bank for Reconstruction
and Development approved a loan of up to $300 million to Ukraine’s national gas
and oil company Naftogaz for purchases of natural gas on the European market to
fill storages for the winter heating period.

According to Yatsenyuk, Ukraine
needs $1.3 billion to make it through the winter. $500 million has already been
received, and if the European Bank for Reconstruction and Development grants a
further $300 million, that would unlock yet more funding from the World Bank –
an extra $500 million under sovereign guarantees, Yatsenyuk said on Sept. 30.

Kyiv Post
Legal affairs reporter Mariana Antonovych can be reached at antonovych@kyivpost.com. Staff writer
Johannes Wamberg Andersen can be reached at johannes.wa@gmail.com