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 six key areas: economy & finance, security & defense, energy, rule of law, public administration and agriculture.
Rule Of Law
The Verkhovna Rada on Feb. 2 approved the first reading of constitutional amendments on reforming the court system. The amendments have been upheld by the Constitutional Court.
President Petro Poroshenko is touting the bill as a radical overhaul of the court system, but critics say courts will remain unchanged, and the president will retain enormous political influence over them.
A major setback for the judicial system is the reinstatement of Serhiy Vovk, the judge who sentenced ex-Interior Minister Yury Lutsenko to four years in jail in a politically motivated case.
Six months ago he was suspended by the High Qualification Commission of Judges.
The term of Vovk’s suspension expired, and nobody applied for its extension, according to the judicial system’s official website.
Last March the Verkhovna Rada stripped Vovk of immunity due to a criminal case against him.
A positive development for the rule of law is the launch of a criminal investigation against lawmaker Ihor Kononenko by the National Anti-Corruption Bureau on Feb. 3. The case was opened after Economy Minister Aivaras Abromavicius resigned, accusing Kononenko of corruption.
But another person suspected of criminal activities, Luhansk-based separatist leader Sergei Korsunsky, has roamed free in Kyiv for months despite his links to Kremlin-backed forces in Donbas. He was recently recorded by Ukrainian activists in a Kyiv café, exposing what critics say is the incompetence and corruption of law enforcement agencies. He was arrested only after the video triggered a media scandal.
Meanwhile, after numerous attempts, lawmakers have passed a law that revises the criminal code to include tougher punishment for obstructing the work of journalists.
According to the bill, anyone who interferes with a reporter’s equipment (phones, recording devices, cameras, etc), or any data within them, could face from three to seven years in prison.
The draft law was passed at first reading last June. – Oleg Sukhov and Alyona Zhuk
Security & Defense
Earlier this week National Police Chief Khatia Dekanoidze launched rapid action teams in Kyiv Oblast. The teams are expected to speed up the reaction of police officers to crime reports.
Western-style police patrols, which are replacing Ukraine’s corrupt traffic police, were expanded to the city of Ivano-Frankivsk on Jan. 31. Ten cities now have the patrol units.
As part of the police reform, vetting for police in Odesa Oblast will be launched in mid-February. Currently, vetting is under way in Khmelnytsky Oblast.
Meanwhile, NATO will open an office in Ukraine, in addition to its information office that has operated for more than a decade.
The office will advise government bodies and widen participation of the country’s representatives in NATO events.
Ukrainian Foreign Minister Pavlo Klimkin and NATO Secretary General Jens Stoltenberg signed an agreement on the office on Sept. 22. Parliament ratified the accord on Feb. 4. – Oleg Sukhov and Oksana Grytsenko
Finance & Economy
The central bank could close more banks if they fail to disclose the names of their ultimate owners by April. As of December last year there were seven small banks in this category . Since 2014, over 64 banks were deemed insolvent — more than a third of the entire banking system. However, most of them were small, shell financial institutions involved in illegal schemes to siphon money out of the country.
“The level of transparency of the banking system now is at 98 percent,” National Bank of Ukraine Governor Valeria Hontareva said at a meeting of parliament’s finance and monetary policy Committee on Feb. 3.
Stress tests on the 20 biggest banks have already been completed, and tests on the next 40 banks on the list will be performed by May.
The government has approved additional financing for two state banks. Oshchad Bank and Ukreximbank have together received Hr 15 billion ($578m) worth of long-term government securities.
While saying it has made progress in reforming the banking sector, the regulator is keeping a tight rein on its monetary policies, maintaining the key interest rate at 22 percent and imposing strict currency controls. This has the potential to stunt economic development, but a relaxation of the controls is dependent on the granting of International Monetary Fund loans and prices for Ukraine’s key exports, such as grain, ore and steel. – Olena Savchuk
Public Administration
The State Migration Service on Feb. 4 started piloting on their official website the online registration of new passports and ID cards that are to replace the old Soviet-era internal passports. Applicants aged 16 and over can apply. The user-friendly service aims to speed up the process of issuing passports and helps reduce lines at passport offices.
After registering, users receive notifications via text messaging with their personal tracking number and an appointment time for the procedure. The service is only available to residents of one city district in Kyiv during the pilot phase. — Olena Goncharova
Energy
The deputy head of parliament’s energy committee, Bloc of Petro Poroshenko lawmaker Olga Bielkova, published a column on Feb. 2 outlining what further steps are needed this year to boost Ukraine’s energy independence.
Noting that Ukraine needs to consume less through energy efficiency measures and promote domestic energy production, Bielkova identified bill No. 2960, which lawmakers are now reviewing, as the means to create an “effective and independent regulator.”
“Unfortunately, there had been a lack of political will surrounding its adoption,” she said.
She praised the Economy Ministry’s initiative to introduce corporate governance at state-owned companies — state-run Naftogaz Ukrainy is now under the economy ministry’s purview — in accordance with guidelines of the Organization for Economic Cooperation and Development. Changes include installing independent supervisory boards, removing public officials from management positions, and creating a state holding company that will professionally manage the largest and most important companies.
Unbundling, or finalizing the division of natural gas transportation and storage, needs to be completed, Bielkova said. Their separation “will also attract investors to develop these assets and improve overall market efficiency,” she said. Otherwise, if Naftogaz retains control over those functions “the company will remain the key market player, with the privilege to decide whether other actors can enter the market, and on what conditions,” she added.
She said bill No. 3325 provides additional clarity on the gas market, as it will enable non-state entities to use the gas distribution network on a paid basis.
Due to falling global prices for oil and gas, taxation should shift from duties paid according to the depth of extraction, to the income of gas companies, according to bill No. 3630.
To foster competition, regulatory barriers should be eliminated to allow more producers, traders and investors to enter the market. Rules dating from 1984 on developing oil and gas fields need to be revised, a new Subsoil Code needs to be approved, and the volume of natural gas reserves that producers and traders are required to maintain requires revision.
To get local communities involved in cooperating with energy companies, bill No. 3038 will reallocate 5 percent of oil and gas rental payments to local budgets. To make the market more transparent to investors, according to Bielkova, a centralized database should be created containing geological data and presentation materials. “Otherwise, the government can still seek ways to allocate licenses only to certain holders,” she said.
Also missing is a database on joint activity agreements between state-owned companies and private oil and gas producers.
Kyiv should finally establish a coherent coal industry policy, according to Bielkova. She said prices for heating and electricity should reflect the real costs in the coal industry. “If Ukrainian mines are to continue producing coal and competing with global manufacturers, it will require a new energy tariff calculation based on fair coal prices, and not subsidies given to the coal industry,” she said.
In-depth policies are needed to ensure than if any unprofitable mines are closed, “social, environmental, and economic issues” are resolved, Bielkova said. — Mark Rachkevych
Agriculture
Acting Agriculture Minister Oleksiy Pavlenko, who resigned on Jan. 29, said a number of bills are required to boost the production of bioethanol fuel in the under-utilized agricultural sector this year.
Ukraine can produce 21.8 billion cubic meters of biogas, 1.5 million tons of bioethanol, 1.2 million tons of biodiesel, and 37.9 million tons of solid fuel, Pavlenko said at a conference devoted to export credits on Jan. 28 in Kyiv.
He promised that the ministry would take a number of steps this year to foster the production of biogas. They include drafting bills to improve legislation on the so-called green tariff — electricity produced from alternative energy sources — promote a licensing system, and implement joint projects with investors.
“All these areas provide interesting opportunities for investors, ensuring a high yield and thereby contributing to the development of the Ukrainian economy,” Pavlenko said.
More than 400 state-owned enterprises under the ministry’s purview are ready to be handed over to the State Property Fund for privatization, Pavlenko said when he resigned. As a result, over 100,000 people will be given farming land once their ownership changes hands. Last year nine export markets were opened to 100 Ukrainian meat and dairy producers, while 238 firms got certificates to sell their goods in the European Union, he added.
Two additional Ukrainian dairy producers got licenses to export their goods to China, bringing the total number of companies to 24. Four got approvals in December, while 18 got veterinary certificates in September, according to the Agriculture Ministry. – Mark Rachkevych
