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 Sept. 15-22.
Overview
Ukraine’s progress in reform, or rather the lack of it in certain areas, came into the spotlight at the annual Yalta European Strategy Forum in Kyiv on Sept. 14-16. President Petro Poroshenko, in his speech to the forum, again said there was no need for independent anti-corruption courts in Ukraine – his preferred option is for anti-corruption panels under the Supreme Court, within the current judicial system. To back up his point, Poroshenko asked the international visitors to the forum to raise their hands if their own countries had anti-corruption courts. Former U.S. Secretary of State John Kerry, addressing the forum later, rebuked the Ukrainian leader, saying all U.S. courts are anti-corruption courts.
Defense
The U.S. Senate on Sept. 18 passed a defense policy bill for 2018 that earmarks $500 million for Ukraine in security assistance, including lethal defensive weapons. However, there are strings attached: half of the money will be withheld until the U.S. secretary of defense certifies that Ukraine has made institutional reforms of its defense sector – ones that would ensure that it can sustain defense capabilities developed using previous U.S. assistance. Earlier, U.S. Secretary of Defense James Mattis, visiting Ukraine on Aug. 24, Ukrainian Independence Day, indicated he may recommend the provision of lethal weapons to Ukraine to fend off further Russian aggression.
Education
The new law on education in Ukraine passed by the country’s parliament on Sept. 5 to advance education reform has run into severe criticism from abroad. The controversy surrounds Article 7 of the law, which restricts teaching in minority languages in Ukraine. According to the article, starting from Grade 5, all teaching in educational institutions will be in Ukrainian, apart from in classes in which the minority language itself or its literature is being studied. Protests came from Hungary, Romania, Greece and Bulgaria, all of which have small minority populations living in Ukraine. Ukraine says that the new law is in line with both the Ukrainian Constitution and the Framework Convention for the Protection of National Minorities and the European Charter for Regional or Minority Languages. Ukraine on Sept. 18 submitted the legislation to the Council of Europe so that it could check whether the legislation is in line with the convention.
Energy
The last two independent members of the supervisory board of state oil and gas company Naftogaz announced on Sept. 19 that they were resigning due to government efforts to sabotage the planned unbundling of the company. Paul Warwick and Marcus Richards said no major progress had been made in the area for five months. The two said in their letter of resignation that political meddling by the government in the company “had become the norm.” The two join a growing list of foreigners who were brought in after the EuroMaidan revolution to shepherd through reforms who have since left their posts in frustration at the political obstruction.
Energy reform leaped to the top of the agenda in Ukraine after Russia launched its military intervention following the 2014 EuroMaidan Revolution. While Ukraine has deliberately weaned itself off Russian gas imports, instead sourcing natural gas in “reverse” mode from some of its neighbors to the west, the government was forced in March also to cut off supplies of anthracite coal from the Russian-occupied parts of the Donbas – the only area in the country where it is mined. A March 15 instruction from the National Security and Defense Council, effectively forced on the government by the independent actions of Ukrainian volunteers, formally put in place a blockade on trade with the occupied territories. However, several coal-fired power plants in Ukraine are equipped only to use anthracite coal as fuel, and the government was forced to source the coal from abroad. On. Sept. 17, the fourth, 80,000-ton delivery of anthracite coal from South Africa arrived in a port in Odesa, and earlier, on Sept. 13, a ship with 62,000 tons of coal from the United States also docked at the port. The government plans to import 700,000 tons of anthracite coal by the end of the year.
Economy & Finance
Ukraine’s government on Sept. 15 approved the country’s budget for 2018, with the document setting the budget deficit at 2.4 percent of gross domestic product, which is within the limits set by the International Monetary Fund to continue Ukraine’s $17.5 billion support package. The budget also sees growth in 2018 at 3 percent of GDP, up from the forecast 1.8 percent this year, and inflation falling to 7 percent, from 11.2 percent this year. The budget still has to be approved by parliament, however.
Meanwhile, IMF First Deputy Managing Director David Lipton, who visited Kyiv earlier for talks on the implementation of Ukraine’ reforms, told Ukrainian Prime Minister Volodymyr Groysman that Ukraine should now switch from stabilizing the economy, to promoting rapid growth. The IMF’s reform requirements include bringing gas prices into line with the cost of importing the fuel, new legislation to speed up and make more transparent the privatization of state assets, and a law to increase the time required for the public to contribute to the state pension fund in order to be eligible for a pension from the current 15 years to 25 years.
Also, Ukraine entered the foreign bond market for the first time since the start of Russian military intervention in the country in 2014, selling $3 billion worth of 15-year dollar-denominated sovereign debt. The issue overshot the initial target of $2.5 billion, with the yield on the bonds settling at 7.375 percent by the time the books closed. The funds are expected to be used by the government to service earlier debts.
Judicial reform
Ukrainian President Petro Poroshenko and Ukrainian Prime Minister Volodymyr Groysman both said they expected parliament to pass important amendments that would “complete the judicial reform” of Ukraine. The amendments coming before the Verkhovna Rada include alterations to procedural codes, in particular, the Economic Procedural Code, the Civil Procedure Code, and the Code of Administrative Proceedings. However, the government is still to put forward legislation to set up anti-corruption courts in Ukraine – one of the requirements imposed by the IMF in order to unlock the next tranche of Ukraine’s $17.5 billion aid package. Earlier, Poroshenko indicated that the issue of anti-corruption courts might be postponed until after the next elections in Ukraine, in 2019.
